Fleet News

BCA market report: look at performance, not anecdotes

'IN any trading environment there is a perception of conditions and fortunes. This tends to inform all the comment and pass-the-time discussion, which then leads to assumptions of all kinds as views are repeated.

So it is with this year's van market and the assumption across the trade that 2003 has somehow been even better than last year. At the root of this lies an assumption borne earlier this year that the market would return to the familiar pattern over the summer of a quiet July and August. Last year these months sparked a great deal of comment because they bucked the usual quiet trend.

This was attributed at the time to the trade making up for the diversions of two major international sporting events and a royal jubilee celebration. When July and August 2003 again failed to die down, in terms of retail and trade activity, an assumption was bred that the market has been performing more impressively than expected.

But it is dangerous to rely on tradespeak only, so the sole way to check the true position is by analysis of actual performance rather than mere market psychology.

Taking a snapshot of the market via a small sample of benchmark vans, we learn that 2003 has brought enormous pressure on the 3.5-tonne sector.

Looking at a high roof 311 LWB Sprinter, the transition from September to October indicates some value stability with a reduction of only £75 on a 2001X with 60,000 miles, compared with a fall of £200 in the same period last year for the equivalent 2000W.

However, looking at the year-on-year performance of the same vehicle we find it changing hands for £725 less this month than in October 2002. Taking a Transit 350 LWB medium roof 89bhp, we find a similar picture. Last year's September to October movement was down £175 while this year's equivalent movement was just £50. But again the main difference is in overall values this year compared with last.

Last October's three-year-old Transit was valued at £7,800 while the equivalent van this month books at £6,325.

Two issues have dominated this sector of the light commercial market in 2003 – oversupply and ferocious competition on new vans. The fight for market share is now such that it is not unusual to find discounts and cashback offers adding up to 30% off list price. As many dealers are telling us, a lot of buyers have been tempted out of the used market by this kind of affordability, leaving prices only one way to move to tempt them back. Combine this with the super-abundance of used vans and a picture of a softer market than assumed emerges.

There is a happier story told by the car-derived van sector. The strong performance of Escort has seen a 55 1.8D, at three years and 60,000 miles, fall just £50 between September and October and book at just £75 less than the equivalent van last year.

This market is showing far greater stability thanks to much tighter supply levels.

Taking an Astra 1.7 DTi, we find a price in October 2003 £175 stronger than the equivalent vehicle's performance a year ago. So the facts according to the figures tend to support a slightly differing view from day-to-day trade talk. But this is not to dismiss positive moods and general get-up-and-go because that is vital to the overall health of any market.

The underlying message from the market, therefore, is that keeping a close eye on actual performance – rather than anecdotal and received wisdom – is the real key to sound decision-making.

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