Condition is Key Driver for Commercial Vehicle Value, says Manheim
James Davis, head of commercial vehicles at Manheim, suggests that shifts in supply and demand patterns of the current used van market have led to a change in the factors behind CV values. Traditionally, vehicle age has played the largest role in shaping CV value, with ancillary considerations such as mileage, colour and availability also being key value influencers. However, those rules are now changing.
According to Davis, the current high level of demand has had a significant impact on what influences CV values, with condition now key to driving price.
Over the past eight years, the CV sector has seen values steadily increase, in spite of a rise in both the average age and mileage of vans. Comparable figures from 2006 Q1 and 2014 Q1 show that although the average age at auction has risen by 9 months (from 54 to 63) and mileage by 12,000 (from 72,000 to 84,000), the average value has increased by £1,429 (or 45%).
Davis says: “The effects of the recession are still being felt in the CV sector as the average age of vans at auction continues to grow. As the downturn started to bite, a lot of van contracts were extended – heralding a change in the way values are determined. Prior to the recession, age dictated value, something that loses its currency in a time of longer contracts. To maximise potential end-of-contract value, it’s essential for the van’s overall condition to be good. I think these figures send a message to suppliers that it’s not all about age; condition, including elements such as usage and operational environment, is now king of the CV jungle”.
He continued: “The recession saw the van rental market rapidly consolidate, forcing many suppliers out of business. Those, usually larger players, that were left in the market took an innovative approach to moving metal. Use of ‘Flexi-rental’ schemes grew significantly in popularity during the recession, with more and more operators choosing not to commit to long-term contracts.
With condition, rather than age, now central to a van’s value, it’s perhaps no surprise that vans are being kept on the roads for longer.
Davis concluded: “It’s an exciting time for the CV market, and I expect this to continue into next year. There are currently four million vans on British roads with a further 300,000 being registered each year. By the end of the decade, we could see a wholesale market volume increase of 30%, meaning it’s more important than ever for suppliers to ensure their vehicles stand out. I’d suggest that making sure the van’s condition is up to scratch is the best way of achieving this. Vans might be getting older but, as recent trends have shown, buyers are now more likely to make a purchase based on upkeep rather than the number of years, or miles, on the clock.”