In recent years, the used van market has experienced low volumes. Lower new LCV sales during the post-recession years created a subsequent vacuum, which in turn had an impact on residual values. However, new sales returned to pre-recession levels in 2014, while 2015 and 2016 were record years for registrations and, though the market was down slightly in 2017, it was still the third best year for new van sales in a decade.
Andy Picton, Chief Commercial Vehicle Editor at residual value specialist Glass’s explains: “Speaking to the main auction houses, they have openly told us that they expect more stock to be coming back from a variety of sources. We’ve had record registrations up to the end of last year and, although some [fleets] have been extending their vehicles over that period, they’re now starting to come back. We haven’t seen all of it yet by any stretch because we’re only into February.”
As stock levels increase, the vans in less-than-perfect condition, with higher mileage may see their value drop. Such vehicles have sold well in recent times, due to the scarcity of used LCVs, but that is unlikely to continue in 2018.
That’s not to say that these vans will disappear from the used market. After all, they account for a huge proportion of new sales and there will still be buyers on the lookout for a bargain, as James Davis, Head of Commercial Vehicles at auction firm Manheim, explains.
“There’s always a place for that product. The bread and butter vans represent value, and from that perspective, they’re really good news. Low-mileage vans now are making real premiums. “
Following a long spate of unpredictability after the financial crisis, Davis thinks the used van market is likely to settle back into a seasonal norm in 2018, courtesy of the impending increase in stock. “[The market] will probably return to a traditional de-fleet pattern, because it’s been very changeable in recent years. I think we’ll start to see volumes increase around the end of March into April, tail off at the end of May, I think June, July, August will be quite steady, then I think we’ll start to see volumes ramp up towards the end of the year.”
Although he predicts an increase in the number of used vans, Davis doesn’t think they’re in for a big fall in prices, for a number of reasons. “I really don’t see residual values dropping; far from it. I think operators will start to figure out they can future-proof themselves in the next two or three years with the clean air stuff [such as low emission zones] and I think they’ll be looking for those Euro 6 vans.
“What you could find is that fleets extend leased vehicles, because they’re not sure, with Brexit and the economy, what’s going to come round the corner. But also, you could get a change of ownership – people coming out of contract hire going into flexi-rent [shorter term, variable contracts] – because they can hand the vans back if there’s a problem; I can see that happening maybe to a greater extent with some of the larger fleets. But generally speaking, I don’t see anything that’s going to destabilise the [used] market, other than economic conditions.”
Whatever the rest of the year holds for the used van market, businesses need to keep an economical ear to the ground if they’re to bank on a good return at de-fleet time. “The best advice for a fleet manager that’s selling vehicles is to stay really close to the market,” says Davis, who believes sellers need to be increasingly sensitive to future low emissions zones around the UK, and whether or not their vans can operate within them.
“Whereas in the past, a fleet manager never really had to get the crystal ball out, now you’ve got to start looking a year, two, three years ahead and thinking, when that vehicle sells, I can’t expect the same returns that I’ve enjoyed for the last 10 years, where we’ve seen old vehicles make premiums.”