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Remarketing: Electric LCVs struggle to spark demand in used market

Date: Thursday, October 19, 2023   |   Author: Tim Cattlin

There was always going to be a time when the supply mix of used vans would start to change. Increasing numbers of electric vans being registered would eventually see them appearing in the auction halls, seeking second life owners, at which point those responsible for setting the residual values started to nervously chew the end of their pencils, hoping any provision made would be sufficient.

Trade interest, and therefore bidding, is driven by customer appetite. Speaking to dealer group heads and independent traders, the picture is similarly sketchy. 

“When we do see them (EVs) they have to be priced ultra aggressively,” said Gareth Kaye, LCV franchise director, Motus group (UK) Ltd. 

“The demand for used EVs remains very low and this is shown if you review the web activity on adverts for an ICE and BEV equivalent on our web platforms. As with most dealers, we have a plan around stock acquisition and profile, and the low demand on EV means we are unlikely to buy any.”

This sentiment is echoed by independent traders, such as Barry Clarkson of Clarkson Commercials, Glasgow. “Like any dealer we buy stock that we know sells quickly,” he says.

“E-vans simply aren’t on our radar at present, however should consumer demand dictate differently, we’ll revisit matters but for the time being it’s a no from us.” 

Jim Reid, of Jim Reid Vehicle Sales, Aberdeen, concurs: “We have a small batch of electric vans in stock after de-fleeting from a long-term rental, however we’re finding these hard to shift. The demand locally is simply not there, we would now only buy to fulfil a sold order.”

Feedback being received by the trade from buyers is that at present an electric van isn’t a viable option, with payload and range restrictions cited together with the challenges of charging. The relatively simpler, and perceived safer option of continuing with diesel vans is preferred. 

“No matter the industry, the two main credentials an LCV requires are range and payload,” commented Clarkson. 

“Currently e-vans have neither, thus reducing their practical application down to a tiny minority of users. Throw in downtime for recharging coupled with customer delivery deadlines and the myriad of other business demands clearly demonstrate their [operators’] lack of appetite.” 

Highlighting challenges faced by customers, Reid added: “Time is money so there is no time to wait 20–40 minutes to recharge on route to a job. Payload and towing capability, especially in the plant industry is an issue too, where most businesses are already on the limit with towing at 2.5–3t.”  

In broad agreement is Shelley Emery, Van Monster’s head of trade and auction disposals.“We believe the main reason for apathy amongst used buyers is their concern that electric vans will provide low levels of productivity,” she said.

Those suffering most from this weaker than expected demand are the vendors who, when setting risk originally, didn’t foresee a lack of strength in the used market. 

Motus’s Kaye explained: “I think the ones coming to market are going to be a challenge for the vendors. Residual values will have been set at what they considered conservative at the time but the whole shift in both car and CV BEV residuals means they are about to take hits the like of which they haven’t seen since pre-Covid. If I was in their shoes, if I got a solid stand-on bid I would be taking it – first loss is the best loss and all that!”

The valuation guides, having access to both data and sentiment from acrossthe industry agree that there is a challenge to face. Julian Pullen, chief commercial vehicle editor at cap-hpi, said: “A lack of product knowledge, plus a limited spectrum of potential second users, is hampering sales. Main dealers that sell new will buy used in low quantities, but generally used buyers are very uncertain.” 

Andy Picton, chief commercial vehicle editor at Glass’s, added: “Pricing is a big part of the issue, along with a perceived lack of usable infrastructure and the compromise between range and payload. Nevertheless, there is a lot of negative and unfounded industry comment that isn’t helping.”

The remarketing companies, whilst pragmatic about the current market dynamic, are a little more bullish about the future for the used electric van. Matthew Davock, director of Manheim Commercial Vehicles, of Cox Automotive, said: “We’re experiencing a warmer reception to e-LCVs in our lanes and on our online channels, but this is from an admittedly very low base. In the first nine months of the year, we sold 188 e-vans, which, while representing a 22% year-on-year increase, is still a small proportion of our overall stock. The 58% first-time conversion rate is lower than that achieved by their ICE equivalents but not outsideof our expectations.”

Niche players will capitalise on the reluctance of others to speculate on an uncertain market. 

“We are working with some specialist buyers that only trade EVs and they are prepared to stock some vehicles,” said Alex Wright, managing director of Shoreham Vehicle Auctions. 

At rival firm Aston Barclay, Geoff Flood, national LCV manager, noted: “Some of our buyers predominantly sell EVs and hybrids and they are more prepared to buy vehicles for stock while others are buying vehicles based on their perceived value.”

The trade is very price conscious and Manheim’s Davock says the recent softening in values has seen interest gain momentum. “Recent market price movements mean the typical used e-LCV is now cheaper than its diesel counterpart, in some cases by as much as 50–60%. 

“This shift has not gone unnoticed by the trade and with the risk diluted, increasing numbers are prepared to dip a toe in the water.” 

Cap-hpi’s Pullen has also noticed parity between supply, price and demand appearing. “Some have already reached the bottom of the curve. VW’s ABT eTransporter, first gen Kangoo ZE and eSprinter, [are] all very poor examples of an EV with very low CAP figures but [are] now showing patchy over performance in some sales. Most others are still on the curve down but should bottom out in the next couple of months.”

There is reason to be optimistic surrounding the long-term future, Glass’s Picton suggested. “Demand will grow as an increasing number of ULEZ/CAZ are introduced and more widely, operators realise that there is a role for a used EV. 

“As more EVs enter the used market, prices will find their level,” he predicted.

The potential impact of low-emission zones is also noted by Davock. “The other factor influencing stocking decisions today is the expansion of the ULEZ in London and Bristol. 

“It’s too early to read much into the numbers but there is a general feeling that some customers, particularly those supplying into these regions, are currently taking a greater interest in EVs as well as compliant ICE variants. Again, price has to be an influence here.” 

Aston Barclay’s Flood added: “When we look at how the used EV car market has evolved, it is certainly very encouraging for vans. 

“It’s going to take time for the market to settle down, however, once more dealers and end user operators understand EVs in more detail, prices and demand will rise.”

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