Remarketing: Signs of stability

Date: Thursday, March 03, 2011

Used van values rose last year, but with the VAT hike and rising fuel prices the market may not be out of the woods just yet, writes James Dallas.

 

Average used van values grew by over 10% in 2010, an indication that stability is returning to the market following the economic downturn.
According to Manheim Remarketing’s latest analysis, wholesale used values increased by £373 to £4067 compared with 2009, while average age fell by six months to 50 months and mileage decreased by 6299 to 70,556 miles.
Manheim says average values peaked at £4416 in April and remained relatively steady from July until the year-end. Excluding market or model mix distortions, Manheim also said sub-three-tonne large vans recorded the biggest rise in average value last year – up 17.7% (£642) to £4274. This was due in part to a four-month fall in average age to 50 months coupled with a substantial decrease in mileage of 12,548 miles to 83,994.
All market segments posted year-on-year price increases in 2010 except small panel vans, which fell 2.6% (£106) to £3895.
Overall, average values in December 2010 were 2.7% (£108) ahead of the previous month.
Large panel vans under three tonnes were up 1.3% to £4274, Tippers rose by a sharp 7.3% (£438) to £6415 and boxes and Lutons edged up 1.4% to £6811. Segments falling in value included car-derived vans, down 8% to £2252.
Manheim’s commercial vehicle boss James Davis says there is potential for a good year in 2011 due to the rise in van de-fleet volumes caused by consolidation in daily rental and other industry sectors. He adds: “The majority of the vans we are seeing coming to auction are the popular brands. Well specified bread-and-butter ex-fleet and rental vehicles in the £3500 to £5000 price range. These always attract buyers as there is a ready retail market for them.”
With most buyers investing their own cash, Davis says pre-selling looks like a better option than stocking for vendors.
“If the economy maintains its gradual recovery and new vehicle registrations continue to struggle, the used van market will thrive,” he says.
Davis says some increase in supply would result in shallower value rises than last year, but concludes: “The outlook is positive for a stable 2011.”
Manheim’s major auction rival, BCA, says the van sector endured a difficult end to 2010. Duncan Ward, head of commercial vehicles at the company, explains: “Market conditions were tough at the end of the year with a combination of poor stock mix and inclement weather resulting in some price pressure across the board.”
However, Ward agrees prospects are looking brighter for the new year.
“Buyers have been very active in the early days of the year. January generally brings an uplift in activity and this is typically sustained until the Easter period, which usually represents a watershed in demand.”
Ward anticipates a surge in volumes coming to auction in the early spring, which could once more put values under pressure.
According to BCA, average values climbed by just £37 to £4067 in December from November’s low point for the year. Changing model mix accounted for the slight rise, with lower value part-exchange numbers down and nearly new volumes up. Values actually fell in all three main sub-sectors, fleet/lease, part-exchange and nearly new.
The average value for the year overall at BCA was £4303 with a high of £4633 reached in April.
Fleet values fell 2.9% month-on-month in December to £4465, with the CAP comparison dropping a point to 96.1%. It was the lowest monthly average value recorded in the fleet/lease sector at BCA in 2010. The figure was 2.5% down year-on-year but 48% ahead of the low point two years ago.
BCA says business failures in the sector meant many vans came to market in December ahead of their planned de-fleet date, in poor condition and of similar make, model and specification.
Part-exchange values remained flat in December at £2329 compared with November, but CAP value fell by more than a percentage point to 95.4%. Year-on-year values dropped 8.2% as tough retail conditions saw volumes decline.
Nearly new volumes climbed in December in percentage terms but BCA said stock remained scarce. Model mix changes saw values plummet from £12,293 to £9809 month-on-month, while CAP comparison improved by half a point to 98.7%.
Ward described the economy as “fragile” and warned the VAT rise and increasing fuel costs may hamper demand in the coming months.



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