Vans

Light commercial vehicle values are set to remain strong at least for the first six months of 2014 and maybe even longer so long as there are no nasty surprises.

That’s the message from market experts not withstanding a 13% rise in new light commercial vehicle registrations last year as wholesale dealers remain starved of three to five-year-old vans.

Supply remains the key factor, according to auction companies, and as always vans going under the hammer in ready-to-retail condition with a good specification and in an attractive retail colour will prove the most desirable in what will continue to be a sellers’ market.

George Alexander, chief editor, commercial vehicles at Glass’s, said that so long as economic recovery continues, vehicle manufacturers don’t force the new van market and “everyone plays their part” used values “at a minimum will hold firm”.

“Early indications are that the New Year should quickly find its stride, which will see LCVs continuing their run of good fortune as supply continues to outstrip demand,” said Mr Alexander.

“However, there are some concerns that if sales of new vans and pick-ups were to grow rapidly with no let-up in the big discounts being offered, this situation might start to change. Nonetheless, we expect to see healthy demand for all well specified LCVs keeping price levels stable over the first six months.”

With no data on which to base used van value expectations for the second half of 2014, Mr Alexander said: “I’m upbeat for the first half of 2014, but the second half of the year might be different. We need everyone to play their part.”

That view is shared by Ken Brown, editor of CAP Automotive’s Red Book LCVs and Motorhomes, who said: “Historic new LCV registration figures would tend to indicate that shortages of vehicles entering the used market will continue to keep prices relatively high.

“Used LCV prices are probably artifically high, but we see that continuing in 2014. By around Q3 we expect to see supply improve purely based on historic LCV registration data, but there is nothing to suggest that prices will begin to fall accordingly due to over-supply.”

Interestingly, CAP tracks average used van values against RPI (Retail Price Index) and while they fell dramatically in 2008/9 during the depths of the recession, by October 2010 they were back in line with the 10-year long term trend and have remained so.

Consequently, concluded Mr Brown: “We may see no drop off in the prices being achieved at auction.”

Although the over-riding view is that used van prices will remain buoyant at least for the foreseeable future there are likely to be troughs within market sectors along the way.

Mr Brown said: “Large defleets can have a dramatic affect on market prices and no other sector of the vehicle remarketing industry experiences this greater than the LCV sector. This sometimes causes prices to fluctuate wildly for certain makes and models at certain times.”

Although average hammer values of ex-fleet and lease vans sold at auction giant BCA dipped last month to £6,669, fractionally below the record high of £6,820 set in November 2013, values were up a massive £1,286 (23.8%) year-on-year (see chart 3) with average age being 41 months (December 2012: 43.68 months) and average mileage of 72,085 miles. (December 2012: 71,133 miles). BCA’s general manager - commercial vehicles Duncan Ward attributed the sector fall to many corporate sellers retaining vehicles for New Year sale.

Auction rival Manheim reported an average 5.5% increase in 2013 van values to £4,405 last month meaning hammer values are £226 higher than December 2012 (see chart 5), despite a signficant average three-month increase in age to 63 months and an averrage 1,200-mile mileage rise to 84,275 miles.

James Davis, Manheim’s head of commercial vehicles, called the state of the current market “remarkable” and added: “It is the scarcity of good stock coming up for auction now, which can be traced back to the recession of 2008, which is largely responsible for the current market conditions.

“Those corporate fleets with access to funds back in recessionary times, could really reap the benefits of de-fleeting three to five-year-old vehicles in the current market, which is starved of such product.

“Looking ahead, there is more optimism around the business sector in 2014, with lending to SMEs reported to have increased and housing and construction projects restarting. I therefore think we will see van prices remaining strong in the first quarter of the year.”

Ward said: “The overall shortage of used product (see chart 4) and the issues of supply versus demand will see a continuation of high conversions and higher selling prices in 2014, effectively meaning we are going to see more of what is best described as a sellers market.”

Roger Woodward, managing director of online remarketing specialists, CD Auction Group, is similarly optimistic saying: “The new LCV market is on fire at the moment but it’s important to remember that the ex-fleet, wholesale used market is dealing in vans that are anything up-to seven years old - so it’s very different. Supply has been short all year and demand is good.

“Values are high though there has been some levelling off recently. At CD Auction Group we have been getting CAP ‘clean’ on a lot of ex-fleet stock where the benchmark is CAP ‘average’. I would expect that to continue in 2014 and, as the economy picks up, I would expect demand to rise but the shortage of suitable ex-fleet stock to continue.”

Alex Wright, managing director of Shoreham Vehicle Auctions, said: “In 2014 there will be reduced van stock and those that do appear will be higher mileage, older and in poorer condition. Those vehicles with a service history and in clean condition will be priced at a big premium because of the shortage.”