With Manheim predicting a significant ageing of UK’s van parc in coming years, should we be worried about the used van marketplace? We ask James Davis, head of commercial vehicles at Manheim.
Analysis by Manheim has uncovered some interesting facts about the age of vans on UK roads. In a sector typically starved of statistics, the remarketing specialist has analysed new van registrations from 1996; providing a unique vision of the current and future shape of the used van market.
By building a year-on-year cumulative picture, Manheim has demonstrated that, of the 3.7 million vans in the UK vehicle parc, half of these today are over seven years of age. First noted in 2013, Manheim’s Market Analysis has since been regularly reporting a significant influx of older vans being sold in auction. The company concludes that there is likely to be a significant ageing of the UK van parc in years to come. But should we be concerned? I doesn’t think so.
With business confidence at record lows during the recession, many fleet operators took the decision to extend van replacement cycles, either shying away from committing to new lease contracts or unable to ring-fence suitable lending terms. New van registrations collapsed by 40% and these factors combined to create a perfect storm. For the past two years we have experienced record supply shortages of de-fleeted vans from first life users.
But there is an underlying growth in the used van market that pre-dates the recession. We’ve experienced a supercharged wholesale demand for vans over the past eight years. Comparing 2006 to 2014, Manheim has seen the average selling price of used vans sold in auction increase by 45%, or £1,450. This is despite vans being a year older with 12,000 more miles. Consequently, I believe the increase in average van selling prices we have reported over many recent years is a clear demonstration of supply and demand playing out. It reflects the importance of vans to the UK economy, whatever their age. The SMMT has reported that there are 40% more vans on the road than 25 years ago, whereas the number of trucks remains largely static. This demonstrates the clear growth of the UK’s service sectors, even if manufacturing has been reported to decline over this same period of time.
The economic case for operators running vans longer makes perfect sense. Certainly, lower annual mileage fleets’ vans could be written down further and, in the case of contract extensions, this made for easier negotiation as the asset would remain out on the road earning revenue whilst being written down. Considering modern van reliability and lower associated repair costs the financial case was clearly acceptable for the majority. It will be interesting to see if it changes the industry view going forward.
In addition to mechanical durability and reliability, there have clearly been associated improvements in design methods, materials and production quality. When combined with a spell of milder winters, vans built in recent years have definitely retained their youthful looks well into older age.
Like cars, vans’ shapes and sizes have changed in recent years. However, what suits a first life user does not necessarily suit the needs of a subsequent user. Ask one of the 1.6 million van drivers whose van is older than seven years and you’ll often find that their requirements differ from the original procurer when it was brand new.
There is a great selection of quality vans to choose from in auction, with many utility fleets selling their extended older vans readily to a large audience of eager buyers in the hall and online. Along with vans from councils and local authorities, these vans have operated inside every UK community and are therefore firmly in a sole trader or SME’s heart and mind when it comes to selecting a used van for their business. These vans are well maintained and sold with excellent service history and full documentation.
According to current auction age profiles and SMMT new van registration forecasts I believe wholesale van volumes will ramp up progressively towards the end of the decade. Providing the economy remains in growth, this is great news for the UK van market. When we reach 2020, the wholesale market is likely to have endured a 12 year ‘shockwave resonance’. This will have been the most significant scar born from the worst injury to befall the wholesale van market in living memory. But the UK van market is robust. Like the businesses that drive vans day in and day out, it is crucial to the future wellbeing of UK Plc.