Every month the big auction houses send out the same message: good-quality vans are finding eager buyers while scruffy vehicles are struggling to sell.
That’s hardly surprising really. The majority of buyers at auction are traders who will take your used LCVs, patch them up and turn them into cash on their forecourts.
They are experts and know exactly how much each piece of damage will cost to fix. If it’s too much, they will not be able to make a profit so their hands will remain firmly in their pockets.
Light commercial vehicle sales are hugely complicated as, by their nature, the vehicles being offered have been used and often abused.
If, for example, your business involves delivering flowers, the vans you offer at auction are likely to be pristine apart from maybe the odd spill of water.
But if you run a building firm, your vehicles are likely to be worth little more than scrap value at the end of their fleet lives and you would be wise to factor this into your contracts when going out looking for business.
But in between these two black and white scenarios are many shades of grey – and it is to these that we turn here.
Do you patch up your vans before selling them – and, if so, how far do you go?
It’s a question that the major auction houses take a lot of trouble over and the good news for fleets is that their advice comes free as part of the selling package.
All the experts agree on one thing – your quest for clean vans at selling time begins when you buy them. The first job is to add ply-lining to the list of paid-for options. It will cost around £200 per unit depending on the size of the van but will add much greater value at selling time when you peel away the dirty wood to reveal a pristine interior.
It will also prevent reverse dings – damage caused by loose cargo floating around in the back (although, of course, everything should be securing fastened) which knocks lumps out from the inside. This can’t be mended cost-effectively.
The second item to opt for at buying time is a reversing sensor for each vehicle. Again at around £200, these devices will help avoid all those annoying knocks and scrapes that tend to plague light commercial vehicles and make them worth less at selling time.
The sensors will invariably pay for themselves during the van’s fleet life.
Sensors will also help avoid the possibility of reversing over a passing pedestrian, which in itself should make them a must-have option.
BCA UK business development manager – commercial vehicles Duncan Ward said: “There is a real shortage of good-quality, ready-to-retail used vans, which is leading to fierce competition and generally rising values for the best examples. The flip side is that vans in poor condition are often being overlooked because of the time needed to bring them up to retail standard.
“Proper preparation and good presentation are vital if your LCVs are going to achieve the best possible price at auction. With the demand for well-presented vans, there is a massive opportunity for sellers.”
Smart preparation – the process of bringing vehicles back to ‘showroom condition’ through paint technology, cold metal dent removal and repairs to interior and trim – has an important role.
Ward said: “This technology helps vendors maximise returns by ensuring vehicles look their best when they are sold. Vendors are enjoying significant returns on their ‘preparation investment’ and notable improvements in entry-to sale-ratio.
“Smart preparation is a valuable tool provided vehicles are chosen carefully. For a 2010 model year van at 10,000 miles in good condition, but with a few small dents, Smart prepared can be a cost-efficient choice for the vendor.”
However, the return on investment to bring a five or six-year-old, 100,000-mile van, without a straight panel to its name, back to showroom condition is likely to be less rewarding.
When deciding whether to repair an LCV before selling it, Shoreham Vehicle Auctions MD Alex Wright says there are several factors to consider – the main one is the age of the vehicle. Repairing any damage or faulty electronics on sub four-year-old vehicles will dramatically increase their value.
The older the vehicle, the less important it becomes to repair. These vehicles are often treated like workhorses and are being bought to adhere to legislation changes such as the new London Low Emission Zone regulations.
If the bodywork is damaged, it is important to note where the damage is. Any extensive damage crossing two or more panels should be repaired (irrespective of the van’s age), as something like this might put a buyer off due to the repair costs after purchasing the vehicle.
Small dents and nicks to bodywork can be left when the vehicle is sold, particularly if it is more than four years old. In the current economic climate buyers are looking to save money and if it helps bring the price down a little, it is more likely to sell.
Wright said: “A tatty ex-fire ser-vice 52-plate van that went through Shoreham recently showed how a buyer was prepared to pay more for the vehicle because it had an immaculate service history, despite the exterior condition of the van.
“Buyers normally prefer to buy a white vehicle as they can usually repair the bodywork quite easily and cheaply with-out the use of an expensive paint oven.
“If a customer wants to buy the vehicle with damage they can sell it as seen or, if they want a pristine vehicle, they can repair it and sell it for more money. Buying a slightly body-damaged vehicle therefore gives the trader options to widen their buyer base.
“Buyers tend to value lifestyle vehicles such as the Volkswagen Transporter, Mercedes-Benz Vito or Renault Trafic, higher than other LCVs which they might use for work purposes only. As Transporters and Vitos often double up as a weekend companion, drivers prize these vans much more and would be put off a vehicle if it had extensive damage.”
Any vehicle with metallic paint will greatly depreciate in value if there is bodywork damage, as these panels can be expensive to repair, particularly if the van is more than four years old.
The higher spec a vehicle is, the more valuable it is in the buyer’s eyes, so ensuring it arrives for sale with as little damage as possible will help it sell for a better price.
On the matter of spec, optional extras such as air conditioning or electric mirrors should be in working order, as these will cost the buyer more money to repair.
A good clean interior will help generate a better price. A buyer will often take the interior condition
into consideration when second-guessing how hard a life the vehicle has had. It can impact on the value if it looks dirty and untidy.
At Manheim Auctions, James Davies, director of commercial vehicles, puts in a lot of time and effort analysing the market and assessing how much damage should be repaired. And it’s sometimes sur-prising what sells and what doesn’t.
Take faulty engines and gearboxes, for example.
Davies said: “Where it’s uneconomical to repair an older van – for example, if an engine or gearbox fails – the vehicle may be de-fleeted direct to auction by the ‘first life’ owner. Vendors are often surprised at the level of interest ‘non-runners’ can attract, if presented in the right way. For the entrepreneurial trader who has a network of used parts suppliers and access to lower-priced components and hourly labour rates, this non-runner represents a potential profit opportunity.
“We actively encourage vendors to declare any mechanical faults, so that buyers can bid confidently knowing the likely repair costs. Hiding behind ‘sold as seen’ is too risky for any vendor’s reputation.”
Manheim’s buyers are increasingly reporting that repair workshops are getting busier, while retail van sales remain steady, suggesting condition is generally worsening.
July auctions at Manheim saw average mileage on large panel vans reach 108,238 miles – the highest figure since its LCV Market Analysis began in 2006.
Mileage and usage of a van dictates length of service for subsequent owners – a high-mileage van in ‘first life’ is perfect for a ‘second life’ user who won’t be racking up thousands of miles each month.
Davies said: “The reality is that second life, as well as subsequent, owners need to look at the ‘sell or repair’ decision over the longer term and buying a newer van could offer greater benefits.
“In addition to fuel efficiency and environmental credentials, a final consideration for operating a newer van is legislation. In January, we saw owner-operators face a deadline in London to conform with the Low Emission Zone changes.
“This continual focus on emissions only ever targets the dirtier, older end of the market – vans that are generally more than 10 years old.
“This is not a consideration for the ‘first life’ corporate owners, but is now a definite consideration for ‘second life’ owner operators as the likelihood of other LEZs cropping up across the UK is inevitable.
“Those that exist will become more stringent, as has been the case with trucks.”