For some months now, I’ve been reporting on falling new van registration figures each month — they fell by 2.5% in June, for example. What I haven’t mentioned is the effect that low volumes of new van sales are having on the used van market.

Naturally, if fewer new vans are sold, fewer old ones enter the secondary market. What this means in practice is a particular shortage of good quality used vans under three years old — at this age and mileage, postponing replacement for another year is an easy decision for a cash-strapped small business.

Pay more, get less

What has been happening is that used van prices for all sizes of vans have been inching up, but so have age and mileage. In other words, buyers have been being forced to pay top money for older, higher mileage vans in worse condition.

As a result, used van prices were slightly higher in June 2012 (£4,171) than in June 2011 (£4,140), despite  average mileage having increased from 69,129 to 76,661 and average age having risen from 51.59 months to 58.21 months — both figures suggesting vans are being kept for an extra six months before being replaced.

Clearly, this trend can’t continue — and perhaps it is nearing its conclusion, as used prices were lower in June than they have been since last August.

The latest auction results from BCA confirm that this trend might be reaching a common sense limit, as Duncan Ward, BCA General Manager, explains:

“In fact, June brought a much needed reality check to the used commercial sector.  There was almost an expectation from vendors that dealers will continue to pay ever higher prices for older, higher mileage vans because stock is short in supply.   However, buyer confidence in the wholesale market is quite fragile and there is an increasing reluctance to buy poorer condition or excessively travelled vans because of the investment required to get these vehicles ready for retail.”

The graph below shows how used van auction prices have changed since 2010:

BCA used van prices June 2012 (graph courtesy of BCA)

It looks as though sellers looking for top prices are going to have to present their vans in exceptional condition, as Duncan Ward confirms:

“We have been advising our sellers for some time to review their remarketing activity to ensure their vans are presented in the most saleable condition.  Vehicles must be appraised sensibly and methodically and valued in line with market sentiment.  Pre-sale preparation and presentation is important, and all the documentation and service histories should be present when vans are sold.”

Falling used van prices should at least bring some semblance of fairness to the market, with buyers seeking rare, low mileage and nearly new vans continuing to have to pay a premium, while older vans go cheaper.