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Windfall LCV conditions to continue for 'many more months'

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Values for ex-company light commercial vehicles remain at, or close to record levels, and while it might appear that prices are on a knife edge if vendors follow the golden rules of disposal then windfall conditions will continue for many more months.

Indeed, George Alexander, chief editor, Glass’s commercial vehicle guide, believes prices enjoyed by contract hire and leasing companies today could become the norm in two or three years’ time if actions to destabilise the supply and demand equation are avoided.

“The market has another 18 months of strength left in it and can be stoked along very nicely,” said Mr Alexander. “Prices are where they are and economic indicators would suggest we have a period of healthy growth.

“It is a shame if businesses look at the current situation as an opportunity; it is not an opportunity and it can become the norm. In two or three years time the market can still be rolling along very nicely or we can we an over heated market which will turn into price peaks and troughs.”

Auction giant Manheim says that demand for defleeted vans is currently so high that models at even seven years old are proving to be hugely sought after

Latest data reveals that the average value of vans sold by the company was £4,632 in February, fractionally down on record levels but £349 or 8.1% higher than 12 months previously with average age up at 62 months and average mileage fractionally down at 85,333 miles.

With almost half of used vans in the market reaching the seven-year mark, Matthew Davock, head of LCV at Manheim, said: “These older vans are, without doubt, the tail end of extensions and deferred replacement programmes resulting from the economic downturn.

“Older and higher mileage vans will always find homes as they are at an attractive price point and represent excellent value. Mileage is now seemingly less of a mental barrier in retail buyers’ minds; this is likely against a backdrop of modern reliability and a comprehensive maintenance history.”

Meanwhile, BCA has reported that average values for ex-fleet and lease vans at £6,810 in February were the second highest price on record. Year-on-year, values were up by £987 (16.9%), with average mileage little different at 69,578 miles and average age fractionally lower at 40 months.

Highlighting the requirements for vendors to take “sensible actions”, follow best practice and present for sale vehicles in good condition and not demand high prices for vans that are not well presented, Alexander said: “It’s difficult to remember a better time to have been an active player in the van market.

“To maximise these opportunities, it is to be hoped that the experiences gained from 2008 onwards will guide all decision makers across our industry to adopt supportive strategies.

“We are at a turning point where one direction will take us down the familiar path of boom and bust, the other representing a once in generation opportunity to build stability into the equation.

“If fleets ensure the right vehicles are placed in harness on day one and then operated professionally, this will lead to a virtuous circle ensuring that an appropriate mix of desirable used LCVs will be returning in sensible numbers. In turn this supports residual values which can reduce ownership costs.”

Indeed, it is a view shared by experts at rival vehicle valuation company CAP which, notwithstanding the seasonality of demand for some vans impacting on individual sector prices such as 4x4s, has reported averages values increasing 4.4% year-on-year.

Ken Brown, editor of CAP Red Book LCVs and Motorhomes, said: “I doubt there will be many risk managers who saw that coming.”

Furthermore, he believes there is little on the horizon to impact on values with prices for vans up to 3.5 tonnes - the heartland of the market - remaining strong.

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