Remarketing: uncertainty helps keep used LCV market on fire

New light commercial vehicle (LCV) sales went into reverse in September falling by 6.1% after the 5% increase in August. In total, 274,247 vans up to 3.5t have been registered so far in the UK this year, 3.0% lower than for the first nine months of 2017.

But not all commercial vehicles (CVs) are falling with pickups rising 4.6% to 42,311 and 4x4s up 283.5% to 1,396.

Sales are also still growing at the heavy end of the new CV market, i.e. rigids between 3.5t-6.0t, with sales up 16.5% in September to 1,059 units and 28.9% for the first nine months of the year, topping 7,056 year-to-date.

As March 29 draws closer, without any news of a confirmed post-Brexit trade deal, the uncertainty in the new LCV market will continue to keep buyers away.

This uncertainty makes the next 12 months even more challenging for LCV manufacturers who are also facing the 2019 introduction of WLTP (Worldwide harmonised Light vehicle Test Procedure) one year after the car sector.

The car introduction resulted in new car sales spiking during July and August followed by a collapse in September.

We are yet to have details about how vans will be tested, e.g. empty, part laden etc, and how they will treat each potential configuration such as panel van, chassis cab, tippers etc.

This means we have a serious risk of vans not being tested before the implementation and thus not available to order post-WLTP implementation.

This could cause more chaos than we saw for new cars, with long delays on orders and some vehicles potentially no longer available. It is worth remembering this if you are currently holding on to your fleet to see how Brexit pans out.

This uncertainty is continuing to have a significant positive impact on the used van market, driving up prices and sales volumes.

BCA reported average LCV values as hitting the second highest level on record in September and only £4 behind the record of £7,572 seen in April this year.

The £7,568 average per unit is a 15.1% increase over September 2017 and, while the average age fell by just more than one month to 50.83, the average mileage rose by 2.6% to 66,615.

The net impact means the bulk of the sales price rise is due to the used LCV market still being on fire.

With regard to the important fleet and leasing sector, LCVs performed even better with BCA reporting a record average £8,517 in September 2018 which equates to an average 40.96% of the original manufacturer recommended price.

It was a similar story at Manheim where Matthew Davock, head of LCV, reported: “September’s performance has broken several records. From average selling price to first-time conversion and growth in online buyer activity.”

Manheim reported a double-digit year-on-year increase with prices up 12% to £6,438 in September. With the average age remaining steady at 57 months and average mileage increasing by 3% to 74,114 the result mirrors that of BCA.

Davock’s reference to conversion rates was certainly warranted with Manheim reporting a 4% increase in first-time conversion rates from August to September where they hit 82.5%.

Some of this can be attributed to the end of the school holiday season and the return of buyers to the halls and online but it should be noted that supply also increased.

With consistency, BCA COO UK Remarketing Stuart Pearson said that, despite increased volumes of stock during September, “demand from buyers was strong across the board, with corporate vendors enjoying excellent conversion rates and average values rising to a new record high”. 

Andy Picton, chief commercial vehicle editor at Glass’s, also commented on the increase in supply in September with “a 4.9% rise in used sales at auction, with volumes sold increasing by nearly 1,000 units on the same point last year”.

According to Picton, prices have now risen by around 15% year-on-year with the average age dropping by “1.4 months to 61.9 months” while the average mileage dropped by 925 miles – nowhere near enough to explain the price rises seen.

Picton also noted the sharp rise in used values but believes there could be a supply issue looming as he states that “there were many examples of professional buyers paying well above the guide prices for vehicles that were exhibiting significant amounts of damage”.

Meanwhile Cap HPI noted how trade sales have been rising since mid-September while vehicles presented for sale have been falling, according to its latest data in mid-October.


Crew cab vans perform well

Ford Transit Custom

Picton noted that good-to-high specification and ready-to-retail panel vans like the Ford Transit Custom, Renault Trafic and Vauxhall Vivaro are selling well.

But he added that it is the crew cab vans which are performing particularly well. This is especially the case for sole traders who are balancing their work vehicle with something to meet their family requirements.

Shoreham Vehicle Auctions (SVA) also noted the change in buying habits, with used van buyers looking for vehicles that offered a more welcoming and potentially family-orientated environment.

According to commercial vehicle sales manager at SVA Tim Spencer, “used buyers are increasingly looking to pay a little more for vans with higher spec such as air conditioning and reversing cameras”.

This trend away from traditional workhorses even extends to paint colours.

Cap HPI has been reporting on the premiums and discounts created by certain colours and this was echoed by SVA, which recommended that vendors “should alter their reserve prices upwards to reflect this demand” for non-white colours like silver and black.

If you are considering buying a new 4x4 for your fleet, you might want to consider that the used van market remains awash with them.

Picton noted: “Top specification automatic models with extras are the most sought after, with mid-range models often struggling and coming under downward pressure.”

Used van vendors also need to be aware that the move from physical attendance to online buying is also continuing to grow.

Manheim reported 41% of vans were bought online, a 5% increase year-on-year which was also the same message from SVA, which noted that buyers “are not afraid to bid on and buy stock online from a few hundred miles away”.

This means preparing used vans to have an extra shine and look their best in front of the cameras could secure that extra bid or two.

This is particularly true for used vans aimed at franchised dealer buyers who are looking for vehicles in ready-to-retail condition and with the highest and nicest specifications.

WLTP and Brexit may be impacting the new van sector detrimentally, but it is the clean air zones (CAZs) and London’s ultra-low emission zone (ULEZ) which are skewing used van demand with buyers clamouring to get their hands on good condition and specification Euro-6 vehicles according to several sources.

With only a few weeks left until Christmas it seems like the festive break is going to be the only let up in what has been an incredible year for used van traders.


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