Tag Archives: vans

Manheim says shortage of large vans is driving up sales of smaller vans

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Manheim logoCommercial vehicle buyers are purchasing more car-derived vans (CDVs) and small panel vans, due to a chronic lack of larger panel vans (over 3.5t) in the market, according to the latest market analysis from vehicle remarketing firm Manheim.

According to Manheim’s sales figures, the volume of smaller vans entering the used market has risen by around 8% over the last year, while the number of larger panel vans (>3.0t) reaching Manheim’s salerooms has fallen by 14%.

Manheim’s figures show that the that price of a larger panel van (>3.0t) — a traditional fleet workhorse — peaked at £5,297 in May, prompted by continued high demand and a modest fall in average age and mileage, which fell from 62 months to 61 months and 86,062 to 84,510 miles respectively.

Manheim van selling prices May 2013-2014

Average LCV selling prices at Manheim, May 2013-14 (courtesy of Manheim – click to enlarge)

Across the market as a whole, the average value of a used van has risen by 9.2% to £4,741 over the last year, despite an increase in the total volumes of vans hitting the used market, as Matthew Davock, head of LCV at Manheim, explains:

“2014 has seen a continuation of the record levels of demand in the used van market. We have seen two months of significant year on year increases in van de-fleets; these vans have been snapped up by eager buyers looking to secure price range quality stock.

“Interestingly, the mix of vans has changed over the past twelve months, with many more car-derived and small panels vans coming up for sale. Conversely, the lower volumes of larger panel vans we’re seeing is, we believe, driving a shift in buyer behaviour toward smaller vehicles.”

Age is no barrier to used van demand, says Manheim

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Manheim logoThe recent upturn in new van registrations may be a welcome relief for UK van dealers, but many van operators are continuing to run vans to much higher ages and mileages than previously seen, according to vehicle auctioneers Manheim — echoing the long-running trend reported by their competitors, BCA.

Nearly half of all used vans hitting the market in February were over seven years old, according to the firm — 36% of car-derived vans, 46% of small panel vans and 45% of large panel vans (>3t). This shortage is attributed to two, related, factors — the dramatic fall in new van registrations since 2008/9, and the causal fact that many businesses have been delaying fleet renewal as long as possible in the light of tightened circumstances and questionable availability of credit — two facts which have helped support and buoy business for long-term and daily van rental companies during the same period.

Matthew Davock, head of light commercial vehicles at Manheim, says he believes the tide is turning:

“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.”

One side effect of this has been to support the value of used vans — in an automotive market led by the UK’s obssession for new cars, constrained circumstances have forced van buyers to appreciate the value offered by older models, according to Mr Davock:

“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.”

Small vans in particular have benefited from this trend — Manheim’s price data shows that the average hammer price for small vans has risen by 22% over the last year, from £3,957 a year ago to £4,846 in February 2014.

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.

Used van prices hit new record in February

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BCA commercial vehicle auction saleAverage used van prices hit a new record of £5,345 in February, leaving them 11% higher than one year ago, according to the latest sales figures from vehicle auctioneers BCA.

Despite the continued increase in average age and mileage, demand for used vans remains greater than supply, pushing up prices massively ahead of inflation, as these figures show:

All vans Avg Age (mnths) Avg Mileage Avg Value Sale vs CAP
Feb 2013 58.55 78,770 £4,789 103.05%
Feb 2014 60.73 81,346 £5,345 102.57%

Data courtesy of BCA (www.british-car-auctions.co.uk)

BCA’s General Manager – Commercial Vehicles, Duncan Ward, commented:

“As BCA has been reporting for many months, demand remains high for used light commercials, reflecting the improving economic messages from a variety of sources. Many small and medium-sized enterprises (SMEs) in the UK are now upbeat about their growth prospects this year and this sector is a big buyer of used light commercials. In fact, demand remains strong across the board, from car sized vans through to large panel vans and there is plenty of competition for any van presented in ready-to-retail condition.”

“This time of the year also typically sees an uplift in the building and construction industries.  As a lot of building activity was curtailed due to the wettest winter on record, we expect to see even more interest in tippers and drop sides as the weather improves in the weeks ahead.”

Recent strong growth in new van registrations should eventually feed through to the used market, but it could be 12 months or more until this really becomes apparent, suggesting that secondary market demand will remain very strong through the spring and summer of 2014.

Used Van Prices Hit New Record In January

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BCA van auction at Blackbushe

Used LCV values hit a new record in January 2014, but price growth appears to be slowing.

The relentless march upwards of used van values continued in January, as I predicted.

According to the latest figures from vehicle auctioneers BCA, average values for all light commercial vehicles increased marginally in January 2014 to £5,322 – a rise of £11 compared to December 2013.

January’s average value was the highest since BCA began reporting monthly sales in 2005, and was the sixth month in a row that average values across all light commercial vehicles exceeded £5,000.

On a year-on-year basis, January’s used LCV prices were 13.9% — or £653 — higher than in January 2013, despite the average age of vans being sold having risen by 1 month over the same period.

The average sale price relative to the CAP [book] price remained unchanged on one year ago, with vans selling for an average of 102% of their book price:

All vans Avg Age (mnths) Avg Mileage Avg Value Sale vs CAP
Jan 2013 56.64 80,736 £4,669 102.24%
Jan 2014 57.90 79,654 £5,322 102.24%

Data courtesyt of BCA (www.british-car-auctions.co.uk)

Duncan Ward, BCA’s General Manager – Commercial Vehicles, confirmed that January had delivered as expected:

“January essentially delivered more of what we saw throughout the previous 12 months – a shortage of stock allied to decent levels of demand that generated exceptionally strong prices in the used van market.”

“With stock remaining thin on the ground, buyer demand is focused on the best quality commercial vehicles and this is driving values up.  BCA saw lots of activity in the online arena with around a quarter of all vehicles being purchased by internet bidders and BCA’s Video Appraisals are helping to create additional confidence for remote buyers.”

Mr Ward also confirmed that used van prices were rising at the bottom end of the market, in a sign that the rising tide of demand is lifting all vans, regardless of quality or age:

“The rise in average prices at the ‘value-for-money’ end of the market also continues and dealer part-exchange values reached a new record level. In fact, demand has been right across the board, from older higher mileage vans through to younger ex-fleet and lease vehicles.”

Although average values fell in both the ex-fleet/lease and nearly-new categories, BCA says that this was largely due to changing model mix in the fleet market and the volatility created by very limited volumes in the nearly-new market. Overall, demand remains strong, although my interpretation of the graph below, showing all sales, is that the growth in demand may have reached a peak and be beginning to slow, as you’d expect in a market where new van registrations are rising strongly:

BCA LCV prices 2011-2013 (Jan 2014)

BCA LCV prices 2011-2013 (Jan 2014)

Chancellor Delivers 3% Tax Hike For Van Drivers In Autumn Statement

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MoneyThe Chancellor used last week’s Autumn Statement to sneak in a widely-ignored tax increase for van drivers who are allowed to take their vans home and use them for unrestricted personal use.

Currently, drivers who use their vans for personal use pay a benefit-in-kind (BIK) charge each year, which is added to their tax bills.

The current van BIK rate is £3,000 for van use, and an additional £564 for drivers who get free fuel. A basic rate taxpayer will pay 20% of these amounts, so will have £600 added to their tax bill for van use and £112 for fuel.

The value of the BIK will be increased by 3% from April 2014, meaning that van users will now pay tax on a BIK charge of £3,090 for van use and £581 for fuel. For a basic rate (20%) taxpayer, this equates to £618 and £116.

It’s worth noting that these rules only apply to drivers who use their van for personal use. Simply taking it home with you is no longer enough to incur a charge, and there is also an exemption for using the van to commute and to make occasional, insignificant private use, such as leaving work to visit the dentist, or going to the tip once or twice a year (click here for HMRC factsheet).

To be honest, I can’t imagine that there are many employers left who give employees unfettered personal use of their vans — even less so with unlimited free fuel. I suspect this is most likely to apply to small business directors and owner-operators who do make unlimited personal use of the VAT business vehicles.

Van Registrations Surge Higher In November As Sales Approach 2008 Levels

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The UK’s commercial vehicle (CV) market continued to grow in November. According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), new registrations have topped 300,000 over the last twelve months, for the first time since 2008.

New CV registrations rose by 22.7% in November, compared to the same period last year, with van registrations rising by 19.4% to 22,647, and truck registration surging an impressive 39.3% to 5,410. So far this year, van registrations have risen by 11.7%, while truck registrations have climbed by a more modest 6.5%:

UK van and truck registrations: 2013 and % change on 2012

November % change Year-to-date % change Rolling year % change
Vans 22,647 19.4% 250,124 11.7% 265,929 9.8%
Trucks 5,410 39.3% 44,867 6.5% 48,446 3.7%
Total 28,057 22.7% 294,991 10.9% 314,375 8.8%

Data courtesy of SMMT (www.smmt.co.uk)

Mike Hawes, SMMT Chief Executive, says that the gains are due to a mixture of environmental, technological and economic factors:

“The November commercial vehicle market rose 22.7%, continuing the strong upward momentum we’ve seen over the past four months. With engine technology developments driving up the truck market, plus van owners and operators responding positively to this year’s economic recovery, the sector is on course for its best performance in five years.”

As the graph below shows, van and truck registrations have both trended firmly higher since the middle of this year:

New CV registrations, 12-2009 to 11-2013

With car registrations also hitting new highs in November, car and van dealers are going to be looking forward to bonus-fuelled Christmas celebrations. Let’s hope this year’s increases are sustained into 2014.

Ex-Rental Vans Attract Top Prices At Auction

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New figures from vehicle remarketing specialist British Car Auctions (BCA) show that ex-fleet vans — such as those from large van hire fleets — attract the strongest prices at auction, as professional buyers complete for these high quality, one-owner vans, which typically have a full service history.

According to the BCA data, values for vans from fleet and leasing companies have improved by £110 (1.7%) in October compared to September to £6,518 – the third consecutive month a record value has been achieved and the seventh record value seen in 2013.

The average price of ex-fleet and lease vans has risen by an astonishing 25% over the last year, as the table below shows.

Fleet/Lease Avg Age (mnths) Avg Mileage Avg Value Sale vs CAP Sale vs MRP
Oct 2012 45.24 72,352 £5,201 101.52% 32.60%
Oct 2013 40.84 69,547 £6,518 103.16% 37.49%

Data courtesy of BCA (www.british-car-auctions.co.uk)

The fall in average age is interesting, as there seem to be two possible interpretations:

  1. Large fleet operators are deliberately shortening their replacement cycles to boost residual values, thus lowering their total cost of ownership.
  2. Improved economic conditions mean that fleet operators are feeling more confident and want to reduce the average age of their vans to improve their image and avoid the maintenance requirements of older vans — in particular, they may be starting to defleet their vans before they are due for their first MOT test, at 36 months.

I don’t know which — if either — of these is the explanation for the five-month reduction in average age, but it is noticeable that the average monthly mileage of ex-fleet/lease vans has also risen over the last year, from 1600 in October 2012 to 1700 in October 2013. This could point to an improvement in business conditions.

Van Sales Collapse Continues To Power Used Van Market To Record Levels

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Used van prices remain firmly supported by strong demand last month, according to the latest figures from auctioneers BCA.

The average value achieved of £5,151 was just £7 below September’s all-time record of £5,158, and was nearly 16% up on the average value achieved in October 2012. Sale prices remained well above CAP prices, as this table shows:

All vans Avg Age (mnths) Avg Mileage Avg Value Sale vs CAP
Oct 2012 58.42 79,452 £4,447 101.87%
Oct 2013 59.28 80,725 £5,151 103.90%

Data courtesy of BCA (www.british-car-auctions.co.uk)

This graph shows how strongly prices have risen over the last two years, thanks to an underlying shortage of supply caused by the slump in van sales in 2009, from which the UK’s van market has still not recovered, as I discussed last week:

Used van prices to October 2013

Average used LCV prices at auction for the two years to October 2013, courtesy of BCA.

BCA LCV auction

Vans and 4x4s going under the hammer at a BCA LCV auction.

Duncan Ward, BCA’s General Manager, says that the problem is a lack of used supply from big corporate fleets, which typically feed the top end of the used market:

“This stock shortage is a long term issue that results from collapse of the new van market in 2009.  Four years on, the big corporate fleets that provide the bulk of the ‘first time to market’ used vans simply do not have the same volumes to sell.

Professional buyers who typically buy corporate vans at auction are finding they have to bid harder and higher to secure the same stock and this trend is set to continue.  And in terms of seasonal movements, the onset of bad weather usually marks an increase in demand for four wheel drive vehicles and we can expect to see average prices for 4×4 pick-ups rise in the coming weeks.”

“While new van sales are recovering, they are nowhere near the levels seen in pre-recessionary times.  The used sector shortage is set to continue until new van volumes pick up significantly and the economy improves enough to generate a bigger churn of vehicles in the marketplace.”

As I discussed last week, sales of medium vans (Transit-sized vans), which accounts for around 60% of UK van sales, remains nearly 20% lower than it was in 2003 and is down by around 30% on pre-recessions peak levels. Clearly there is a lot of ground to make up still — and so business is likely to remain brisk for those in the used van trade.

One side-effect of this is that van hire companies, which traditionally buy new and keep their vans for a short time, should continue to achieve strong residual values when they sell their vehicles, which will, in turn, help keep rental rates down, adding to the attraction of renting, rather than buying, for businesses whose need for vans varies through the year. In effect, van rental companies are shouldering the burden (quite profitably) of financing and supplying flexible capacity to van operators, who are happy to employ a ‘pay as you go’ model and reduce their finance commitments.

In my view, this situation could continue for some time and may even become permanent, to some extent, as SMEs find it harder to get competitive financing than they used to, while van hire companies are able to enjoy economies of scale and provide ‘all-in’ rates for flexible hire of nearly new vans that make owning or leasing seem unattractive.

Ford Transit Sales Highlight Shrunken Van Market

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Ford Transit Custom High Roof

Regular updates and new models like the Transit Custom have protected Ford’s market share, but there’s no hiding the shrunken state of the UK’s medium van market.

It’s no secret that van sales remain depressed compared to pre-recession levels, but some recent sales figures from Ford enabled me to see just how big this decline has been.

Ford put out a press release in the wake of yesterday’s SMMT van registration figures showing that its share of the European medium van market is at its highest level for more than a decade. More interesting than that were Ford’s historic sales figures for Transit vans since 2002.

Since the medium van market accounts for roughly 60% of UK van sales, it’s a key barometer of the state of the economy. So how is UK plc doing?

Still down 30%

In 2003, Ford sold 72,078 Transits, giving it a 33.2% share of the UK market. In 2012, the blue oval sold 55,259 Transits, giving it a 30.7% share of the UK market.

Using these figures, we can see that the UK medium van market has shrunk from 217,102 in 2003 to 179,996 last year — a 17% reduction over the last decade.

Ford’s figures show that medium van sales peaked in 2006, when sales hit 257,625, before dropping to a low of 134,778 in 2009. So far this year, Ford’s figures indicate that 169,353 medium vans have been sold in the UK, suggesting that the year-end figure will be slightly higher than in 2012, but medium van sales are likely to remain around 30% below the pre-recession peak, providing a stark reminder of how much ground the economy has lost over the last five years.

Used market remains key

Although van hire firms have generally maintained their fleet renewal policies through the recession, there has been a trend towards running vehicles slightly longer, and many other fleet operators and small businesses have definitely kept their vans for longer and delayed new purchases, all of which has helped to contribute to the shortage of decent quality used stock and the ongoing increase in used van prices, which are at record levels, according to auction data.

Ford’s recent move to introduce capped-price servicing for cars and vans over four years old reflects this shift in the market — the firm wants to develop a relationship with owners of older vehicles who might previously have been ‘lost’ to main dealers, in the hope that they will eventually buy a new van, as the economy begins to recover.

However, the overall message is clear — the economy still has a lot of lost ground to make up.

Van sales soar 26.3% in October – SMMT

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Van registrations rose by an impressive 26.3% in October, taking the total increase for the year-to-date to 11%, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

The figures mean that the overall commercial vehicle market, including trucks, is up by 9.8% this year, compared to the same period last year:

UK van and truck registrations: 2013 and % change on 2012

October % change Year-to-date % change Rolling year % change
Vans 22,473 26.3% 227,477 11.0% 262,257 6.6%
Trucks 5,105 32.0% 39,457 3.2% 46,921 -0.9%
Total 27,578 27.3% 266,934 9.8% 309,178 5.4%

Data courtesy of SMMT (www.smmt.co.uk)The increases come on the heels of a 10% increase in van registrations in September, and October’s data show that as expected (by SMMT), truck registrations have turned around in October and are now positive for the year to-date — although they remain lower on a rolling year basis.

“Both the van and truck markets showed great strength in October boosting the sector by 27.3% and taking the 2013 growth rate to almost 10%,” said Nigel Base, SMMT Commercial Vehicle Manager. “We anticipated this late strength in the truck market and SMMT has raised its forecast for van registrations to 264,100 a 10.2% rise on last year.”

What’s hot, and what’s not?

As always, the increase in registrations was not evenly dividend across the different weight categories and types of CV. In the van market, the biggest percentage increase was in the 2.0-2.5t category, where sales rose by 45% from 2,417 in October 2012 to 3,513 in October 2013.

However, the biggest increase by far in volume terms was in the 2.5t – 3.5t market (Transit-sized vans), where sales rose by 32% from 10,187 in October 2012 to 13,447 in October 2013. This increase suggests that big fleet operators are proceeding with fleet renewal plans and that other big buyers — such as van hire companies — are also experiencing strong demand for new vans.

Losers in the van category include sub-2.0t vans, where sales fell by 3.3% from 2,718 to 2,629. I believe that this is partly because there simply are not very many sub-2.0t vans anymore — car-derived vans like the Fiesta and Corsa vans are still under 2t, as is the pint-sized Citroën Nemo and its rebadged siblings, but there aren’t really any others anymore, and they form a definite minority market.

In the truck categories, I was interested to see a 41.7% surge in rigids between 3.5t and 6.0t (see my story on this topic yesterday), while sales of rigds over 16t were up by 34%, suggesting that retail, food distribution and construction companies — the main users for this class of vehicle — are feeling more confident about the economy.

Finally, sales of 3-axle artics were up by 36.6% in October, compared to the same period last year, suggesting that operators are biting the bullet and buying into Euro 6 before they are forced to, and that they can see healthy forward demand for their fleets’ services.

All in all, an encouraging picture, if it can be sustained.