The used van market is showing considerable strain right now, with sellers under hefty pressure to cut prices and prevent the market from stalling completely, according to vehicle valuation expert Cap.
The pick-up sector is the one hit most hard, continuing to struggle “largely due to a dramatic fall in retail demand,” says Cap’s LCV editor Ken Brown.
“There is very little appetite for vehicles in this sector at the moment, particularly lifestyle models,” he says in the firm’s June marketplace report, published in the company’s Red Book pricing guide. The market is waiting for a “new baseline” to settle on pricing these models, and Cap reports a huge monthly drop of 7%, with the Toyota Hilux most likely to buck the trend with a 5.5% fall. “The commonly held view is that retail demand has dried up and no amount of price slashing will stimulate the market in the short term,” says Brown.
But it’s not all doom and gloom, well not completely. The overall price movement for June, according to Glass’s is down 2.2%, on top of a 1% fall the previous month, with larger vans of 2.8t-3.5t providing some cause for optimism. Brown reports that prices are continuing to stabilise, dropping by 1.5% in June, with the Volkswagen Crafter actually increasing by 3%.
The car-derived segment is virtually non-existent on a grand scale, with Cap reporting that only 5% of used light commercial vehicle volume came from this segment last month, and virtually all of those were Vauxhall Astravans. The light van segment was dominated by the Vauxhall Combo in sales terms, with many vehicles coming from utility firm defleeting. Cap says very few vehicles are holding station on price, with the triplets of Citroen Nemo, Fiat Fiorino and Peugeot Bipper heading in a positive direction.
The medium van segment struggled in May, with prices reaching just 92% of the guide figure. Brown thinks the Citroen Dispatch, Fiat Scudo and Peugeot Expert appear to be falling out of favour, and LDV Pilots are looking predictably tired against more modern competition.
Cap also gives a severe warning about the prices achieved being the maximum any one person was willing to pay on the sale day, and large numbers of vehicles can remain unsold, distorting the pricing evidence. At this point, realistic pricing expectations, and maximising the chances of a vehicle appealing to the market are crucial (see panel).
The age profile of used vehicles is also shifting as an after-effect of the new vehicle market slowing in 2008. There is a lack of three-year old vehicles, a trend that will continue for the foreseeable future according to Cap, and one- to three- year old models are bucking the downward pricing trend.
Auction firm Manheim Remarketing has reported April 2011 wholesale LCV prices sitting 12.8% lower than they were 12 months earlier, which means £564 down at an average £3852. That continues a trend of values reducing every month since January this year, though Manheim is predicting that won’t last as volumes start to drop off. “It is likely that van defleet volumes will now reduce for the remainder of the year and beyond,” says Manheim’s CV general manager James Davis. “The used van market is generally robust and reduction in volumes will then place upward pressure on sale prices.”