The latest Market Analysis from Manheim's commercial vehicle team provides evidence of the most sizeable shift towards older vans seen in the used market since reporting began in 2006.
This February's sales data highlights a clear move in the wholesale market towards light commercials aged five years and over. Indeed, Manheim reports that it has never seen such a high proportion - nearly half - of all used vans in the market reaching the seven year mark.
Looking at individual van segments, small panel vans between two and three years of age are attracting premium prices, achieving on average £7,522 (43% of their original price) at auction. Manheim's analysis confirms that there is a chronic shortage of vans in the three to five year age bracket, although this is likely to improve as new stock feeds into the used market during the next few years.
At the other end of the age spectrum, much older vans are still attracting surprisingly strong bidding. Indeed, dependant on market segment, between 30% and 50% of all vehicles sold at auction last month were over seven years of age. Despite this ageing profile, average selling price has risen year-on-year by £349 or 8%. This trend is attributed to the significant fall in new van sales in 2008/2009 and the subsequent shortage of stock in the used wholesale market.
Looking in more detail at vans sold in February, 36% of car derived vans, 46% of small panel vans and 45% of large panel vans (over 3 tonnes) were over seven years old when they sold under the hammer. 4x4s were even older, with 60% over eight years old.
Matthew Davock, head of LCV at Manheim, said: "These older vans are, without doubt, the tail end of extensions and deferred replacement programmes resulting from the economic downturn. Anything sub four years in auction today is seeing significant interest, from both online and physical buyers. Fewer than three in 10 vans sold in February fell into this age bracket.
"This is not bad news for the market. Older and higher mileage vans will always find homes as they are at an attractive price point and represent excellent value. Mileage is now seemingly less of a mental barrier in retail buyers' minds; this is likely against a backdrop of modern reliability and a comprehensive maintenance history."
Looking at the performance of small panel vans in more detail, Manheim's analysis shows that the hammer price for this popular vehicle type has jumped from £3,957 a year ago to £4,846 in February 2014, a rise of £889 or 22%. This remarkably strong performance at auction has broken a significant glass ceiling, recording a value of 31% of the original new price.
Davock continued: "Every month we track the average selling price of vans at auction, comparing these values to their original price new. While this measure has hovered between 26% and 28% over the past year, in January we saw this figure rise to 29%. Now we see it breaking the 30% ceiling, at 31% this confirms the amazing demand for small panel vans as the new workhorse segment in the used van market."
In February, sales of car derived vans, a popular segment in the used LCV market, showed some softening of values, falling from £3,598 in January to £3,413 in February 2014. This small drop in prices was attributed to a rise in the average mileages of vans, from 69,358 in January to 74,721. Davock comments: "During February, we saw a larger volume of older, higher mileage car derived vans in the halls and lower volumes from seasonally de-fleeted daily rental fleets."
Looking ahead, based on this year's remarkably strong start, Manheim believes that the market for used vans will remain stable for the next few months. Overall they believe the wholesale market has hit a price ceiling; while there is a chronic shortage of quality used vans at auction, conversion rates and bidding activity will remain high. Only an increase in supply can destabilise this and with SMMT new van registrations forecasting low growth, this is highly unlikely to happen in 2014.
Davock added: "These latest figures are good news for vendors and buyers as they show that the UK used van market is very healthy at the moment, with strong demand driven by increased business confidence and bank lending".