The conditions of sale

Date: Friday, May 29, 2015   |   Author: James Dallas

The state a used van is in when it is presented for sale can have a crucial bearing on its value, James Dallas discovers.


 

With demand far outpacing supply in the used van market for at least the last three years as a lingering consequence of the recession, values in the auction halls have been regularly pushed up as buyers scrap over whatever stock is available.

However, just as crucial in determining how much a van will sell for is its condition.

Early this year, when a batch of vans arrived at BCA centres from corporate sources with higher ages and mileages, and thus in poorer condition, than usual, Duncan Ward, the firm’s CV boss, pointed out: “It’s a timely warning for vendors that if the quality of stock is declining this will impact on the price performance.”

Ward adds: “We are seeing a two-tier market develop as professional buyers and end users compete strongly for the best presented ‘retail ready’ vans where values typically outstrip price guide expectations by some margin. In contrast, hard-worked lower spec vans in corporate colours need to be competitively valued to create interest.”

With the restriction on volume now beginning to ease, condition is becoming even more important and Ward says rising numbers of poorer-conditioned models coming to market is a significant factor. He warns that values are under pressure “as a result of the generally poorer condition and higher age and mileage profiles reaching the marketplace”.

Ward explains: “The remarketing rules for vans are really no different than they are for cars – proper preparation and good presentation are vital if your LCVs are going to achieve the best possible price in the remarketing arena.  And the competition is getting tougher because many corporate volume vendors are choosing this route."

He advises vendors to ensure their vehicles are in the best possible condition for their age and mileage and says smart preparation and refurbishment can be critical to this.

James Davis, head of commercial vehicles at Manheim Remarketing, says:

“Condition is the chief influencer of value and is governed by industry sector usage. This is then compounded by the behaviour of drivers who influence localised incidents of unfair wear and tear (as defined by the BVRLA Fair Wear and Tear Guide). It might seem illogical, but condition even outranks age and mileage. This is because, unlike cars, there’s no direct correlation between condition and age / mileage. According to its industry and usage, a six-month-old van can be in a worse physical condition than a six-year-old van.”

But Ken Brown, the editor of Red Book, LCVs for residual value specialist CAP, argues that the relationship between condition and value is not always clearcut.

He says if a buyer needs a particularly scarce model, they will be willing to ignore damage and even pay above CAP Clean values to secure the purchase. Brown says that in the run-up to last Christmas, demand for large panel vans was so strong “damage was being completely ignored”.

Nevertheless, professional buyers gravitate towards the best-presented, cleanest condition vans because they know they can turn them around quickly once they get them back on the forecourt.

If a poorer-presented vehicle is offered alongside better examples, it is likely to be shunned by bidders and remain unsold.

“Irrespective of market conditions, the best presented LCVs sell quicker and generate better returns on average,” Ward says.

He explains potential buyers view damage as an extra expense that will also delay sale as it will have to be made good before the vehicle can be retailed.

For some damage, he warns, there is no cheap fix. Paint or oil spills on seats, for example, will normally require them to be removed and replaced while a badly dented and corroded panel is difficult to repair and would either need replacing or require the van to be sold “as is” with a consequent drop in value as buyers tot up how much repairs will set them back.

George Alexander, CV editor for Glass’s Guide, says: “With used LCV volumes growing, poorly presented vans will struggle to sell unless reserve prices are set at rock bottom levels.”

CAP’s Brown concurs. “Most vans eventually find a home somewhere, it’s all a matter of the price the vendor will let them go for. They will know when to reduce their price aspirations.”

Manheim’s Davis agrees: “If sensible reserves are set then a van will sell at the right market value first time,” he says. “Buyers flock to the most realistically valued stock. This is the only stock that offers them a profit opportunity.”   

Interestingly, Brown suggests buyers with their own body and paint facilities may view damage as a profit opportunity because they can buy cheap and keep repair costs down before re-sale.

He says different makes and models are susceptible to distinct types of deterioration.

“Most vans have their Achilles heel and are prone to damage in certain areas.”

For example, Mercedes Sprinters and Vitos are notoriously bad for corrosion blisters and corrosion creep under the paint on chips, panel edges and clinched seams, Brown claims, but tend to hold their value anyway – perhaps due to the strength of the brand.

The PSA models, the Citroen Dispatch and Peugeot Expert and the Fiat-badged derivative, the Scudo, are often seen with sill damage, old model Vauxhall Vivaro and Renault Trafic tend to get roof damage caused by the hump catching when carrying ladders and long-wheelbase vans are prone to left-hand rear quarter panel damage, according to Brown.

Almost all models get rear door damage and chips on the front end, says Brown and adds: “Windscreens are often overlooked and if a trader spots a crack they will factor in at least £300 for replacing it.”

Original equipment replacements for lamp lenses and mirrors can be expensive, Brown says, and warns copies for newer models may not be available. Metallic paint is also problematic when it comes to colour matching and can result in whole sides of vans needing a re-spray to get the right match.

Second-hand vans will bear the scars of the trades they have worked in before remarketing time. Milk delivery or parcel delivery vans, for example, will often have worn seats due to the frequency of the driver sliding in and out while painter/decorator’s vans are likely to have paint stains in the load bay, cab and on the rear bumper. Buyers will expect to pay less or ignore them altogether.

Manheim’s Davis reckons car-derived vans’ values are particularly affected by poor condition as they are the least likely to suffer damage in general usage – often being used as crossover leisure vehicles. Also, their lower average selling values means the cost of repair is proportionally more significant.

But Alex Wright, Shoreham Vehicke Auctions boss,Analysis disagrees. “Generally, the larger the van the more it will be adversely affected by any scratches, dents or any other visible damage, as they are more expensive to repair,” he claims.

Lifestyle double-cab pick-ups with damage to kit such as alloys and air con will suffer heavy depreciation.

Glass’s Alexander says: “Those models that have a high level of specification will perform especially poorly when remarketed in a poor state.”

Conversely, tough working tools such as tippers, dropsides and messing vans, if presented in good condition will command strong values.

Perhaps surprisingly, mechanical factors are considered less significant than body or interior damage.

Alexander illustrates the point: “Whereas a clutch, head-gasket or wheel bearing can be dealt with in a straightforward manner, the cost of and time taken to attend to body damage and a cab interior that resembles a chicken coup will prove to be a big turn off.”

Davis adds: “Modern vans are more reliable, monitor their own health and are well maintained by first life corporate fleets

For minor dings BCA’s Ward says: “Smart Preparation – the process of bringing vehicles back to ‘showroom condition’, through paint technology, cold metal dent removal and repairs to interior and trim – can have a vital role to play.”

Although it’s a technique more commonly associated with car vendors, he says it can be cost effective in ironing out a few small dents on young, low mileage vans that are otherwise in good condition. Brown largely agrees but argues van buyers are still more likely to tolerate the odd small outside-in dent than car customers. He also notes that panel vans suffer from inside-out dents caused by the load on board, which generally cannot be smart repaired.

It’s a different ball game for older vans as Ward points out: “The return on the investment to bring a 5 year old, 100,000 mile van, without a straight panel to its name, back to ‘showroom condition’ is likely to be less rewarding.” 

Also worth considering is that there is likely to be little benefit in repairing exterior damage if the cabin is heavily damaged and soiled.

Ward argues pre-sale preparation will always add to a van’s value and can range from a simple powerwash to specialised ‘ready to retail’ processes, including trade name deletion and vinyl wrap removal. All of these processes can be carried out at the point of sale to save time and money, according to Ward.

With vinyl wrapping, he points out that the stickers will have formed a weatherproof surface and once removed, will leave pristine paintwork, which may not match the rest of the vehicle. If so this will need to be machine polished to ensure a uniform finish.

“It’s worth remembering in a competitive market, anything the fleet operator can do to make his or her vehicles more desirable, will have a benefit where it really matters – back on the bottom line of the operating company,” he says.

And often, the most simple measures are the most effective. Cleaning a van before presenting it for sale, says Glass’s Alexander, “is undoubtedly the most cost effective way to maximise returns”.

 

 

Top tips for adding value

 

Smart prep younger vans

Delete trade names

Remove vinyl wraps

Machine polish faded paintwork

Replace soiled seats

Or sell reduced ‘as is’

Powerwash vans pre-sale

Value stock realistically

 

 



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