REMARKETING: Buying used - a guide for the wary...

Date: Wednesday, August 29, 2018

What are the pros and potential pitfalls for small businesses wanting to acquire a used light commercial vehicle? Tim Cattlin explores the available options.

Independent dealers compare well on price against franchised rivals

Not so long ago, the used van buyer only had the local newspaper as a source for researching the price and availability of a vehicle.

Nowadays, the internet is his oyster, whether he wants to buy from a nationally recognised dealer chain, an independent dealer or from an unknown private seller.

Private sales, traditionally advertised through local press, are now offered through portals such as Gumtree, Ebay, Auto Trader, and even social media such as Facebook Marketplace. However, Gareth Kaye, group franchise director at dealer group Imperial Commercials, has a word of warning for anyone considering buying from these platforms.

“The risk is that they (the seller) are actually a trader trying to dupe them (the customer),” he says. “Ebay (and now Facebook) have a real reputation as a dumping ground – with absolutely no comeback in the event of any issues – so for cheap, bottom of the market, it’s fine, but above that? Avoid.”

Andy Picton, chief commercial vehicle editor at residual value experts Glass’s, highlights a second concern with going down the private route.

“A one-owner vehicle with a full service history could be a particularly desirable vehicle; nevertheless, as this is a private sale, the seller can ask what he wants for his vehicle and will often want top dollar, often unrealistically so. Not all private sale vehicles are in good condition and possibly have been repaired after an accident or theft.”

For those less familiar with buying a used van, Picton suggests bringing along somebody who knows about vehicles “for them to give it the once over and a test drive before committing, as there is no warranty or very little comeback to the seller if something goes wrong soon after purchase”.

There are, though, potential advantages of obtaining a van privately, as Steve Botfield, senior editor – commercial vehicles at automotive data firm Cap HPI, points out: “These channels present minimal seller overheads and a competitive price when compared to forecourt prices. You’re buying directly from the user, there are no buyer fees, and flexible viewing is available in most cases at a mutually agreeable time.”

Deal or no deal?

Independent used van dealers (those not tied to a new-van manufacturer) offer a huge choice of vehicles at all price points.

They will usually purchase their stock from auction, other trade suppliers, or it is acquired as part-exchanges.

“This is where the lion’s share of retail used volume can be found,” says James Davis, director of CVs at auction firm Manheim. “There’s lots of choice of badge, specification, age and mileage and the dealer can source specific vehicles to order.”

Botfield sees additional advantages. ‘The independent has minimal seller overheads and offers a competitive price when compared to a main dealer forecourt price. Vehicles will have been selectively chosen and had a pre-delivery check/service prior to being offered for sale. They have the ability to offer additional warranty products, along with vehicle finance options being available, and can fit non-franchised parts when servicing or repairing faults. “

Imperial’s Kaye, however, suggests that there are still pitfalls to be wary of: “There are two types: those that do it properly and have a place/workshop and a reputation, and those selling from roadsides/petrol stations and home, who can present the same risk as buying privately. But most of the time you get some protection dependent on the buyer’s status (private or business).”

On main street

Many buyers prefer the peace of mind offered when buying a used van from a main, franchised dealer.

The reassurance of seeing the badge of a globally recognised brand over the door, a nice shiny showroom, and a reputation to protect is clearly attractive. These don’t necessarily come cheap, however, and vehicle prices are usually higher than those offered by the independent trader.

“The dealer is looking to cover any preparation costs, advertising and a profit margin within the sticker price,” explains Glass’s Picton. “Vehicles will tend to be less than three years old and with fewer miles on the clock, but will be more expensive because of it. In return, any potential buyer will be safe in the knowledge that their new purchase is good for many years’ work and will come with the remainder of the manufacturer’s warranty, a full service history and MOT.

Kaye agrees, adding: “This has the lowest risk, but often a smaller choice (usually franchise-specific) and at a high end of pricing. Franchised dealers have to prepare to standards set by the manufacturer, provide better-quality warranties (most are still under factory warranty anyway), and in the event of issues have a reputation to protect and deeper pockets to resolve issues.”

Start the bidding at...

The lure of buying a van at ‘trade price’ may prove appealing to some, and a visit to any LCV auction will see a small number of potential private buyers warily mixing with the regular trade characters.

“It’s a trade price, so there is trade risk,” says Manheim’s Davis, outlining a potential issue for smaller businesses. “Many are sold as seen under auction law, although the customer could buy a younger van still inside the manufacturer’s warranty, so minimising the risk of major issues.”

He continues: “Most vendors are very protective of their brand so are transparent, declaring a fault when they know about it. We at Manheim are responding to feedback regarding the cost and complexity of mechanical repairs and are launching a 43-point mechanical inspection pilot this summer, which has a money-back guarantee if we miss anything.”

Glass’s Picton adds: “There are some great vehicles to be had at auction – however, there are plenty that are sub-standard due to damage, high miles, poor specification, and in poor general condition, including shoddy repair work or no service history. All vehicles are ‘bought as seen’ with very little comeback to the auctions themselves.

“You need to visit an auction a couple of times to familiarise yourself with the procedures, rules and regulations, routines and general hustle and bustle of a typical auction day before you start bidding. Buying from auction means coming up against other like-minded people who want the same vehicle for the same reasons as you, not only in the hall itself, but ‘online’ as well.”

Whatever the source, the provenance of any used van is a paramount consideration.

Although risk is at its lowest when buying from a franchised main dealer, a buyer needs the reassurance that the vehicle hasn’t been subject to a major insurance claim, hasn’t been stolen, and that the mileage is correct. They’ll also want to see proper documentation, two sets of keys and a service history, which will also help to verify the accuracy of the mileage.

“A prerequisite when buying a vehicle is to ensure that you acquire clean title (free from finance and not on the stolen register) and that it has not been involved in any previous major accident,” says Cap HPI’s Botfield.

“The majority of dealers will provide you with a copy of the vehicle check. However, if buying a vehicle privately it is wise for the purchaser to carry out their own check before parting with the purchase price of the vehicle, in order to safeguard themselves from the vehicle being repossessed if the seller did not own clean title to the vehicle.”

Stuart Pearson, chief operating officer at BCA, gives three reasons why buying from auction is worth considering:

  • Cheaper, ‘trade’ prices: Cash flow is always an issue for SMEs – if a quality vehicle can be acquired for a lower price that is a real benefit.
  • Choice: Bigger sales (such as BCA Blackbushe or Manchester) typically offer over 500 LCVs with a huge range of makes, models and configurations to choose from. There will also be a wide choice of one-owner vans from corporate fleets, up to five years old and usually with a full service history. There will also be dealer part-exchange vans and vehicles from webuyanyvan.com, plus LCVs from smaller fleets and local businesses, and utility and service vehicles.
  • Participating in an auction is straightforward:  BCA’s regular programme of LCV sales are open to all buyers, there is no pre-registration, and potential buyers can see the vehicles before bidding.

 



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