Small businesses are turning to used LCVs rather than investing in new models due to their concern over the General Election and the potential outcome of Brexit, according to Shoreham Vehicle Auctions (SVA).
With SMMT figures showing new van sales down 5.3% to 26,982 year-on-year in May and lagging behind 5.0% in the first five months of the year, Alex Wright, managing director of SVA, claimed expanding smaller companies are spending £10,000 to £15,000 on a good quality used van rather than committing £25,000 to £30,000 to buy or finance a new one.
“This spells good news for the used market as the demand for one to three-year-old used LCVs is set to grow over the coming two years until the true results of Brexit are realised,” Wright said.
He added that the “light commercial market is well tuned to the current economy” and argued factors such as low interest rates, higher inflation and a falling Pound would also encourage SMEs to switch from new to used in order to better manage their risks.
“Cashflow is king and they are able to change their purchasing decisions swiftly to protect their cash in the bank [while] not preventing them growing their businesses,” Wright claimed.
But he said there was no sign of larger companies following a similar pattern by delaying new van purchases or increasing their used replacement cycles as they did during the recession between 2009 and 2013.
“SVA is still seeing a steady flow of three-to-four-year-old used ex-fleet stock coming into the market, which will help satisfy this demand from SMEs,” said Wright and added there remained a sufficient price gap between nearly new demonstrator stock and the three-year-old van market not to damage prices of the latter.
SVA forecast a settled used market for July and August with demand growing and prices remaining at their current levels rather than suffering from the normal summer dip. Only if new van sales plummet in the coming months would used prices rise above inflation as demand threatened to exceed supply, the firm said.