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Winds of change experienced in the LCV wholesale market

THIS year is the strongest ever seen for used van values at Manheim according to Matthew Davock, Director of Commercial Vehicles at Cox Automotive.

He believes wholesale performance for the past 12 months will never be witnessed again. However, the early part of next year at least looks to continue similar trends before the market repositions itself when stock shortages are resolved halfway through the year. 

According to Davock, the shortage in the supply of used Euro 6 vans and demand for vehicles that comply with emissions zones such as ULEZ, will impact the market for the next few months at least, affecting wholesale stock dynamics for at least the next three years. It’s expected 2022 will look different to today, with many fleets prioritising Euro 5 age returns, which will dictate the wholesale headlines. Eventually, the year ahead will see older stock values reduce, as buyers focus on ULEZ compliance. 

Manheim November auction results

November 2021 demonstrated several key milestones, in what has been a year like no other for the LCV market at Manheim. Most notable of which, was a return to four-figure average used selling prices, ending five consecutive months above the £10,000 price barrier. The average van mileage recorded by Manheim continued at levels not seen for over a decade, reaching 1,420 more miles compared to October to the highest point of 2021, at 86,875 miles. The first-time conversion rate remained identical to October’s recording of 77%.

The company’s auction data continued to demonstrate a significantly older profile of commercial vehicle with average age at 72 months, a six-month increase from October. The average age of vans hit a five-year high, at six years during November – 10 months older (and with 14,073 more miles) than the year-on-year average. 

Davock said: “The reason for this is the increasing number of used Euro 5 vans which have entered the wholesale market, as more older vans are de-fleeted. The numbers are also represented in the 8.6% increase in the volume of used vans sold compared to October. This aligns with my prediction that Euro 5 statistics continue to dominate the percentages, with Euro 5 vans representing 52% of the volume sold, compared with 48% being Euro 6. Despite vans being 10 months older and having 14,073 more miles in November, values are still £1,442 or 17% stronger than November 2020 averages.” 

In terms of used van values, the biggest performance softening was seen in the £2,000-£4,999 price barriers, with some models showing a 4-6% price drop compared to October, with 12% more volume seen in this segment alone. By far the biggest performance gap also seen during November, was the average van values of Euro 6 versus Euro 5 product. 

Davock added: “Euro 5 vans, with an average age of 98 months and 109,094 miles, achieved an average selling price of £5,934. Meanwhile, Euro 6 vans, with an average age of 40 months and 61,939 miles, achieved an average selling price of £14,477. In total, £8,543 separated Manheim’s average Euro 6 performance during November versus Euro 5 product, which again demonstrates the two-tier market we are witnessing.” 

Used van market retail softening  

Feedback generated from buyers highlighted that November was a frustrating month, as many dealers reported a retail softening, with sales that were 15-20% softer than in October.

Davock added: “Given all the highlights, November felt very different compared to 12 months ago, with less buoyancy and no glaring bounce back loan schemes. Despite the small signs of softening from our feedback, the market remains extremely positive.” 

The aggressive market prices which are being paid, have led to Cox Automotive predicting December performances to remain stable.  However, Davock warns that buyers will become more selective as the year draws closer to an end, with many assessing the retail activity which will result in them bidding and buying accordingly. 

Writing in Cox Automotive’s AutoFocus Q4 magazine, Davock said: “LCV volumes will remain constrained during Q1 (2022). For the first time in over a decade, disposal managers head into a new year with complex strategies as new vehicle delivery dates and customer extensions continue to dominate business priorities and capabilities. As a result, we expect age and mileages to continue to show significant shifts as sellers prioritise Euro 5 defleets into the wholesale market. 

“These dynamics are evident in the remainder of 2021, with average age increasing by seven months and average mileage by 13,000, ahead of averages observed in the other three quarters of 2021. In October, age and mileage were the highest seen in nine years, with an average age of 67 months and 86,000 miles. Overall, we expect prices to continue to perform positively, as volume constraints, matched with a winter period, will continue to fuel both the retail sector and buyer demand during the first quarter of 2022.”

New van market 

Davock said: “The new LCV market remains very positive, with many leading manufacturers reporting record-breaking vehicle order banks. The big question will be how long it will take to build and fulfil these orders. Some report production demand for at least the next two years, and the orders and demand month-on-month continue to rise. 

“Other reports suggest as many as 405,000 LCVs have been ordered for the UK and not yet built, and this will only continue to be fuelled and accelerated by the circa 2.5 million vans on the UK roads today that are Euro 5/ULEZ non-compliant. This demand matches the added focus around LCVs electrification/alternative fuel LCVs, which suggests we are in for a very buoyant new vehicle market for at least the next five years.”

Business Van of the Year Awards 2021

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