CV Market Tracker - January 2021

2020 summary

The shortage in the wholesale supply volume in the used van market reflected the new market shortfall according to Cox Automotive UK, with the resultant de-fleet stock shortage driving a record-breaking series of selling price increases post lockdown.

Over eight months, the price guides increased their van values by up to a third, with Manheim recording a 32% increase (£2,062) in average selling values over the same period (£8,527). Taking the profile of Manheim stock in Q1 vs the remainder of 2020, average age only fell by three months (to 59) and average mileage fell by 6,000 (to 69,820).

Manheim’s buyer sentiment survey in December 2020 also showed how resilient and adaptable dealers have become:

• 72% reported overall sales remained positive
• 66% reported high demand in medium/large panel van and chassis cab
• 28% reported low demand for car derived van apart from higher spec examples
• 44% are offering free onward delivery to promote an online seamless buyer journey

Two points of note in Q4 were the pressure on export and specifically the Irish markets. Demand has been suppressed in Q4 with many dealers reporting both price rises and export age bandings further afield making it more difficult, especially when vans are over six years old.

As well as the upward record-breaking trend for selling price, the time it took for vendors to sell out fell significantly, part due to the pent-up demand but specifically Manheim’s innovative Simulcast sale programme. Looking back to 2019, the time from physical or digital arrival to finding a buyer fell by 40% or 6 days to just nine days. This represents the largest ever fall and lowest ever stock holding period and, in terms of asset holding cost reduction, proved a significant benefit to vendors.

Matthew Davock, Manheim director of CV, said: “2020 was a year unlike any other. No-one could have predicted the price rallies witnessed and this combination of market forces has never been experienced in living memory. Vans remain essential to UK business and the records we saw tumble in terms of active buyers, selling prices and days in stock were a by-product of this unique supply-led recessionary demand. Whilst Euro 5 has found its price point, albeit significantly higher than Q1 2020, Euro 6 promises to remain in the highest demand and achieving continued record demand.”

2021 outlook

The SMMT’s latest forecast for 2021 was published in October 2021 and sits at 328,000 new LCV registrations. This would represent a 12% increase over 2020 performance, giving a total of 328,000 new vans registered. The Cox Automotive forecast is more prudent, due to our views of the ongoing COVID restrictions, softening retail demand and recessionary economic recovery patterns. Cox Automotive sees 2021 new registrations tracking similarly to 2020 with a top end forecast of 285,000.

Davock added: “As we transitioned from December to January, the seasonal softening of the used market was clear. The older, more damaged, and highest mileage examples softened in terms of price and conversion rates whilst demand for the cleanest retail stock was unwaveringly popular. It would appear buyers are anticipating de-fleet supply to increase as typically happens in Q1. Speaking to corporate fleets, just as in Q3 last year, this de-fleet supply is simply not coming. For example, many report a trend for contract extensions in the face of business uncertainty. Whilst it is logical that January will see many dealers observing more auction sales than bidding, the additional overlay of lockdown and rising unemployment will impact supply and demand activity as it did last year. Euro 6 will remain the golden child of the used van sector with any new supply shortages reflecting in the used values achieved.”

James Davis, customer insight director, Cox Automotive, commented: “We see the 2021 new and used van markets as a year of two halves. Whilst we have happily escaped the Brexit no deal tariff nightmare scenario, we believe the first six months of 2021 will track similarly to 2020. This is because most of the overarching market determining factors remain unchanged. We see lead times normalising as global supply chains are aligned in recovery with COVID compliant working practices, but this is against the backdrop of reduced factory outputs and challenges in specific areas such as logistics. What is clear is that, in this second lockdown, we have escaped outright factory closure and broken supply chains in previous lockdowns when COVID swept the globe with lockdowns from East to West.”

Davis concluded: “The second half of 2020 will be determined by the vaccine rollout programmes and the phased return of the economy. The shape and speed of recessionary bounce differs hugely but I feel sure that the impact will be felt in the new and used van market until the middle of the decade. CV registrations have always closely tracked GDP as a reflection of the health of the economy and the plethora of stimulus and support packages must be accounted for at some point. There is significant pent-up demand from household savings (termed in the media as ‘revenge spending’) and no doubt the UK’s businesses, specifically SMEs and sole traders will benefit from spending from both domestic property improvements to Government backed national infrastructure projects.”

More detail on the new and used van markets can be found in the 2020 Cox Automotive Insight report.