A new confidence emerges after exceptional performance for used LCVs

By Matthew Davock, director of commercial vehicles at Manheim UK

Light commercial vehicles (LCVs) have continued to dominate the market this year, with strong quarterly results for both new and used stock.

For new LCV stock, registrations rose for a fourth consecutive month in April 2023, up by 17.3% on year-on-year statistics showing an improved return of consumer confidence following the supply chain issues that have affected the market since the pandemic.

With returning confidence, vehicle stock cycles are now stabilising. Fleet upgrades are heading back to normal patterns, with vehicles returning to be de-fleeted in their thousands.

In fact, overall volume passing through our auction houses is up 19% year-on-year, and we’ve de-fleeted more than 27,500 vans and trucks already this year.

With higher stock volumes, it might be expected that prices would fall - but that’s not the case.

Market demand remains buoyant and vehicles of all ages and mileages are being snapped up by buyers. This has given auctioneers and de-fleet services a boost, as they are eager to get the market on a more stable growth path.

LCV lifecycles extended

The exceptional volume of LCVs being de-fleeted in Q1 has revealed some interesting insights around why 2023 has jump-started the market.

Companies now have a full calendar year of post-pandemic data to draw on from 2022. Business trajectories and five-year plans are back in action, bolstered by investment and growing confidence.

Additionally, fleet upgrades have returned to the top of the business agenda after a two-year delay.

Our figures show that vehicles coming through to auction are, on average, 81 months old (an increase of 24 months on pre-pandemic numbers), and typically have 84,379 miles on the clock.

This isn’t surprising - many companies delayed fleet upgrades as they waited for market stabilisation and supply chain issues to be resolved.

What is surprising is that demand for older and more worn vehicles remains high. Even vehicles that are more than 10 years old are selling well and commanding good prices.

Average vehicle sale time has also dropped, with 85% of sales going through first time.

Used vehicles offer excellent consumer value without excessive outlay. The price difference between a brand new and two-to-three-year-old model can be as much as 42%.

Auctioneers have highlighted that the two-to-three and five-to-six-year-old products sit within the “sweet spot”, where demand is at its highest.

However, demand for older vehicles also indicates buyers are willing to put in the legwork to refit and refurbish.

Many auctioneers have reported that older, more ‘tired’ stock is still returning in great condition, extending the product lifespan.

Weighing it up

The most popular LCV weight range in Q1 was the 2-2.5 tonne, reporting exceptional growth of more than 66%.

Another surprise was the popularity of small volume pickup and 4x4 utility segments, reporting astonishing growth of 29.3% and 183.4% respectively.

Vans up to 2 tonne and within the 2.5 - 3.5 tonne weight range were both down, but promising growth in other classes means sellers provide some cause for optimism.

A decision many fleet managers are now facing is when to convert to electric vehicles (EVs).

With the 2030 deadline creeping closer, the choice remains to complete another cycle of internal combustion engine (ICE) vehicles or switch to EV now.

Strong demand for Euro 6 stock suggests fleets are keen to transition to ULEZ-compliant and then EV vehicles sooner than later; Euro 6 stock represented 60% of all stock sold in February 2023.

As more early adopters of EV and ULEZ-friendly vehicles report back to manufacturers and vehicle profiles improve, additional weight classes will become more viable options for fleets. 2023 might be the year auction houses start to see de-fleeted EV LCVs returning in force, ready to support the next generation. 

There’s no denying it’s been a difficult few years for commercial vehicles. Thankfully, fleet has always been a resilient sector, something which has been rewarded with exceptional Q1 results.

It’s great to see stock cycles returning to usual patterns, and it’s refreshing for our auction houses to have stock in a variety of ages, mileages, and prices coming through. Buyers are keener than ever to get their fleets up to scratch so they can meet business demand.

No matter your price point, stock levels are promising across the board. We’re anticipating demand to grow in line with supply volumes and the strong start to Q1 shows us that fleets are getting back on the road in force.