Remarketing: Cash converters

Date: Friday, September 30, 2016   |   Author: James Dallas

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The marketplace for light commercial vehicle conversions underwent a change when the European Community Whole Vehicle Type Approval regulations arrived in 2013.

This made life difficult for some of the smaller, independent bodybuilders who found they could not comply with the exacting standards and saw the major manufacturers muscle in on the action.

Customers can increasingly take their pick from factory-fitted conversions or approved conversions carried out by independent experts such as VFS and Ingimex, which often come with a manufacturer-backed warranty.

Mainstream conversions like tippers, dropsides and Lutons are often available on the forecourt and can be serviced through the manufacturer’s dealership.

A van conversion can cover myriad changes to a base vehicle – from simple racking to adding a bespoke body or load area. As a result, as many as four out of five vans on the roads have undergone some sort of conversion. A lot of these will not be registered as converted because some simple modifications such as racking or extra storage will have been fitted by the owner or operator.

When it comes to the larger jobs, however, manufacturers have welcomed the move to Type Approval. Most were already offering factory-converted vans but now work more closely with their approved converters.

Each conversion is examined and approved by the Vehicle Certification Agency (VCA) and the Driver and Vehicle Standards Agency (DVSA).

Low-volume and niche conversions are subject to National Small Series Type Approval or Individual Vehicle Approval (IVA).

So how does this vast array of conversions fare at remarketing time?

Well, despite the large number of converted LCVs on the road, BCA’s LCV operations director Duncan Ward says: “The remarketing sector is dominated by panel vans and car-derived vans, many from the corporate sector – in fact,  only around 15% of the marketplace is not a traditional van, so anything different is likely to generate interest with buyers. Lutons, dropsides and tippers always attract a lot of interest.”

Ward says demand for more specialist vehicles, such as temperature-controlled vans, is not so strong, but that they can attract interest from cash and carry, independent food retailers, or even market traders, providing they have a good combination of age, mileage, specification and payload.

But he adds that a large percentage of ex-supermarket delivery vans have little attraction for the general used sector as they have been over-specialised.

On the other hand, Ward says demand for cherry pickers and hi-abs tends to be healthy from a specialised audience because such vehicles do not reach the market very often.

“Condition is important and buyers like to be assured the additional equipment has been properly maintained and serviced,” says Ward.

Condition, as ever, is the key – Ward says Lutons are particularly desirable if fitted with a tail-lift, but warns: “Any obvious damage can seriously dent resale values – GRP bodies are difficult to repair and tend to require patching, which can look unsightly.  Sellers should also ensure the tail-lift is regularly serviced and any relevant paperwork is supplied at the time of sale.”

Andy Brown, CD Auctions’ boss agrees that core conversions are the most sought after, but says: “There is a market for all types of conversion – you just need to research potential buyers and market to the right audience.”

Brown adds that Ford, Vauxhall and Volkswagen conversions are the most popular at CD Auction sales.

BCA’s Ward says the growth in civic building projects over the past couple of years has sustained demand for the perennially popular dropsides and tippers, but cautions that damage in the load area can temper enthusiasm.

crew cabs fare less well and are seen by sole traders as too niche, according to Ward. The extra three seats are usually not required, and if they have been removed and converted into a tool locker this is simply seen as dead space, he adds.

Roadside recovery vehicles are scarce and generate a lot of excitement in the auction halls, says Ward, but he claims potential buyers are often put off because such vans have usually come to market after a hard working life.

As with all used LCVs, a high level of presentation should be the norm for converted vehicles. Professional buyers will tolerate minor cosmetic damage that can be rectified with smart repairs, as these are working tools, but significant damage to bodywork is a turn-off because it means delays and expense before the vehicle can be retailed. 

Worse still is damage inside the cabin that could necessitate the costly replacement of seats or dashboard.

Ward concludes: “A very specific or distinct specification may be undesirable in the secondary market. While a panel van will have myriad uses and applications, a supermarket home-delivery van with freezer, chiller and ambient sections will have a very limited marketplace. In contrast, scarcer configurations such as cherry pickers reach the marketplace infrequently and will attract a lot of buyers as opportunities to buy are few and far between.”


The RV specialists’ view

Andy Picton, senior commercial vehicle editor at valuation firm Glass’s, says conversions do tend to boost values, but adds: “The chassis it’s built on can make a difference, as can the type of conversion.”

Picton says more obscure conversions struggle to find buyers.

“The more bespoke the conversion, the more difficult it will be to find a second home,” he explains. “A dropside, tipper, box or Luton van will have more opportunities on the open market.”

LCV industry consultant Tim Cattlin reckons conversions are generally worth more at resale time than standard vans, provided they are not too niche and aimed only at a tiny second user market.

Cattlin makes the point that traders are unlikely to buy specialist conversions for stock because they attract such a restricted market they will receive little attention on the forecourt.

“Unless they have a buyer lined up they will play safe and buy stock that they can turn into profit quickly,” he says.

Low demand means that fridge and freezer conversions and compartmentalised supermarket vans often disappoint when it comes to remarketing despite their high initial cost, claims Cattlin.

He says cherry pickers enjoy strong used demand because buyers can be put off by their high new cost and notes that while used welfare vans may attract a premium over a standard van this can be wiped out by large defleets, leading to a flooded market.

Picton believes the EWVTA regulations have boosted the remarketing value of manufacturers’ factory conversions through providing reassurance to second buyers.

 “Most manufacturers now offer a dropside, tipper, box or Luton van on their price list, which will be covered under their warranty,” he says.

“Older examples will have often had their body converted by a third party and would not benefit from the same warranty. The older the vehicle, the more work it has likely to have been through and the poorer condition it will be in.”

He says confusion can arise if the chassis has been supplied by the manufacturer and the conversion supplied by a third party. The warranty may run for different periods leading to disputes over who is responsible for what part of the vehicle when there is a problem.

The golden rules of good condition, sensible miles and a full service history apply to conversions as to all used LCVs, Picton says, although he adds:

“Something a little out of the ordinary can be seen as good news in the used market as it breaks the monotony and gives the trader a chance to purchase something different. However, vendors offering a conversion that is too bespoke will limit their chances of finding a suitable home.”


Conversions at a glance
• Tippers and dropsides always attract interest
• Condition is key: seller should provide evidence of servicing and maintenance for extra equipment
• High mileage and poor condition equals low value
• High specification appeals as much in conversions as in regular vans
Source: BCA


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