Used van warranty sales support trend for the used van market

The signs from the van sector is that new sales are down but this is countered by the used van market being steady and showing a resistance to the economic downturn. The WMS Group’s consumer website (UVW), have seen an increased demand for used van warranties and associated products as van owners are holding on to their vehicles for longer or buying a used van.  It is becoming ever more important to keep your van on the road and a warranty gives peace of mind and van owner confidence.

It’s been a tough year for the van industry. Since the current recession began last year, commercial vehicle sales have fallen month after month, fuel prices have fluctuated wildly and major manufacturers have teetered on the edge of bankruptcy But the doom and gloom is not universal. One sector of the motoring industry has, surprisingly (or unsurprisingly!) done much better than expected: the used vehicle market.

As Louise Wallis, head of the Society of Motor Auctions, recently told Fleet Directory: “Sellers at motor auctions have enjoyed the best possible conditions over recent months, with reduced supply and good demand from buyers, resulting in high conversion rates and strong prices.”

According to CAP, the Ford Transit accounts for as much as a third of all used panel van sales. CAP current valuation manager Ken Brown told Fleet News: “As a result of this, any models in reasonable condition are sure to attract strong bids, especially when in metallic paint.” Condition is the single most decisive factor in the used van market, notes CAP, with demand strongest for used vehicles in excellent condition with enhancements. Visible damage and poor preparation can scupper panel van auctions, it adds.

According to Alex Wright, Sales Director for Manheim Auctions: “We are now well into the seasonal period when values traditionally harden. This period usually begins as early as May yet throughout June and July we have seen consistently strong attendances both in the auctions halls and online with healthy bidding and high conversion rates. The marginal fall in average wholesale used van values of just 0.6 per cent in July, following a fall of 0.5 per cent in June, leads us to believe that there is still an underlying strength in the wholesale used van market.” Manheim has also benefitted from the increasing popularity of online buying, selling according to a recent press release, as many used vans and trucks via the internet in the first six months of 2009 as it did over the whole of 2008. Over that period, 15.2 per cent (6,017) of the 40,000 vans and trucks sold by the company attracted online bids, and only a little less than half that were sold to online buyers (7.1 per cent or 2,820 vehicles). Rival auction house British Car Auctions saw a rise of 2.8 per cent (£100) in average used van values of July. Motor industry information specialists Eurotaxglass take the same view – that the used van market is booming.

Commercial vehicle editor George Alexander says: “Nearly every tidy van up to 2.8 tonnes is proving popular, with the relationship between supply and demand being in balance.”

So what’s driving the used van boom? Belt-tightening in response to the recession has undoubtedly played a role, with fleets economising and offloading excess vehicles onto the used market. Increased supply (over supply from some perspectives) has acted as an incentive, with a rich choice boosting the numbers of price-conscious van and vehicle buyers flooding into the showrooms and auction houses.

Meanwhile, the picture remains one of gloom at the new end of the sector. Over the last year, we have seen the collapse of once established names like LDV, while other international manufacturers have struggled with plunging sales. Recent figures from the Society of Motor Manufacturers and Traders (SMMT) revealed that van sales over the first half of 2008 were 45 per cent down on the same period last year. Vauxhall alone saw a 48 per cent drop in sales over the first half of 2009, followed by Ford and Citroen (both down 42 per cent). Volkswagen is not far behind, with a 36 per cent drop in sales.

Commenting on the bleak figures, SMMT Chief Executive Paul Everitt said: “The commercial vehicle market continues to reflect the very difficult conditions facing business buyers, particularly those in the freight transport and construction sectors.” However, van registrations may cease to tumble by the end of the year, he added, but if they do, it will be at the lowest levels since the early 1990s. Even the much discussed scrappage discount scheme has failed to lift the dark clouds hanging over new van sales. As recently as mid-July, just 325 vans had been sold under the scheme. Ford has been the biggest winner from the scrappage scheme, having sold 200 vans and commercial vehicles by mid-July – compared with 12,000 cars. The runners-up were Mercedes-Benz, with 147 sales, Volkswagen with 83, and Peugeot with 80. Renault had sold 58, Vauxhall 30 and Iveco just seven. Industry figures blame the van sector’s sluggish response to the scrappage scheme on the ten year cut-off date: only vehicles over that age are eligible. LCVs are typically worked much harder than cars, and this intensive usage wears them out more quickly they claim. Consequently, there are far fewer ten-year-old vans on the road.

In the words of SMMT Commercial Vehicle Manager Robin Dickeson: “In respect to [commercial vehicles], the scheme is imperfect and would be more relevant if it was set at seven years.” There can be little doubt that the recession has had a devastating effect on the motor industry, both at home and abroad. How cheering then, to read recent reports that the worst may already be over. Earlier this week, amidst reports of an upsurge in business and investor confidence, Michael Izza, Chief Executive of the Institute of Chartered Accountants, went as far as to tell the BBC: “…the UK recession is at an end.” Could a brighter dawn for the motor industry be close?