The cost-of-living crisis, high interest rates combined with changes in the balance of supply and demand for used vans have all made 2023 another year full of twists and turns. But are we seeing the used van market return to stability?
Julian Pullen, senior editor commercial vehicles and motorcycles at cap-hpi thinks the signs are there.
“Having heard, and used the word ‘unprecedented’ way too many times over the last few years, 2023 saw a thankful, if gradual, return towards ‘business as usual’ in the LCV remarketing world. New vehicle supply continued to ease, particularly through the second half of the year, and auctions and dealer forecourts subsequently saw used vehicle stocks bolstered to more reasonable levels.”
Adding a caveat to this though, Pullen suggests that product mix and buyer behaviour in 2023 were different to previous years.
“Stock age and mix changed considerably and vehicles available to sell were on average, older, and showing more damage than in previous years.”
He added: “There was also a notable absence of younger low-mileage vehicles around, of the type historically de-fleeted in numbers by hire businesses running vans on their own risk.”
Andy Picton, chief commercial vehicle editor at Glass’s has also seen the auction landscape change. “Registrations have improved dramatically in 2023, albeit from a low starting point which has allowed most operators to de-fleet into something newer and cleaner, which in turn has increased the pool of used stock.
“We’re also now seeing over 75% of all vans sold at auction being Euro 6. There’s a diminishing demand for Euro 5 as ULEZ/CAZ force most operators to Euro 6.”
The auction companies are reporting a strong 2023. With the global component shortages easing, operators were able to refresh their fleets with a consequential rise in auction entries.
If demand fails to match supply, however, there is a danger that prices will weaken but this wasn’t evident overall.
Matthew Davock, director of Manheim Commercial Vehicles, Cox Automotive, said: “2023 was another record-breaking year for LCVs at Manheim as our strong market position was reaffirmed. Our new sales program generated fantastic engagement, with a 37% increase in buyer activity compared to 2022, resulting in an average of 216 more active buyers per day. Wholesale auction volumes returned to pre-pandemic levels too – representing a 22% increase in numbers versus 2022.”
With fleets having had to retain their vehicles for longer than anticipated, the change in the age and mileage profile has been substantial. Davock observed that 2023 saw the oldest-ever stock profile seen in the wholesale LCV market sector, giving buyers stock profile challenges they had never witnessed before.
“The average age recorded was a whopping 74 months (six years of age) on average at Manheim throughout 2023,” he said.
“This meant stock on average was nine months older than 2022 levels and 14 months older on average than pre-pandemic market levels. An alarming market statistic was that only 12% of the stock on offer to buyers was between one to three years of age. This was 44% in 2019.”
Alex Wright, managing director at Shoreham Vehicle Auctions has observed a shift in values in certain areas. “We have seen some big changes in the market in 2023 but the used van market has been very resilient,” he said.
“It has remained consistent throughout the full 12 months, although there were market corrections in certain areas, such as chassis cabs, Lutons, tippers and double cabs, that experienced a fall in prices. Late and low prices also came down from their previous high levels.”
Auction firm Aston Barclay experienced a good year, according to Geoff Flood, head of LCV.
“[It] was a record year for the LCV business with over 300 vendors selling over 10,000 used LCVs. Vendors and buyers like our hybrid physical and online sales approach and this has translated into more buyers and more vendors visiting our sites, which has kept prices and conversion rates at consistent levels,” he said.
Perhaps as a result of an increase in the number of older, higher-mileage vehicles being disposed of, Flood says trade bidders are being more selective.
“Currently the most in-demand used stock at auction includes LCVs between 65 to 68-plates in age with a good service history and in reasonable condition, priced between £10
to £12,000.
“We are predicting this trend will continue with vendors telling us that more used ex-fleet vehicles of this age and condition are coming through in the first four months of 2024, which should balance supply with demand.”
Also noting the changes that were seen during the last year is Gary Sullivan, managing director of Van Monster, who remarked: “The market enters 2024 with demand balanced
with supply, which is very different from early 2023, which saw us sell everything that we could get our hands on, irrespective of mileage of condition.”
He added: “New vehicle supply has improved but it’s still nowhere near where it needs to be to cater for the demand of larger fleets. This continues to contribute to an older van parc with used LCVs coming off the market older, with higher mileage and many vehicles with damage.”
Insiders’ outlook for 2024
Julian Pullen, cap-hpi: “A day trip down any motorway bears out the fact that vans continue to be the lifeblood of many UK businesses, and with new manufacturers, new models, and better versions of existing BEV examples all coming on stream this year, the new and used van will continue to be a solid contributor to reliable turnover and profit opportunity in the UK automotive industry for many years to come.”
Andy Picton, Glass’s: “Demand in the used market will continue in the main for diesel vehicles, with a growing but limited demand for hybrid vans. Values in 2024 should generally remain strong for used Euro 6 stock as further CAZ are introduced. As most manufacturers look to combat the requirements of the ZEV mandate by streamlining their new model offering, certain used models will see an increase in demand and as a result stronger prices paid.”
Matthew Davock, Manheim: “We expect to see more volume in the first half of 2024 compared to the same period in 2023 and overall volumes to increase further versus 2023 levels as many of the largest fleets and rental businesses take advantage of the new vehicle supply’s positive factors. We expect to see BEV volumes continue to increase further throughout 2024 and we also expect to see an increase in demand for BEV LCVs as guide values re-align, buyer awareness regarding ranges increases and positive retail demand and asset confidence builds.”
Alex Wright, Shoreham: “Used vehicle supply is likely to be restricted again in 2024 as it’s three to four years since the Covid pandemic when new vehicle sales were heavily compromised in early 2020. Businesses will also be tightening their belts even when interest rates continue to fall, with the Bank of England expecting little economic growth in 2024, which will restrict used vehicle demand.”
Geoff Flood, Aston Barclay: “The overall health of the used LCV market is likely to be linked to how interest rates perform. If they continue to fall, then this will help fuel growth in the economy, which benefits the smaller businesses that buy used LCVs. It will kickstart the economy and should help keep used LCV prices and demand consistent throughout the year.”
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