While many areas of the economy have spent much of 2020 battening down the hatches in the face of the global pandemic and Brexit looming large on the horizon, the UK’s used van market has been going from strength to strength.
In the past week, three of the nation’s biggest remarketing and auction operations, Aston Barclay Shoreham Vehicle Auctions and BCA, have all reported continued buoyancy and growth.
According to BCA, demand remained ‘exceptionally strong’ during September, with average values continuing to significantly outstrip guide prices and sale conversion rates across its auction sites topping 90%.
It also saw average LCV values rise by 3.7% from £7,709 in August to £7,994 in September, with vehicles averaging 113% of their guide value.
And it was a similar story with Aston Barclay. It saw average prices rise yet again in Q3 by 4.2% (£255) to £6,204. That equates to a massive 26% price rise in 2020 from a Q1 average of £4,923 to £6,204 (£1,281) in Q3.
Importantly, all three businesses predict the trend will continue. Aston Barclay says it sees no sign of the market cooling down as it enters Q4 and SVA believes the market will continue to boom well into 2021.
But what are the reasons behind the burgeoning used van market?
Shoreham Vehicle Auctions Managing Director, Alex Wright, said, “The current economic uncertainty means many SMEs are avoiding taking out a finance deal on a £25,000 new van and are looking to buy used vans instead to support their current business workload and expansion.
“All van types have seen a big price rise, in particular the 3-5 tonne GVW panel van and any chassis cab with bodywork fitted. This has been fuelled by bodybuilders’ lead times increasing as they continue to clear their order backlog after lockdown.”
He added, “Sectors where used vans have been in most demand are the typical builder, plumber and electrician trades, plus food delivery and parcel delivery where many larger companies pass on work to sub-contractors who run single or multiple vans. These sectors, which are considered essential and will keep operating throughout the second lockdown, have also benefitted from the £50k Bounce Back Loan which has helped fuel new vehicle purchases.
“In addition, many corporate fleets have also extended their current van replacement cycles due to Covid-19, which is fuelling the price rises as fewer 3-5-year-old used vans are coming back into the market.”
Meanwhile, Geoff Flood, National LCV Manager at Aston Barclay, attributes the growth to three factors: the growth in the home delivery sector, vans working harder since lockdown and replacement cycles being delayed while new vans were unavailable.
Flood added that demand was being seen across the board and not just in one sector.
“Recently, some ex-council Transit vans on 09-plates with 50-80,000 miles went through our Leeds site and they made 160% of . That’s unheard of,” said Flood. “Even non-runners are making CAP plus, even without an engine or with damage.
“Any van in a colour other than white is currently making stronger money while anything with sat nav and air conditioning is attracting extra interest from buyers. Last week’s sale at Leeds featured 138 vans, attracting a total of 2,226 bids, which further reinforces the strength of demand.”
Critically, all three companies fully expect the demand to continue to grow.
Flood added: “The second national lockdown will further accelerate demand and prices, and stock continues to be very scarce.
“With fewer people allowed to get out to the shops and fewer retailers open, there will be further growth in online shopping. That fuels more companies looking to buy new vans, which will keep prices strong. This demand and high prices will continue well into 2021.”