Condition is the key to cash

Date: Wednesday, August 06, 2014   |   Author: James Dallas

Van operators need a huge variety of converted light commercials to meet their specific needs, but how do these vehicles fare at remarketing time? James Dallas reports

For many light commercial vehicle operators, popping down to the local dealership to buy a batch of panel vans or chassis cabs is not an option – they require something more specific that necessitates making an order through a manufacturer’s dedicated conversion scheme or from an independent body builder.
But how do vehicles such as tippers, Lutons or temperature-controlled vans fare when it comes to remarketing time?
Duncan Ward, general manager at remarketing firm BCA, says that 85% of LCVs passing through auctions are vans, so the rarity of different bodystyles means conversions attract a lot of interest, so long as condition is good.
“Lutons are particularly desirable if fitted with a tail-lift, but condition is vital, and any obvious damage can seriously dent resale values,” says Ward, who warns vendors to ensure their vehicles are prepared for sale.
“Sellers should ensure the tail-lift – if fitted – is regularly serviced and any relevant paperwork is supplied at the time of sale.”
Ward adds that box bodies are difficult to repair and usually require unsightly patching, which is likely to put off buyers.
When it comes to tippers and dropsides, he says the used market is still overshadowed by the recession-induced collapse in the construction industry five years ago when builders stopped buying new vehicles.
“As a result, we simply are not seeing the volume the market could absorb, and values are correspondingly high,” he explains.
Collapses in the construction industry also hit the used market, as Tim Spencer, Shoreham Vehicle Auction’s CV manager points out: “The only time when tipper and dropside demand falls is at the height of a recession when the construction market is struggling.”
George Alexander, chief editor – commercial vehicles, at Glass’s Guide, agrees that supply shortage is now driving up demand: “Over the past 18 months, there has been a significant shortage of used stock, and as a consequence prices for the most popular examples have risen sharply. Those 3.5-tonne conversions that return to the marketplace in good condition will consistently provide vendors with strong returns,” he says.
Like Ward and Spencer, Alexander stresses the fortunes of tipper, dropside and Luton conversions are dependent upon the health of the UK housing market and, as it is currently enjoying strong growth, demand for such vehicles is on a high.
Martin Blunt, van auctions boss for online remarketing firm Autorola, gives another reason for the popularity of used tippers and dropsides.
“Refurb costs for a tipper or dropside body are quite cost-effective to quickly improve the look of the vehicle,” he explains, although he adds light damage does not deter the SMEs, with whom they are particularly popular anyway.
As chassis conversions are more expensive new than their panel van stablemates, they tend to cost more on the used market. But in percentage terms, Alexander says RVs for chassis-converted LCVs will typically be at least 5% below those of the base vehicle. The exceptions are motorcaravans and executive-type minibuses.
David Hill, Mycarcheck’s LCV specialist, says a good quality, 36-month old converted Ford Transit Luton will command a premium of up to £4000 over a comparable standard van, while SMA Vehicle Remarketing’s national operations director Eddie Thomson says he would expect tippers to see up to 130% of a comparable base-level LCV.
BCA’s Ward says crew cabs attract lower values because second users are often sole traders who do not need the extra three seats. On the other hand, he claims the scarcity of roadside recovery vehicles generates demand but, because they are generally remarketed after a hard working life, payload and condition is critical.
Glass’s Alexander also emphasises the need to retain payload capacity.
“It is of crucial importance that the additional weight of the build does not reduce payload too greatly,” he stresses.
In fact, condition is the yardstick for determining values. A used LCV is the next owner’s working tool and a calling card for their business, so a good level of presentation is expected. Professional buyers might expect to see some cosmetic damage because LCVs are working vehicles, and small issues can be addressed with Smart repairs or minor bodyshop work.
Alexander advises operators to take simple steps, such as ply-lining the interior of every van and putting load-liners in pick-ups to protect resale values.
“Low-cost additions such as extra lashing points that will secure loads and prevent inside-out damage, and seat covers/matts that will ensure each vehicle can be valeted to an appropriate standard, are a must,” he says.
But Ward adds: “Significant damage to body work, such as dented panels or doors, is a real turn-off as it means delay and expense before that van can be retailed. Potentially worse is damage inside the cabin as that means seats or the dashboard might need replacing, and that is expensive.”
Metallic paint should also be avoided as it is expensive to repair, while particularly obscure conversions can also be tricky to shift due to the limited number of buyers interested in them.
“While a panel van will have a myriad of uses and applications, a supermarket home-delivery van with freezer, chiller and ambient sections will have a very limited marketplace,” Ward explains.
However, he notes such vehicles may appeal to cash-and-carry businesses or independent food retailers.
Thomson from the SMA argues that because more customers are looking to transport perishable foodstuffs, demand for fridge/freezer vans is on the rise, so long as the vans have been well maintained.
It is debatable whether racking in a van on an auction lane helps or hinders its value. Alexander points out it is likely to be specific to the original owner’s needs and thus best removed prior to resale. The exception is for standard specifications that will suit the majority of fleet operations. But Autorola’s Blunt notes it could be worth leaving racking in because if a small business needs it they will retain it, but if not they can easily take it out and sell the kit on.
Roger Holder, Hitachi Capital’s CV remarketing boss, concurs: “In my opinion, racking should always be left in a vehicle when remarketing, as it increases the desirability of the vehicle by giving the trade the choice to sell as a standard vehicle with the racking removed or sell as a specialist vehicle with the racking in situ.”
While factory-converted or industry-recognised conversions make premium values, Holder warns: “Homespun conversions, such as a second row of seats that don’t match the factory trim or poorly fitted side windows and trim level can have a detrimental effect on the price achieved in remarketing. This type of conversion can dramatically reduce the vehicle’s value and even make it worth less than a standard vehicle.”
John Davies, chairman of the Vehicle Remarketing Association, goes further: “An aftermarket conversion to non-industry standard is the kiss of death. Whole Vehicle Type Approval covers this off for first-life operators. It’s when vans are used and sold that other alterations can be made.”
Davies says messing vans, fitted with washing and toilet facilities for work teams located at remote sites, are invariably popular second-hand buys, and both Holder of Hitachi and Mark Lovett, Leaseplan’s CV boss, say auction demand is always strong for what Lovett describes as “staycation” conversions such as combis and VW camper vans.
Mycarcheck’s Hill says a VW Transporter T5 in good nick will always attract attention due to its potential for camper conversion, while Shoreham’s Spencer adds: “Having a second row of seats in a van professionally fitted by the manufacturer or dealer gives a panel van extra flexibility and value provided that rear windows are not fitted to the van, which changes the vehicle’s status to a car and means operators can’t recover the VAT on the vehicle purchase.”
As well as condition, the quality of conversion and the converter’s reputation, Lovett says a manufacturer’s warranty will boost a vehicle’s remarketing value.
When it comes to blue light conversions, if the intention is to sell for use in the UK, the vendor is responsible for ensuring that any specialist equipment has been removed or disabled. The prices achieved for such stock will typically be low, says Glass’s Alexander, but adds: “If such vehicles are exported in order to continue being used in blue light service, their prospects are far brighter and the prices achieved can be surprisingly strong.”
Mycarcheck’s Hill points out decommissioned blue light vehicles tend to be older (five to seven years) before becoming available to private buyers. But he says ex-ambulances in particular have “something of a cult following as either campers or burger vans”.
The price that buyers are prepared to pay for used converted LCVs reflects demand, condition, presentation and equipment. As a rule of thumb, as is the case for all used vans, high mileage and poor condition generally equates to lower values.



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