Volumes filtering back to the used van market is now
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the biggest concern for dealers and auctions as values, which peaked last spring, continue to fall.
Words: Kevin Swallow The outlook for ight CVs returning to the used market remains pessimistic as the impact of van numbers sold through 2008 looks set to affect remarketing strategies in 2011.
While it may be too early to suggest the flow of vehicles will completely dry up, although that could well happen in 2012, the shortage of clean, late-year light CVs is already starting to bite. The figures are stark, according to the Society of Motor Manufacturers and Traders (SMMT), new
van sales (up to 3.5 tonnes) fell in 2008 by 14.3% to 289,463 overall, and down a whopping 26.6% in December of that year.
During this period, the impact on the used van market saw values plummet to an all-time low at Christmas 2008. Average used van prices at British Car Auctions started 2008 at 23.868, before dropping to £2.772 by December.
One year later and the SMMT numbers for new vans up to 3.5 tonnes fell dramatically again, this time by 35.6% to 186.386 units for 2009.
SMMT chief executive Paul Everitt said at the time: "Business demand and consumer confidence remain low, and the effects of recession will be slow to clear in key parts of the commercial vehicle markets."
Poor sales through the past 18 months mean late-year vans, which tend to be anything up to 18 months old, will be the first to experience severe shortages. Still, there are some positive signs. For the first eight months of 2010, year-to-date figures compared with the first eight months of 2009 show van registrations are up by 17% to 133,245 units. If that rate continues through the final four months, registrations are on course to make about 215,000 units.
For the immediate future, George Alexander, editor of Glass's Guide to Commercial Vehicles, says opinion is divided on whether September will see demand for vans of all ages bounce back to the levels seen earlier in 2010 or simply soften further.
"We remain optimistic that the slippage [in demand] at the mid-year is. for the most part, a seasonal downturn coupled to localised price weakness in sectors where too many hard-used vans have returned from extended contracts," he says.
James Davis, general manager for CVs at Manheim Remarketing. agrees with Alexander. With large numbers of identical vehicles entering the used market, it is a real challenge for the company to deal with, Davis says.
In the longer term. Alexander says most pundits agree that the balance between supply and demand will mostly lean towards shortages. "Obviously, we are not heading towards boom conditions, but two years of low registrations for new commercial vehicles dictates that the supply of desirable used LCV stock will struggle to keep pace with demand; we could see the first shortages in early 2011' he says.
'The final evidence that encourages many to take a more positive stance comes courtesy of lengthening lead times and rising transaction prices on new vans," Alexander continues.
'The conclusion must surely be that this pressure alone will bolster prices for nearly-new light CVs and help to support those at earlier years." •