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REMARKETING: Used van market shakes off the recession blues at start of 2011

Date: 03 May 2011

Leading auction firms have report a good first quarter of 2011 for light commercial vehicles in the remarketing arena. Rachel Burgess reports

The van market fell off the edge of a cliff during the recession. However, now that businesses are starting to get back on track, commercial vehicles sales are improving and remarketing companies are reporting a strong performance.

"The wholesale van market has performed strongly as the UK has come out of recession," says James Davis, Manheim Remarketing general manager, commercial vehicles. "With new-vehicle sales slow to recover, the value and choice offered in the used van arena is clear for all to see. In 2011 this has been no exception; in Q1 the demand has remained strong. I believe this has been driven in part by SMEs looking to re-invest profit in a used commercial vehicle rather than paying it as tax to the HMRC."

Duncan Ward, BCA general manager, commercial vehicles agrees: "2011 has started off pretty well with plenty of demand from both professional buyers and end-users for commercial vehicles, continuing the trend of 2010.

"Following the strong start to the year, demand has held up well both in February and March, and overall the market seemed pretty confident, although there were patches when buyers seemed to turn off." According to Ward however, there are still issues relating to poor stock mix resulting from an influx of vans from business failures and liquidations, often in poor condition or non-retail colours and with a low specification. He thinks this is likely to continue in the months ahead. But Ward adds: "Overall, buyers have so far this year remained consistently upbeat and willing to bid on almost everything, while only pushing the barriers on the exceptionally clean, rare or low-mileage vehicles. However, an increase in volume seems to have had a neutralising effect on what is traditionally the most buoyant time of the year."

Indeed, Davis says there has been year-on-year volume increases in excess of 30%, which he puts down to consolidation in the daily rental sector and other industries.

"The good news is that these vehicles are the most popular with the right specification, badge and in the main, good condition. Buyers tend to steer away from vans requiring major rework as timescales can often mean they lose a retail enquiry. An increasing number of utility fleets are replacing vehicles so there is a healthy level of older product, again catering to a variety of budgets."

He continued: "Some traders we have spoken to are struggling to fill their sites and those who would normally stock 50-plus vans are down near the 25 mark. These traders are having to travel further, or log onto new sales, to secure stock. Overall, the wholesale van market remains very robust."

Nearly new

Particular popular in the LCV resale market is nearly new vans says Davis, "with used buyers recognising the great value they offer versus new". And clean, low-mileage, retail-spec vans are very scarce and consequently much sought after, as is anything rare and unusual, adds BCA's Ward.

Ward says there has been erratic demand for 4x4 double cabs after poor winter weather saw prices go through the roof overnight and then stay there throughout the arctic conditions. Demand has eased off recently as weather has improved, but the 4x4 double cab sector is "reaching a wider audience than previously, with caravanners and rural pursuits enthusiasts enjoying the pulling power and sure-footedness these vehicles offer, as well as the extra space".

There has also been an upturn in the car-sized sector this year, says Ward. "Even with such high numbers available, demand on the Connect, Combo, Berlingo and Astra have remained constant. It's a similar story in the 1.0-tonne sector where hundreds of Vivaros, SWB Transits and Transporters are regularly being sold every day. Add air-conditioning and a good colour and it just gets better.

"In contrast, LWB high-roof vans seem to have had opposite fortunes. In this sector condition is king."

Reactions to the eco-branded vans being introduced by manufacturers can vary depending on where they are sold, according to Ward: "Sell a low-mileage eco-van within reach of the M25 and you will attract an eager audience of buyers because of the congestion charging and LEZ. But the same vehicle is much less attractive if sold to a local buyer base in the North, for example."

The remainder of 2011 will see the volume of vans in the wholesale market fall towards the end of the year, predicts Manheim's Davis. "In 2012 and beyond we will start to see a wholesale van volume shortfall as dictated by the fall in new registrations back in 2008 as we entered recession. New van registrations fell around 40%, so that volume 'time bomb' is coming down the track."

He adds: "With supply undoubtedly increasing as the economy recovers, a fall in supply will serve to place upward pressure on used-van values."

Ward echoes this as he expects the two- to three-year old LCV to become "an even more precious commodity than ever as a natural and direct result of the new registration crash witnessed in 2008 and 2009".

"When volumes at this age profile are almost halved then competition to own any available will be extremely fierce," he says.

The usual rules of remarketing apply to vans to ensure fleets get the best value at de-fleet time: presentation and condition is vital and a good specification will help attract the bidders.

Ward comments: "When you are offering upwards of 400 vans in some of our bigger sales, you really notice how the buyers gravitate towards the best-presented, well-specified vehicles. A complete service history is, of course, essential to give buyers confidence, as well as sensible valuation."

Specification is particularly important. For example, panel vans of every size and shape should be ply-lined and where available a side-loading door should be specified. By adding these options alone, sellers can add in value over similar standard vans. Plus, ply-lining makes a van much more likely to be in a more saleable condition after three or four years' hard work.

Ward says options such as air conditioning will also add more value. "And trim and finish are often overlooked in terms of options, but can add considerable value to the right vehicle. Self-employed tradesmen often favour a van that bristles with 'car-like' options and a good retail colour rather than a standard white finish. But obvious corporate colour schemes can hit values."

He concluded that high fuel prices continue to contribute to rising inflation, as well as the knock-on effect of rising costs across all areas of business.

"This means small businesses and solus traders are likely to be looking to reduce their costs going forward, and considering these sectors are the biggest buyers of used vans this could have a significant impact on demand - and therefore prices - as the year rolls on."