Average used van values on the rise again

Average LCV values continued to rise in March, with new record values set for fleet and lease and dealer part-exchange vans, according to BCA. 

The average March figure of £4,860 for all LCVs was the highest on record for any month since Pulse began reporting in 2005. 

Average age rose slightly to 58.8 months, while average mileage increased by over 2,000 miles to 80,800 miles. Year-on-year, March 2013 was ahead by £633 or 14.9%, with age and mileage rising over the period.  

Values in the fleet and lease LCV sector improved again in March, rising by £84 (1.4%) to £5,907 - the fourth consecutive month where a record average value has been achieved for corporate CV stock.

Performance against CAP fell back by half a point to 102.7%, while retained value against Manufacturer Recommended Price improved to 35.43% from 34.9% in February.

Year-on-year, the value evolution for corporate stock remains significant - March 2013 was £926 (18.5%) ahead of the same month in 2012 – with average age and mileage down slightly.

It was a similar story at Manheim, which suggests that a “chronic shortage” in the volumes of commercial vehicles being sold at auction has pushed the average price of LCVs up to a record high of £4,417 in March. 

It also reports that it’s a trend that is set to continue for the foreseeable future, with a record low ‘days to sell’ figure of 12 days in March.

The year-on-year headline increase of £281 (or 6.8%) compounds the month-on-month increase of £134 (3.1%) and could either stabilise or continue to increase in the coming months, dependent entirely on retail activity and wholesale supply.

Many LCV operators have kept vehicles in service longer, meaning vans are coming to market both older and with a higher mileage, so it is becoming increasingly difficult to source good quality used LCV stock, says Manheim.

However, Manheim is advising close scrutiny of market data, specifically when it comes to the contribution made by each van segment.

While headline age and mileage can best be described as stable over the last 13 months, there are considerable volume swings in segment age categories month to month.

It is at this level of detail that a true understanding must be sought.

Both car derived vans and small panel vans have seen their volume increase month-on-month, with car derived vans jumping three per cent in volume from February to March.

In the case of car derived vans Manheim has also seen a 10% increase in volume sold in the 36 to 48 month bracket.

It is a combination of these two factors that has driven their average selling price to an all-time high of £3,442. While March has seen growth in volume rise for some sectors of the market, it has also seen a decline in volume in others.

The small panel van has historically been the most favoured vehicle by SMEs and, despite an increase in mileage of 8,511 and three months in age, the selling price has risen again from £4,072 to £4,140 year-on-year.

Small panel vans are being run longer than any other panel van segment and, although they are not being worked as hard as the large panel vans in terms of annual mileage, the differential is closing.

Tim Spencer, senior group auctioneer at Manheim, said: “The record levels of demand for car-derived vans reflects their lower average value.

“Dealers prefer to stock these popular fast turn models so that cash flow can be spread over two or three vans rather than one late and low large van.

“I am sadly seeing more and more damaged and high mileage 3.5t panel vans in the halls, while there is a two tier market in terms of condition and increasingly by van segment too.

“The trade is certainly hesitant to stock damaged vans, especially with the retail market remaining flat.

“Anything that is clean with good spec is making fortunes. Many dealers are struggling to reconcile how values have increased when they come to replace stock bought only a few weeks previously.” 

James Davis, head of commercial vehicles at Manheim, added: “I believe the next quarter will see price stability, however headline figures across the industry will contradict this as pockets of desirable product drive prices up.

“The devil really is in the detail. With dealers facing restricted supply, they will have to broaden their horizons in terms of sourcing replacement stock and they’ll also need to travel further in order to find the right vans.

“When it comes to stock profile, they may have to consider changing their traditional buying habits.

“They’ll also need to hone in on their own retail activity and invest in multi-sales channels, specifically online classifieds, to ensure that their vans are in front of the widest possible audience.”

BCA's Duncan Ward concluded: “LCV values have been universally strong throughout the first quarter of this year and are significantly higher than the same period last year.

“In fact the market has been even more competitive over the past few weeks and well-presented LCV’s are routinely outperforming guide expectations – often by a considerable amount. 

"We know from experience that in the majority of previous years values have typically softened over the late spring and summer months.  

“However, we saw little sign of that in 2012 as values remained relatively steady until the autumn when they rose quite sharply.  So, second-guessing what trends might emerge this year is less straightforward.

“Anecdotal evidence from a number of sources suggests retail used van activity remains slow, yet the wholesale remarketing sector is relatively strong.  BCA believe the continued shortage of stock is helping to drive demand and keep prices firm.

“While the wider economic picture remains downbeat, a recent report suggested up to a third of working Britons would be interested in starting up their own business. 

“Assuming that even a small percentage achieves that goal, that is a considerable groundswell of self-employed trades people and start-up businesses that may be in the market for a light commercial vehicle.”