CV Market Tracker - May 2021

Despite used LCV sales exceeding expectations for the fourth month in a row this year, commercial vehicle auctions specialist Manheim is urging caution and warning of future supply bottlenecks triggered by challenges within the new van market.

Manheim’s latest monthly LCV market tracker for March 2021 reveals a new record for the average selling price of used vans at £9,903, up £321 or 3.2% from the same period last year. This is a continuation of a trend seen in used Euro 5 and Euro 6 van sales, where increased buyer engagement has been experienced every month since January. The distinct two tier sees pre-Euro 6 having hit a price ceiling; in contrast to late plate Euro 6 which continues to see single digit month on month increases in average selling price.

Euro 6 van sales saw average prices rise by 2.3% to £13,175, with a two month drop in age to 33 months and 4,000 to 49,000 miles. The average prices of pre-Euro 6 vans rose by 1% to £5,559, with identical age and mileage at 92 months and 99k respectively.

However, James Davis, Customer Insight Director at Cox Automotive, is urging LCV retailers not to be deterred by the month-on-month price increases, warning that supply challenges in the new market are poised to cause further disruption in the used sector, limiting supply and driving prices up. He commented: “It has been another great month for van sales, but the combination of the Easter break, spell of good weather and easing of lockdown has put a degree of seasonal pressure into the market. This slight softening must not be confused with any sector wide market realignment. It might sound like buyers are snapping up what they can get, but damaged and high mileage vans are the first to typically suffer with seasonal market cooling; our auctioneers continue to pull out all the stops to generate buyer interest for vendors.”

“We foresee disruption in the wholesale market well into 2022. We’ve all seen the challenges the new vehicle sector is experiencing with raw material and component shortages. This is having a profound effect on the used market, delaying de-fleet programmes and affecting the flow of used stock to wholesale. Supply and demand of new and therefore used vans will remain in flux until new lead times and supply levels return to pre-pandemic times.”

Knock-on effects of supply chain shortages

Davis is also advising caution to positivity surrounding the latest registrations report provided by The Society of Motor Manufacturers and Traders (SMMT) in April. He explains: “There are two main issues here, firstly the data was compared to the first lockdown month of April 2020, rather than 2019 which would be a more accurate comparison considering the market volatility felt last year. Secondly, many delayed orders from 2020 were carried over into this year’s figures. The reality being that in the remaining eight months of 2021, we’ll have to average 30,000 van registrations each month to hit the SMMT’s April revised forecast of 369,000 vans.”

Cox Automotive report there are warnings from within the industry of acute lead time extensions, with some volume OEMs now stating up to 12 months for delivery of their most popular models. Raw material and microchip shortages, coupled to production and logistical challenges due to COVID compliant working practices, are seeing some factory production severely restricted or even halted. Manufacturers are working with suppliers to allocate available resource to ultimately determine which models should be prioritised for production.

Davis continues, “We are in uncharted waters and clearly this places more pressure on the remaining months of 2021 to ramp up new registrations to hit the SMMT’s upward revised forecast. This unprecedented series of factors drives our lower forecast of 285,000 average van registrations, as the route out of the pandemic still has some way to go, in our opinion.

“With lead times for new Euro 6 vans impacted, used Euro 6 van prices will continue to rise. Clearly this distinct two-tier wholesale market of Euro 6 and pre-Euro 6 stock is seeing ever increasing divergence in the average sale prices; but used van inflation is baked into the market now and we do not foresee any price realignment or crash. Until the flow of new vans recovers, the supply constriction of de-fleeted and part exchanged used vans will cause a supply crisis for the wholesale market.”