Remarketing: The second life of electric LCVs

Date: Tuesday, October 26, 2021 | Author: Tim Cattlin

A new challenge for the remarketing industry is the disposal of electric vans. Tim Cattlin talks to industry experts who offer tips on how to achieve the best re-sale return.

Even in the current overheated used vehicle market with values at unparalleled levels, fleet operators who are sending defleeted EVs to auction may find putting some basic policies and procedures in place will help expedite a sale and gain a healthy return. Matthew Davock, director of commercial vehicles at auction house Manheim UK, offers the following advice.

“Firstly, transportation and customer vehicle return handovers will be critical.
I would use an inspect and collect partner that has experience in moving and carrying electric vehicles. Secondly, I would encourage all vendors to ensure the vehicle is sold with all its important documentation and equipment (charging cables etc.).”

Highlighting how careful marketing can aid a sale, Davock adds: “Targeted and dedicated sale events are also important in maximising price sale performances and Manheim has special EV/bespoke sale events throughout our sales calendar.”

Broadly agreeing with Davock’s view, Stuart Pearson, chief operating officer at BCA UK says: “Alternative fuelled LCVs remain relatively scarce, with pure electric vans a rarity. Accurate appraisal and valuation are essential to generate buyer interest. Vendors should pay close attention to providing a full vehicle description and ensuring a comprehensive service history and associated paperwork is present when the vehicle is sold, which includes detailing the type of powertrain and battery specification. Charging cables can be expensive, so ensuring that all are returned is vital. The best prices will be achieved by targeting the right buyer base with the most detailed information.”

Trade buyers are likely to seek some sort of reassurance as to the health of the vehicle’s battery pack, highlights Steve Botfield, senior editor of commercial vehicles and motorcycles at valuation company cap-hpi. “Provide as much information as possible regarding the vehicle’s use and charging cycles, as a high mileage vehicle does not translate into higher battery degradation, providing that a sensible charging strategy is undertaken. In the future, “State of Health” (SOH) reports will become readily available giving the buyer information including the health of the battery and how the vehicle has been charged (240v or Direct-current fast charger (DCDC)). Considerable use of DCFC can impact the speed at which a battery can degrade.”

Although electric vans currently only form a very small part of any vehicle auction, the remarketing industry is now seeing them appear more regularly and patterns are starting to form in buyer behaviour and the level of values being achieved. But, are traders still hesitant because of a relatively unknown quantity? Andy Picton, chief commercial vehicle editor at Glass thinks this may be the case.

“At this early stage, my guess would be that the general motor trade would prefer buying to order. There are now independent traders springing up who are dedicated used EV traders who would be more comfortable buying for stock.

“Due to the short supply of used EVs, there is currently a wider gap between EV and ICE (internal combustion engine) vehicle prices in the wholesale (trade) market. A lack of historic pricing information and awareness concerning acceptable resale values may lead to reluctance to invest in a used EV at present.”

With regard to values being achieved, Picton adds: “The small volume of electric vans in the used market has meant values are in line with expectations, but as with any commodity, supply and demand will dictate the current price paid. As more electric vans enter the used market, we expect the edge to come off these values.”

Geoff Flood, national LCV manager at Aston Barclay thinks the trade is reluctant to buy used electric LCVs for stock. “Currently they [traders] are more likely to buy them for a sold order. The market for used electric vans is still a long way behind that of electric cars,” he says.

Tim Spencer, Shoreham Vehicle Auctions commercial vehicle sales manager hasn’t noticed specific trends for the trade to buy for a sold order, but also sees a future for traders who may exploit what is currently a niche market. “We are starting to see used car dealers set up and specialise just in hybrids and EVs, so this could happen in the future with vans also.”

Manheim’s Davock says dealers are becoming more confident, particularly in some local areas. “I would say around 65% of the trade buyers in the UK would buy a used EV van today for stock. I have seen many instances over the past 12 months from buyers located in the south (linked to the London Low Emission Zone) but over recent months more and more buyers across the UK and Ireland have been bidding and competing increasingly on used EV van assets than ever before, confidence is growing.” Davock has also noticed some dealers becoming 100% committed to electric LCV’s and no longer buying and selling diesel vans. “A small percentage of van dealers in the UK today are already adapting business models and becoming specialists in EV van retailing, and from this changing their business models to support or gain an early market advantage,” he says.

Davock is pleased with the returns being achieved with the electric LCVs sold through Manheim’s channels so far. “I would say electric LCV’s are performing above expectation today,” he says. “Over the past 12 months at Manheim, we have sold 203 electric LCV’s, the average age being 58 months and mileage 37,300 miles. The average selling price has been positive at £9,466. Some examples have been achieving between 53% and 76% more compared with the equivalent diesel model. Our top three electric van volumes have been Nissan e-NV200, Renault Kangoo ZE and Peugeot e-partner.”

Cap-hpi’s Botfield highlights how hard it is to gauge how the values being achieved now stack up against the initial forecasts. “This is difficult to say. The increase in values for
ICE vehicles has also driven up values for EVs over the past 16 months, which no-one could have predicted,” Botfield explains.

Are electric vans future proofed?

Looking ahead, we asked our panel if demand (and prices) could be affected by the used retail buyer seeing newer vans have much longer ranges between charges, or worrying about a used vehicle quickly becoming technically obsolete.

SVA’s Spencer does not believe used customers will be put off : “Not really as the dealer often is buying a van for someone that wants one and understands how they
work and the range.”

Aston Barclay’s Flood says: “Potential obsolescence of any vehicle is a concern for
any retail used buyer, which is also true of EV vans. However, with the current roll-out of new tighter emissions standards in city centres across the UK, the demand for EV vans
is set to increase, which will certainly help to minimise any obsolescence risk for buyers.”

Neither does Glass’s Picton think used buyers will be concerned with ageing technology: “It shouldn’t be [a concern]. Typically, a used buyer who might be a painter/decorator, plumber, chippy or general DIY will be servicing a smaller, more local area and will be covering less miles. They will drive to their customer, be parked up all day and then return home. So a first generation EV with 100 mile range will suit many of these businesses. Used buying criteria will need to change and be based on business requirements in future. If the vehicle is in their price band, has sufficient range and has the right volume and payload capabilities, then there is no reason why first generation EVs shouldn’t sell well.”

Cap-hpi’s Botfield says: “The expectation was that EVs, due to their high upfront cost, would be sweated for several years to realise payback, but in reality, this is not the case. As in 2021, we have seen vehicles of between eight years and a year old being sold in the wholesale market. And so obsolescence will only occur if the right vehicle has not been initially purchased to start with. Future business should also be taken into account when purchasing a new or used EV, as the vehicle might be capable of [carrying out] today’s daily work but will it [be suitable] for the future?”

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