CV Market Tracker - October 2020

Manheim, the UK’s number one CV auction company, delivered its sixth consecutive month of record-breaking LCV sales performances in October and forecasts this is set to continue over the coming months.

Manheim reported that its October used van values jumped 7% (+£546) from September to a new record of £8,936 - this despite the vans being older (+1.3 months) with higher mileage (+2,363 miles) than the prior month.

Analysis of October’s stock profile revealed that Euro 6 vans contributed to this unprecedented performance, with their average selling price jumping 5% (+£632) to £12,772 despite increases in both age and mileage.

First-time conversion rates remained strong, standing for a third consecutive month at 87%, up 13% compared to the same month last year. Looking back to May 2020, when Manheim launched its innovative digital virtual Simulcast auction programme, average LCV values have risen by over a third (+36% and +£2,345).

Matthew Davock, Manheim’s director of CV, said: “We predicted last month that we were approaching the ceiling of used Euro 5 and pre-Euro 5 wholesale values. This has proven true, with increases in age and mileage leading to a logical softening of their values in October. However, with nearly half of all vans sold in the month being Euro 6, we saw exceptional sales performances with the highest average van value on record. We see this trend continuing as buyers fight it out for the youngest examples.”

According to Manheim, its vendor customers continue to report that there are no significant pipeline de-fleet volumes to destabilise demand. This is due to lead time delays in the supply chain as well as deferred fleet replacement programmes.

Davock concluded: “Quarter 4, typically the busiest in terms of the build up to the festive period, has never experienced these record shortages of new and used vans. With a handful of weeks to Christmas and the size and severity of any future lockdowns unknown, we believe online retail activity will step up significantly. The emerging trend of consumer ‘revenge spending’ would indicate that this festive season will be underpinned by a feelgood factor – underpinned by a significantly bigger dose of online shopping.”

James Davis, customer insight director, Cox Automotive, added: “In 2019, the new van market experienced specific pressures from WLTP and Brexit deadlines. Whilst October was a positive result, year-on-year comparison should factor in these different backdrops. The SMMT typically publishes its final annual new van forecast position in October and its members’ forecast a final position of 288,000 vans. That is down 21.3% on the 2019 actual. The industry may well fall short of this number and furthermore I see 2021 tracking similarly to 2020. This is because there are a record number of factors impacting the new and used CV markets. These will continue to impact the global supply chain, as well as market demand, over the next 12 months.”

Source: SMMT, Monthly and YTD LCV Registration Data – Jan 16 to Oct 20

Davis concluded: “We are in a unique supply-led recession. This is a different landscape than typical recessions we have suffered in the past, with accompanying liquidity crises and demand-led pressure. At no time in history have we seen this pattern of market realignment and used vans remain the golden child of the sector. Whatever the ultimate reduction in new supply, the used van volume pipeline is severely constrained in the coming years, long after our economy and society recover. This will see the permanent realignment of used van values as the industry begins to grapple with the phasing out of diesel and petrol in the next decade.”