Glass's Commercial Vehicle Editorial and market Trends April 2015
2015 WILL BE A FLUXING YEAR
Undoubtedly, there will be a considerable amount of change this year. Not least, this will arrive as a result of next month's General Election that could easily return a coalition Government comprising of some unlikely (and probably incompatible) bedfellows. If so, the political manoeuvrings accompanying such an alliance would by no means be guaranteed to keep the UK's economic recovery on track. If the worst fears expressed by some commentators were to be realised, it is likely that business confidence will be dented, which would inevitably damage prospects for our markets.
Ultimately, when it comes to prices of used light commercial vehicles, it is the balance between supply and demand that will determine the outcome. However, in 2015 further to such familiar market issues, there are economic and other threats on the horizon poised to unsettle what had become an exceptionally stable marketplace. We only have to look at the yo-yoing price of oil, as the value of the Euro slides, to appreciate just how volatile things have become.
Another big issue that is set to create headaches is the introduction in September of Euro 6 emission regulations for new light commercial vehicles. If the turmoil witnessed across the new truck sectors in 2013 is anything to go by, it's going to be a bumpy ride. The best guess is that there will be a bulge in registrations for the outgoing Euro 5 models with lacklustre Euro 6 sales over the last quarter and into the first part of 2016.
Thankfully there is still a healthy level of demand for used LCVs, although increases in the volume being de-fleeted have already led to modest falls in price. This should be viewed as an inevitable market correction to what has been an atypical trading period. However, for the big leasing vendors it seems that LCV wholesaling has just become a lot more challenging.
Despite demand in March having bounced back after a patchy start to 2015, there have been several subtle changes as to what used stock is now in demand. Over the past 24 months, the market's appetite for hard-used vans has been solely driven by a lack of more desirable alternatives. Therefore, as was to be expected, scruffy, high mileage LCVs over four years of age took the biggest hit. Now, as the balance between supply and demand slowly re-establishes itself, normal service is being resumed.
With 2014 posting an increase in LCV sales close to 19%, and the first months of 2015 delivering growth above 20%, the greatest impact on prices will be exerted by soaring registrations of van and pick-up. Clearly, as almost all these deals will have involved a high level of discounting, this is likely to place additional downward pressure on prices at late year. Accordingly, many of the circumstances prevailing over recent times that delivered such exceptionally strong demand for all used lightweights are now behind us. From this point onwards its business as usual with the best hope being that growth in the wider economy generates sufficient demand to keep pace with the higher volumes of LCVs being de-fleeted.
Further to the unknowns, it is clear that whatever government we get on May 7th, there will be even deeper spending cuts as Britain learns to live within its means. Therefore the final run up to the General Election might well unsettle businesses, leading some to delay making purchase decisions such as fleet replacements until the outcome is known.
Hopefully, little will have changed by mid-year as whatever government we get, they would be well advised to remain on the current path that led to the UK outperforming its European counterparts. Even if it is only our eyes that have reached ground level, having now almost dug ourselves out of the hole we were in, it would be a disaster if events in 2015 sent us straight back down. Despite all this speculation over what the outcome might be, the strength of the domestic economy will be sufficient to see us safely through, although the best advice might be to enjoy it while it lasts.
MARKET TREND
REGISTRATIONS
SMMT statistics for February show that, commercial vehicle registrations grew by 19.5% compared to this same month last year. Interestingly, against the background of such a strong overall performance it was again heavyweights that led the charge besting lightweights by some margin. These two sectors posted 31.7% & 17.9% uplifts respectively, which highlights the underlying strength within the UK's economy. Such large gains in trucks, tippers and tractor unit registrations represent the market making-up the sales shortfall following the turmoil delivered in late 2013 by the arrival of Euro 6. By contrast, the ongoing strength of sales seen across the lightweight sectors is being driven by genuine growth led demand which some suggest might tail-off later this year. Should increases in LCV registrations of this magnitude continue to be delivered into next year, the fear would then be that three years down the line, residual values might crash and burn. However, over the short term the key to success is strong economic growth that is not going to be derailed by events in 2015.
USED LIGHTWEIGHTS
Against the background of aggressive marketing on new LCVs, and as every cloud supposedly has a silver lining, there is at least the prospect of some relief in sight as high discounts continue to depress prices at late year. Hopefully, this pile-them-high and sell-them-cheap approach will not be taken too far as that would undoubtedly stir up trouble. It would be preferable if due to reduced incentives, sales of new vans and pick-ups grew at a lower rate. Then, as the result of market forces, the price for late year stock would find a realistic and sustainable level.
Dealers have been reporting an encouraging level of retail sales over the first quarter and believe, should the marketplace continue to make the same headway, this could be a bumper year. However, as they know only too well, it all comes down to being able to buy the right used stock at the right price, which for many has proven to be a stumbling block over the past 18 months. Others would appear to have all but thrown in the towel and would rather buy to order, than risk getting fingers burnt when holding too much high price stock. The obvious shortcoming of this strategy is that even if the right used LCV can be sourced when a customer presents himself, the price premium a dealer must pay will cut deeply into their profits.
Across the country, there is mounting evidence that buyers are being far more selective over condition and mileage, a trend that is likely to be more prevalent as volumes increase over the remainder of 2015. Increasingly, older stock is being passed over in favour of popular younger LCVs that will chime with the retail buyer's preferences. With each auction group continuing to offer increasing volumes of used stock, it is apparent that the strongest money is being paid for lots with higher horsepower and higher levels of specification. Used crew van types presented in a ready-to-retail condition continue to sit at the top of buyers most wanted lists.
Although car-derived vans are to be seen in relatively low numbers, the prices they're achieving remain vulnerable when recorded mileage is high. As the number on offer grows, those Nemo/Bipper/Fiorino vans boasting Enterprise, Professional or SX trims outperform standard versions by a wide margin. From this same stable, despite plenty of Berlingos and Partners continuing to be available, healthy returns are posted by the best. Across all years, this model attracts a loyal following as it looks good, performs well and offers great value for money. For Renault, with fewer Kangoos having been seen over the past couple of months, this has helped their cause by producing a better balance between supply and demand. Thankfully, despite Kangoo Maxi appearing at auction in greater numbers of late, both it and standard 90bhp versions at three to four years of age continue to sell at prices that pepper Guide.
As Vauxhall's Astra is in such short supply with prices firming for the best, it is disappointing to see high mileage vans, particularly Sportive and Sportive SE models struggling against Guide. Overall, despite Astra being long in the tooth, it remains popular as it offers a unique design that when the last tidy examples have gone, will not be replicated. Previous model, Combo, is still well thought of and sells to Guide Trade without difficulty. By contrast, with high numbers doing the rounds coupled to a diminishing performance, late plate Combos and Doblos appear destined to never find solid ground. Currently, their prices tend to be at the lower end of the Guide spectrum with higher mileage examples falling below Glass Disposal. In a not dissimilar pattern to that seen with earlier Vauxhall product, previous Doblo SX has a following and typically sells to Guide.
Tidy Ford Connects continue to be especially thin on the ground with prices for the best examples having firmed of late with the T200 90PS being the pick of the crop. When it comes to Volkswagen product, providing mileage is low and presentation high, late year 1.9TDI Caddys continue to sell to Guide yet the 102PS engine is favoured over the 75PS. Caddy Maxi 102PS BMT vans are also proving popular yet, surprisingly, fail to generate much of a premium over the standard engine technology.
USED 4x4s
The market for off-roaders performed in a lacklustre manner over the months of winter, with the only good news being that the number on offer was low enough to support prices at a sensible level. Fortunately, as we moved away from the 4x4 season, the volume appearing at auction continued to dwindle. The majority of what's in the market are top end models boasting car-like interior trim with the best of these pick-ups selling to Guide Trade. As seen over the past 18 months, workhorse types continue to be thin on the ground which sees all tidy examples gaining plenty of interest.
At auction, there are far more L200s and Navaras to be seen when compared to HiLux, Ranger and D-Max pick-ups. Those ‘margin' lots that are inclusive of VAT continue to charm the buyers. Unsurprisingly, at late year, those high-specced models equipped with canopy, side steps and roll bars etc. are making most headway, whereas older, high mileage lots return prices to or even below Guide Disposal.
For Land Rover, high-specced and limited-edition Defenders continue to generate plenty of interest. At earlier years, as a consequence of Defender production ending, 90s and 110s continue to sell well against Guide as buyers actively seek out all tidy examples with additional big premiums being paid for County and XS variants.
USED PANEL VANS
Despite older Scudos, Dispatchs and Experts continuing to attract interest from a wide range of buyers, the returns generated by middle of the road used stock continues to slide. Encouragingly, latest shape Dispatch & Expert models continue to perform strongly at prices to Guide although 1.6HDi 90bhp L1H1 Enterprises/Professionals are most sought after. On the open market, Fiat's Scudo struggles to attract this same enthusiasm and will typically sell at prices that fall below the PSA pair. After a slow start, Nissan's NV200 is now better established with the prices paid for the best, low mileage stock nudging our Top Trade figure.
Good numbers of Vivaro/Trafic/Primastar panel vans continue to be offered at auction with most mid-year lots selling to Guide Trade. Crew vans are in high demand from both trade and retail buyers with hefty premiums being paid for the cleanest. However, due to heavy discounts being available on new, together with some unrealistic vendor reserves, late year stock can struggle. While Sport/Sportive models regularly fail to achieve prices which equate to Guide values, early year, ex-BT lots powered by the older 82/100bhp engine continue to sell strongly.
As the number of Transit Customs to be seen at auction continues to grow, and those for the previous Transit T280 decline, both generations are proving popular with trade and retail buyers. Interestingly, and as Ford would presumably have wished, buyers view the Custom as a completely fresh model series and not simply a replacement to the T280. This has enabled both ranges to achieve their full potential and not be subject to the market fortunes of the other. As if to highlight this, the prices paid for late year Transit 260/280s are still to Guide Trade whilst those for Transit Custom have fallen back from earlier highs. Across all these Ford models, Limited specification returns a hefty uplift over base model with Trend specification collecting a much smaller premium.
With VW's Transporter being seen in fewer numbers of late, it's disappointing to report that prices for 84PS models have come under further pressure. The 102PS panel van performs only a little better which leaves higher horsepower types faring best and the Highline range standing head and shoulders above the rest. Due to the popularity of the T5s increasing in steps up to 180PS, those with most bhp and the highest specifications regularly sell to Top Guide. Warranted, low mileage Kombis having A/C achieve big prices that are well into Guide. From the M-B stable, low mileage Vitos with FSH sell to Guide Trade with Dualiner people carrying versions appealing to both business and retail users.
Although demand for large panel vans at all years has undoubtedly been strong over the past couple of years, it has been noticeable at auction that not every lot sells at the first time of asking. Also, as the average age and mileage of LCVs being de-fleeted continued to reduce, it was to be expected that they would fetch higher figures, yet this should not be misinterpreted as an underlying upturn. Late plate, large panel vans continue to be difficult to source with the scarcity of low mileage stock remaining acute. In spite of the lack of supply, it will only be those presented in good condition that command prices to Guide Trade. Although there is no shortage of large panel vans hobbled by higher mileage, where reserve prices have been set sensibly, they will sell. Yet those 3.5 tonners showing all the scars associated with having endured a hard life will at best sell to Guide Disposal.
Relay/Boxer/Ducato and Master/Movano are all panel van ranges that have made good headway over recent times and are now well respected by trade buyers. Current shape Master and Movano models are proving especially popular within trade circles, although when damaged, the prices they return are being hit disproportionately. Similarly, prices for late year Relay/Ducato and Boxer models have firmed as the general shortage of 3.5 tonne stock has brought such PSA products in to play. From this same source, 3.0t L1H1 and 3.3t L2 variants are also seen as being good news if the mileage is sensible. Iveco's Daily continues to be seen as representing value for money, yet it is only the best that sell to Guide Trade.
Sitting at the top of the pecking order, clean and tidy Transit T350s, Sprinter 313s and 4-pot Crafters set the pace which the others must follow. LWB, high roof examples of the current Sprinter up to three years old change hands at prices to Guide Trade with ease, yet most of what's doing the rounds has high recorded mileage and is less well received. Derivatives of all types demonstrate themselves to be particularly desirable, with each late year example selling strongly. When available, the EF option on Ford's chassis does even better with extra-long dropside and the nicest tipper derivatives commanding sky-high prices. Aligned to the current upturn in the property market, in spite of the dearth of choice to be had, high cube vans and especially luton-bodied chassis continue to perform well.
USED TRUCKS
Across the country, dealers comment that there is just too much samey stock and typically, comprises those Euro-4 and early Euro-5 chassis which have covered far too many kilometres. Further, they observe that no amount of refurbishment will transform such workhorses into the type of used stock that will attract a retail buyer. When available, dropsiders, tippers, curtainsiders and clean refrigerated boxes all perform well. Locating such attractive retail stock is undoubtedly challenging, and acquiring it at the right price can be a real dilemma. Currently, all well-presented 7.5 tonners will sell to Guide Trade but more commonly, the auction yards are filled with hard-worked chassis that don't tempt buyers to dig deep.
At the higher weights, late year 18 to 26 tonners are in high demand with firm money changing hands for the best chassis. Heavy, multi-drive chassis are highly prized with alloy tipper conversions leading the charge. As lead-times on having a similar conversion built on a new chassis stretches far ahead, all tidy used 6x4 or 8x4 rigids kitted-out with a sturdy grab proves desirable. In an attempt to help meet this demand for the best used stock and also raise standards, some manufacturer's used approved schemes insist on complete refurbishment of cab and chassis. Whilst commendable, the consequences for franchised dealers can prove impractical with extended waiting times testing the patience of all.
Across the tractor unit sectors, there a distinct lack of less than four year old stock, although going forward, this is hopefully set to ease over the second half of the year. Currently, most activity is to be seen for those popular, older artics destined to be exported. The others, which fail to make the grade pass through the block and unless boasting a spacious cab, air con, cruise control or the like, rarely sell outright. Thankfully, export business has picked up pace over recent weeks which again is proving something of a saviour to the wider marketplace, as it soaks up those heavyweights that won't find a domestic buyer. The snag being that as the rules on what age and type of trucks international markets will accept change, the better late year, low mileage stock moves into the frame.
USED SEMI-TRAILERS
At auctions across the country, the quality of used stock to be found remains a concern as there is seldom much in the way of younger, clean and tidy trailers to be seen. Despite what's on offer being mostly beyond its sell by date, overseas and UK buyers will still lock horns when the better lots appear. Good reefers, tippers, curtainsiders and flats are first choice with step-frame construction adding a sizeable premium to the price paid. Additionally, positive sentiment continues to be directed toward low loaders and well-specced tankers that are capable of another tour of duty. Export buyers rarely miss opportunities to acquire flatbeds and other types suited to the needs of overseas buyers. What's left over, if worth salvaging, will typically be broken for the wheels, suspension and axles and thereby often return more money than if it was still up and running.
George Alexander
Chief Editor, Commercial Vehicle