Wave of pandemic-worn stock feeds strong used van market

• Five-figure average selling prices persist
• Fourth-highest age shift in seven years
• ‘Pandemic Worn’ vans bolster used sales
• Vehicle condition profile the highest in the post-pandemic period
• Poor March ‘22’ plate new van sales

A wave of pandemic worn used LCV stock has dominated Manheim auctions since March 2022 according to Cox Automotive, with a major increase in Euro 5 van stock arriving and five figure average selling prices continuing. Mileages began to fall off following the highest mileage return in a decade recorded in February.

Manheim - March auction results

The return of five-figure average selling prices for a used van, previously observed between June and October 2021, and again from January 2022, continued in March. Last month’s results saw Manheim record an average selling price of £10,161, a marginal fall of £519, continuing the price easing recorded in February. However, there are signs that this could fall to four figures throughout the next few weeks.
The average mileage of used vans sold in March decreased to 80,022 miles, down 4,539 miles month-on-month. However, Manheim’s used van first-time conversion rates increased to 66.7%. Average days for used vans to sell decreased for the third consecutive month to 11.6 days.

The year-on-year average vehicle age increased for the first time this year to 64.7 months. The age shift is evident, as vans sold during March reached the fourth-highest levels seen in seven years at 65 months on average. This was due to the pandemic effect, which has started to impact both return vehicle age and overall conditions.

In addition, Manheim’s vehicle condition profile increased further by £467, or 34% more per van on average, as the average peaked at £1,366 per vehicle. This was the highest level seen so far during the post-pandemic period.

Higher numbers of pandemic worn vans

Matthew Davock, Director of Commercial Vehicles at Cox Automotive, said: “For the third month this year, used vans at Manheim achieved above the £10,000 selling barrier, and despite a marginal fall in March, van prices remain robust.

“This is largely due to the predicted higher numbers of more ‘pandemic worn’ vans evident throughout March, as vehicle age dynamics continue to increase. Even with tougher market conditions, Manheim sold vans faster for its vendors in March, whilst making healthy and robust auction price performances. Additionally, some positivity was witnessed, as both days to sell and first-time conversions improved last month.”

Within the latest Q2 2022 issue of AutoFocus, Davock reports a very different first quarter compared to Q1 2021 for LCVs. The average value of these vehicles currently exceeds +12% (£1,249) more than in 2021, whilst age and mileage dynamics continue to rise. Despite this, buyer demand is shining through, with Euro 5 van prices +71% (£2,252) more today on average at £5,311 versus pre-pandemic levels and Euro 6 van prices costing +58% (£4,366) more on average at £14,063.

New van market temperature

Data from the Society of Motor Manufacturers and Traders (SMMT) showed 40,613 new vans were registered in March 2022, down by more than a quarter. Davock believes the poor new van registrations should inject some positivity into used activity, with strong used van prices persisting. Business confidence and retail price patience will be crucial as the sector enters a seasonal market period in quarter two, and de-fleeted market growth won’t be as forthcoming as previously hoped.

Q1 2022 data reported a -23.6% decline in new van registrations compared to Q1 2021, as global supply challenges hampered the pandemic recovery. However, there was exceptional demand from significant fleet orders for new electric vans in quarter one, with 4,297 units registered. This represented a 68.9% increase versus Q1 2021 and the highest recorded market share on record, at 5.8% of the total vehicle registration parc.

Strongest year on record for vans

Statistics show that the number of vans that have been ordered but not yet built for the UK market is as high as 405,000. Davock believes that if manufacturers can accelerate these production volumes, 2022 could still be one of the strongest new van markets on record for the UK.

Davock explained: “While the new van market was not as heavily affected by the semiconductor shortage as the new car market, we witnessed 36 months of leasing contract extensions, as well as an ageing parc of around 2.5 million vans, averaging nine years old. The resulting semiconductor crisis and ‘pandemic-worn’ vans encouraged many fleets, leasing and rental businesses to produce larger orders.”

Manheim data shows that used vans cost 72% more on average, compared to pre-pandemic averages. Therefore, it’s understandable why many buyers are looking at purchasing new vans instead. For example, a new van will cost a buyer less per month in average monthly payment terms today, compared to a one- to two-year-old used one, based on current finance averages and packages.

Davock concluded: “Used van prices are also supported by significant prices increases on new ones. New commercial assets are costing 15-18% more on average, than 2021 price levels. This has created a healthy retail gap between new and used price dynamics, meaning that the used market will remain supported, as manufacturers are taking a very aggressive stance on new van pricing today.”