Fuel/interview: Matt Davock on the LCV market

Returning to his passion for all things van-related, Cox Automotive Customer Insight and Strategy Director James Davis, host of the Fuel/talk podcast, recently welcomed Manheim Director of Commercial Vehicles Matt Davock to the show to discuss the third quarter of 2020. With record-breaking average sale values, exceptional online buyer attendance figures, and extended manufacturer lead times, the pair discuss whether there is a bubble, and if it is likely to burst any time soon.

Davock starts by celebrating the achievements of Manheim’s commercial vehicle team over the previous quarter: “We’ve been doing things differently in the commercial vehicle world and we’ve been living and breathing it every day. The way we have adapted as a business, the way our teams have worked, and the agility we’ve shown up and down the country has been simply amazing.” He acknowledges the role COVID-19 has played in accelerating trends in the world of vehicle auctions, including the growth of digital and engaging buyers and vendors in different ways.

One very visible example is the shift from monthly, to fortnightly and, sometimes daily sales. Davock explains: “We are absolutely changing the way in which we auction vehicles right now. Our vendors have adapted really quickly to be able to get vehicles into the market, while buyers have also shifted their habits at a rapid pace.” Davock acknowledges the whole industry has needed to move quickly during the third quarter, recognising the positivity that comes from everyone being on the journey together.

Average selling prices have been the talk of much of the industry this quarter, with Davock confirming that September was the fifth consecutive month of exceptional average selling prices. He goes on to explain that the equivalent vans are making around 40% more at auction than they were during the same period in 2019. “It is good news for the sector,” comments Davock, “but we do need to be aware of chatter about glass ceilings and burst bubbles. Now, all the signs are that this is a trend, a new pricing alignment. With challenges around supply, this new pricing level could be with us for a while.”

Conversation shifted to Christmas and the growth of the home delivery market in 2020. While winter often sees an uplift in demand for commercial vehicles, Davock argues the spike has already happened due to COVID-19 and the increase in businesses offering home delivery. Demand continues to rise, with some organisations looking for commercial vehicles within 24 hours because they need to be able to work. Combined with supply issues in the new van market, there is plenty of evidence of extended contracts in the leasing sector.

Davock suggests that looking back at past trends and spikes probably will not provide much insight, as the market has shifted so significantly in 2020. Looking ahead to next year, he outlines that volumes in the wholesale market are likely to be challenged, prices will remain high, buyers will continue to require quick turnaround and vendors will need to move at pace to respond to the demand. In a recent survey, Davock shares that around three fifths of the buyer base are stocking around 40% fewer vans than they have ever done before.

Shifting to discuss buyer attendance, Davock confirms that there has been a 29% uplift in people logging onto the daily sales online. He suggests vehicle location is no longer an issue when buyers are looking for stock. The routine of attending an auction on a Tuesday or Thursday has gone out of the window. Davock comments: “Buyers are probably shopping in more channels and looking at the Manheim network, sites up and down the country, because it is about the stock that is on offer every day.”

Data continues to be important. Davock explains that conversations are happening every day with more buyers and vendors than ever before, with many looking for insights and market intelligence. He adds: “The market is moving at such a fast pace; the next quarter is likely to be the same. It’s important we keep close to our customers, sharing the data and insight about what we’re seeing in the market.”

Davock and the commercial vehicle team have been working on integrating the data and insight into the upcoming Cox Automotive Insight Report 2020. Read more following its launch in November.

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To watch the full interview, click here or listen via Spotify or Apple Podcasts (search for Cox Automotive).