REMARKETING: Demanding more metal
15 December 2016
Author: James Dallas
Despite the turbulent economic and political backdrop caused by the ongoing fallout from Brexit, the used van market appears to be in fine fettle heading into the final months of the year, with little indication that businesses were hedging their bets and delaying purchasing decisions.
BCA announced in September that during the previous month the overall average value of used LCVs sold at its auctions rose above £6,000 for the first time. According to BCA, the average van sold during August went under the hammer for £6,089, an increase of £158 (2.6%) month on month, and up by £582 (10.5%) year on year.
BCA reports both conversion rates and demand have steadily improved during 2016, in contrast to the state of the market 12 months ago.
Duncan Ward, BCA's head of commercial vehicles, says: "Demand is currently far outweighing supply.
"To put it into context, a year ago the headline average value was falling, and fleet and lease vans recorded their lowest monthly value since July 2013. Since then, average values have steadily improved, climbing across the board by around 10.5%."
He says the construction and civil engineering industries as well as the courier and online delivery sectors have driven demand.
CD Auctions' boss Andy Brown agrees that the market has defied gloomy forecasts at the start of
"So far the expected drop in values has not come through despite high volumes coming into the used market place. Consistently strong demand for used vans has held prices at higher levels than what was expected at the beginning of 2016," he says.
But Ward cautions that, as ever, condition remains vitally important, particularly with rising stock volumes in the wholesale sector increasing the likelihood of indifferent quality vans entering the auction halls.
"Buyers continue to focus on well-presented, good quality CVs that can be ready for retail almost immediately," says Ward.
"It is vital for sellers to prepare their vehicles well and appraise and value them in line with market sentiment as poorer-presented vans must look good value for money if they are to compete."
Andy Picton, senior CV editor at Glass's Guide, concurs that clean stock is the hottest property and adds that auction buyers also target vans with low mileage and a full service history.
"Traders don't want to buy-in work," he explains. "Time is money, and money spent on repairs when it should be ready for sale is seen as bad news. So they would rather pay more and take home a ready-to-retail vehicle."
LCV industry consultant Tim Cattlin believes intense competition in the new van market is affecting the used sector. He says heavy discounting and a resurgence of pre-registration activity has placed pressure on the values of late-plate models coming to auction, particularly those arriving after short-cycle rental deals.
"The newer the van the greater the problem," Cattlin claims. "There is no end in sight to this issue so long as manufacturers partake in providing unprecedented levels of support in order to keep competitors at bay and [maintain] that all-important market share."
Cattlin says supply and demand have been well matched in 2016, with strong interest shown in clean, ready-to-retail stock.
"There appears to have been little wavering as a result of the Brexit vote," Cattlin notes, although he forecasts more pressure on used values next year with the glut of new models registered over the past four years starting to reach the used arena - which should mean more bargains for second-hand van buyers.
Cattlin asks: "Where is the additional demand to absorb these tens of thousands of vans into the vehicle parc?"
With negative economic indicators beginning to surface in late 2016 Cattlin warns that demand for used LCVs could shrink, hitting prices.
He concludes: "Potentially this could be an excellent year for the used buyer - plenty of stock to choose from with traders competing against one another using price as a weapon."
'It should come as little surprise that both Ford and VW have performed well this year'
Looking at demand this year, Andy Picton, senior CV editor at Glass's Guide, says: "The strongest interest is for small and medium-sized vans, especially those with crew van conversions or car-like specification with metallic paint, often found in the Ford Transit Custom Limited and VW Transporter Highline. As we are moving into the winter season, lifestyle 4x4 double cab pick-ups are also proving popular."
Picton says 3.5t vans are in ready supply. Most have been worked hard and, combined with high mileages, are not seen as the most attractive stock.
The best examples of ex-utility stock are doing well, according to Picton, but he cautions that an oversupply sees values fall, as does a batch in poor condition.
Crew vans, higher-specification models, higher horsepower, automatic gearboxes and flagship Land Rover Defenders are in short supply and are seen as good news, he says.
There has been a good supply of the Renault Trafic and Vauxhall Vivaro through the year too, Picton adds, with the best examples performing to Guide. Likewise, the Citroen Berlingo and Peugeot Partner have been regular sightings at auction, with most performing well.
There has been no shortage of the previous-generation Transit 260/280 SWB van, still a trade favourite, he says, and a growing number of the basic-specification Ford Transit Custom are now being seen at auction.
"It should come as little surprise that both Ford and Volkswagen have performed well this year," Picton says.
"The Transporter seems to be on a lot of buyers' shopping lists, as does the Caddy. Ford has a complete range of commercial vehicles from the Fiesta Van to the 2.0t Transit and on to the Ranger pick-up. The Ford Fiesta Van in Sport trim is a popular retail offering, whilst the latest generation of the Transit Connect has been well received due to its diverse range of models and trim levels and improved fuel economy. The Transit Custom has gained plenty of admirers since its launch four and a half years ago."
In the large van sector Picton says the Iveco Daily with its Hi-Matic auto gearbox is winning plenty of friends.
Picton points out that used van demand is heavily influenced by geographical location. Where London-based operators are more likely to require a modern van with an economical engine and lower CO2 levels to avoid additional charges, an owner-driver outside of the capital who lives and works locally and travels in their van for only a few minutes a day would not be interested in a late-plate van but would prioritise price and carrying capacity.