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REMARKETING: LCV auction market has 'taken off like a train'
Date: 27 April 2010
The commercial vehicle market has, at times, made its car equivalent look healthy over the past 18 months. But the situation is changing. Rachel Burgess examines how LCVs are currently faring in the remarketing arena
Demand for used vans has "taken off like a train in 2010" and there is a shortage of "just about everything", says Duncan Ward, auction giant BCA's general manager of commercial vehicles.
Almost every van configuration seems to have a market. "Whether you are selling a cheaper budget van, a well-used but tidy ex-lease vehicle or a late-plate model, you should expect plenty of interest," says Ward.
Both BCA and rival Manheim have reported a strong start to the year for commercial vehicles, with prices up by around 15% over the first quarter of 2010. The contrast with 12 months ago is compelling: BCA reports average values now sitting at £4500, £956 and 27% up on the end of March '09, while Manheim puts its average commercial vehicle sale at £4237, £1365 and 47.5% above the same time last year.
The new Ford Transit is the benchmark panel van model particularly in short-wheelbase form. But the Vauxhall Vivaro, VW Transporter and Renault Traffic remain strong sellers, as does the old shape Transit, says BCA.
Large panel
Ward says the large panel van sector is even more competitive in terms of product. "New models launched in recent years have always found a ready audience of buyers, including the Mercedes Sprinter, VW Crafter, Citroen Relay, Peugeot Boxer and Iveco Daily. But even in a strong market, it is noticeable how well-specified, sports and higher power vans are even more desirable, making big premiums over basic models."
He added: "A 2006 Vivaro Sportive will average £500 to £750 against the lower-specced but otherwise similar 1.9 CDTI models when presented in a similar condition. The Transit 2.2 TDCi Sportvan attracts as much attention for its looks as the fact it delivers 140hp, making it a hit property in the used market."
Expectations concerning used van specifications keep on rising, according to Ward. While basic requirements are little changed over recent years, used buyers now want at least one side-loading door, while a bulkhead offers protection for the driver and passengers as well as being a security measure to stop easy access from the cab. Ward says air-conditioning has also become essential.
"Those fitted with a tailgate rather than standard rear doors will generally sell at a premium, while glazed rear doors are unpopular because they are seen as a security risk for contents carried in the van."
Colour is also a deciding factor with metallic finishes in subtle colours such as blue, red and silver favoured.
Trade name deletion is essential - if you are selling, simply removing the vinyl stickers, which still leave the outline of your company name, is not enough. "Make sure your remarketing partners can deliver a quality machine-operated polish to finish the job properly, leaving a completely clear and clean panel for the next owner to rebrand," adds Ward.
The recession saw the average price of vans at auction tumble in 2008. This was due to lower demand - in times of economic constraint, businesses will make do with what they already own and operate.
Ward says: "Interestingly, there are few signs that average age and mileage have risen significantly - it could be those vehicles have not yet returned to the market."
Firm prices
While volumes of good retail-quality vans remain in short supply, Ward thinks prices will remain firm, with the 10%-plus monthly price increments seen in 2009 remaining.
"Prices are likely to be more steady and more in tune with typical seasonal adjustments than we have seen over the previous 24 months," he says.
With increasing confidence in the small business sector, used van demand is outstripping supply and keeping prices firm. This is set to stay, as there is no indication volumes are going to rise much in 2010, and a third successive year of lower new van sales means fewer used vans available to the market for some time to come.
Ward adds: "The effect of fewer new vans being sold will travel through the market like a ripple and it will cause a relative shortage within certain age profiles of vans in the used market.
"In simple terms, it means in 2012 there will be a shortage of three-year-old vans. That will continue to be the case until the new van market recovers some of the volume it has lost."
He concludes: "It should also mean plenty of demand from buyers for the stock that is available and relatively firm average values going forward."
In terms of companies buying new vans now to de-fleet in three years' time, rarity can add a great deal of value - a van bristling with the latest extras will always attract a lot of attention from buyers and that demand will result in a stronger price at auction.
"The reality is that vans gradually get the extras that are seen on the car market, and over time, these extras become expected," says Ward.
"For example, an LCV without power steering is now unthinkable and the same will eventually apply to satnav and aircon. 'Nice to haves' include metallic paint and alloy wheels, except on 4x4 double cabs, which really need all the glitz!" says Ward.
So, vans that have air-conditioning, electric windows, central locking, power steering and in-van entertainment are much favoured over more basic models.
Another changing factor in the van market is downsizing. Whether it is led by legislation or economic conditions, downsizing - or rather 'the right-sized van for the job' - is going to become increasingly important in the future.
Ward comments: "The few examples of the Peugeot Bipper and Citroen Nemo we have seen in the past 12 months have sold very strongly indeed. If you can't downsize your van - because you fit replacement windows or carpet for a living - you may be looking for other ways to cut costs, and there are already signs that the LCV sector is looking to broadly lower emissions and use fuel more frugally."
