Used van selling prices return to five-figures

• Return to five-figure average selling prices
• The strongest values to date with vans today making 86% more than 2019 averages
• Tsunami of ‘pandemic-worn’ van volumes arriving with much higher mileages
• Buyers adopting a more cautious approach
• Late used van values achieve over £20,000
• Van price levels and overall cash flow most challenging factors for buyers today

Following the strongest ever year in 2021 for used vans at Manheim, performance in January saw two further new records as retail conditions proved challenging for buyers and retailers.

The first new record was the average selling prices and the strongest values to date, smashing the £11,000 price barrier. Manheim’s second new record was in volumes sold, with 23% more volume sold compared to January 2021, as vendors attempted to take advantage of strong price dynamics.

Last month, Cox Automotive predicted the supply and rebalance effects would lead to an expected tsunami of ‘pandemic-worn’ van volumes at Manheim auction centres this year and results show this has already begun.

Manheim January auction results

January 2022 marked the return of a five-figure average selling price for a used van, previously observed from June until October 2021. The company recorded another record-breaking average selling price of £11,004 in January. This represents an increase of £2,243 or 26% in the average price of a used van paid, compared to January 2021, when buyers were paying an average of £8,761. Buyers also paid an average of 33% and 86% more on the January averages of 2020 and 2019 respectively.

Additionally, indications continued to show just how competitive buyers are becoming for LCV stock as they clamour for typically older van profiles. The average mileage of 79,692 miles represented a year-on-year growth of 2,945 miles. The year-on-year average age increased by one month to 63 months.

The first-time conversion reflected the general tone of buyers throughout January, as six out of 10 used vans sold first time compared to eight out of 10 in January 2021. The percentage of volume sold at auction was 23% higher than the results 12 months ago.

Writing in the recently published fourth issue of AutoFocus for Q1 2022, Matthew Davock, Director of Commercial Vehicles at Cox Automotive, said: “On the back of surging new LCV registrations in Q4 2021, this year has started much more positively regarding auction defleet van volumes.

“As a result, I predict used van volumes to be around 15% stronger in Q1 2022 v. 2021 averages. Additionally, the early stages of the year will have a different feel than the relentless pent-up buoyant market dynamics we witnessed over the past 18 months. The market starts to balance out record wholesale price levels versus subdued retail activity being observed and reported in the early stages of January.

“Price sensitivity challenges are evident as van values today are on average 66% stronger than pre-pandemic levels; retail patience and overall dealer cash flow confidence will be crucial for Q1 performances as the market settles into New Year proceedings. Prices will ease in the first quarter, especially in the Euro 5 and higher mileage categories, as more volume hits the wholesale market.”

Current van market temperature

January is often a quieter month for the industry, as 72% of buyers asked during the month did report very slow retail activity until weeks three and four.

Manheim’s feedback shows that the vehicle price levels of used vans (being around 26% more compared to 2020 and 86% more than 2019 averages), and overall cash flow are the most challenging factors right now for buyers. Overall demand is much lower today versus a year ago as buyers act with severe caution for the first month of 2022 after a slower November and December in 2021.

Davock added: “Based on demand being softer, this has put pressure on some vehicle values in our digital auction lanes during January, as the ‘pandemic-worn’ vans have started to dominate some catalogues - and like we said previously, this is likely to increase further throughout 2022.

“Having said that, buyer numbers at auction remained very positive last month, increasing by 13% compared to January 2021. It was clear however that many buyers were watching price dynamics much more closely.”

Newer, lower mileage Euro 6 vans proved to be more challenging for buyers in January simply based on the strong price guide dynamics. Last month, newer vans sold with an average age of 22 months and mileages of 31,200, and still achieved an average selling price of £20,660 at Manheim.

Davock added: “These figures have achieved around 96% of the original new list price averages during January. This has been further put under pressure with new van product starting to land on the ground in much healthy numbers, as many of the leading UK manufacturers have had a very positive Q4 2021. From this, van production in the main seems to be much healthier than the current new car dynamics that are playing out in the UK today.”

Van dealers, however, are feeling the effects of the challenging slower market conditions and cash flow dynamics. Consequently, 52% of dealers told Manheim in January that they simply won’t risk stocking too much of the same product, with many adopting the approach of buying stock based on generated leads and not buying for duplicated inventory purposes.

Cash flow continues to put huge pressure on dealers because of the pandemic, dealers are stocking around 40% less stock on average than in 2019. However, they’re having to spend significantly more for stock today compared to 2019.

Another factor hindering retail conditions and cash flow challenges, is the high price of vans which are dominating retail adverts in the UK. Today, only 10% of stock listed is priced under £10,000 and 71% of stock being listed is over £15,000.

Davock concluded: “I expect the market to continue to perform in February, but market patience will be crucial and retail demand need to improve to ensure the market remains steady and robust. Based on a surge of vans being de-fleeted currently, the overall auction volumes and supply will remain very healthy for at least the first quarter of 2022.”