Remarketing: Shortage of stock keeps prices high but quieter times lie ahead

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Petrol van sales have seen triple digit increase but demand for AFVs has slipped into reverse. By Dean Bowkett

A reduction in stock is continuing to push up used van prices while the new van market continues to be a roller coaster ride.

New van sales saw another reversal of fortunes as the 5.6% fall in March becomes a rise of 3.9% in April.

Demand was particularly strong for smaller vans (up to 2.0 tonnes) which saw sales rise 11.0% in April.

Mid-sized vans (2.0-2.5 tonnes) also rose sharply, up 9.2% last month compared to a more modest 5.5% growth in the 2.5-3.5 tonnes range.

But a 13.5% fall in sales of pickups, which currently account for just more than 15% of the LCV new market year-to-date (YTD), dragged back total van growth in the month.

With more than a third of the year gone and a market which is still down 2.3% YTD, petrol van sales saw another triple digit rise, increasing by 558.8% over April 2017 while alternative fuelled vehicles (AFVs) went into reverse and fell 15.2% year-on-year. This means petrol vans are now selling at a ratio of 3:1 against AFVs.

To the end of May new diesel LCV sales still represents 98.7% (116,328 units) of all sales, but 1,158 petrol vans have also been sold and it will be interesting to see how these fare in the used van market in three-four years’ time.

The YTD fall in LCV sales is still forecast by most to be the most likely full year picture as the economic uncertainty continues. Brexit and the European Union’s concerns about the anti-EU populist parties now governing Italy only exacerbates that uncertainty.

Among the trade guides, Glass’s chief commercial vehicle editor Andy Picton noted that a “lack of quality stock to replace sold units continues to be a major problem for the trader.”

This was also confirmed by the auction houses with BCA’s chief operating officer UK remarketing Stuart Pearson commenting: “Demand for good quality LCV stock is outstripping supply”

Picton also highlighted a continuing lack of Euro 6 vans with buyers left to concentrate on “the cleanest Euro 4 and 5 stock”.

Shoreham Vehicle Auctions’ commercial vehicle sales manager Tim Spencer also noted an increase in the “older Euro 4 and younger Euro 5 vans being sold while the market is buoyant and before the Ultra-Low Emission Zones (ULEZ) goes live in London in April 2019” which is a point worth considering if you are running an older fleet of vans.

As well as supply being down, so were the sales volumes. Picton reported that April’s were down 7.1% over March.

Sales volumes is a point also picked up by Cap HPI senior editor Steve Botfield who noted that while sales volumes have been tracking 2016 levels since February they are “significantly lower than 2017” and he expects that trend to continue.

The weather was thought to be the main culprit for the lower sales volumes in March but this has continued into April and onwards through May which shows that there are other forces at play.

It is worth remembering that while new LCV sales exceeded 360,000 in 2017, sales were 25.3% lower in 2013 and still 11.2% lower in 2014 and this is undoubtedly limiting the stock availability of three-five-year-old vans.

Added to this is the economic uncertainty referred to earlier which may be causing van owners to hang onto their vehicles a little longer.

But a shortage of supply means prices continue to rise. According to Picton, prices rose £923 in April compared to the same month in 2017.

Botfield also reported prices as either holding or rising thanks to the limited supply. He noted mileage dropped by just more than 10.4% to 76,579 and their own inspections had seen an increase in the amount of damage on vehicles.

The auction houses are also confirming the view of the guides. Manheim reported that sales prices in April were up 14% year-on-year to £5,952, as Matthew Davock, head of LCV at Manheim, said that “April’s strong performance once again points to a superheated market place”.

BCA was equally as positive reporting a third straight month of record-breaking prices with them rising 1.4% in April to £7,572 which is a 17.7% increase over April 2016.

As noted last month, BCA said there was a marginal 2.4% drop year-on-year in average age (1.25 months) and a 3.5% fall in average miles (64,837) but this falls well short of covering the large rise in used values seen in April.

But before everyone gets too excited, according to Botfield, we may be coming to the end of the road for breaking prices as Cap HPI has seen bidding slowing down and vehicles “taking just that bit longer to sell”.

The supply shortage is also helping with first time conversion rates. There appears to be some disparity across the market with Glass’s noting rates as high as 86%, and Cap HPI reported a 75% first time hit rate.

Manheim also reported vehicles as selling “at their fastest pace on record throughout the month, at an average of just 14 days for all vehicles sold, a year-on-year decrease of seven days (down from 21 in April 2017) and two days fewer than March (16 days)”.

The record-breaking start to the year is not expected to continue through the second half of 2018 and the recommendation is to pay attention to how vehicles are presented.


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