Fleet News

Recipe for a truly healthy market

By David Hill senior editor CAP Red Book

'RECENT times have seen the van market enter a more stable and resilient phase than for some time – and it's all down to careful management of supply.

Take the controlled way in which the Ford Escort van replacement, Connect, has so far been introduced into the market.

There was actually a gap between the end of the Escort and introduction of Connect of around six months.

This created something of a vacuum in that corner of the market and the response of the buyers was to look at Escort again, with the result that values began to firm up once more. Because it will be 12 – 18 months before Connect is coming back in serious numbers, there is little volume here and therefore every reason to expect continuing healthy used values.

We are also seeing firm values for New Trafic and Vivaro – again because of controlled disposal. At last it has been realised that if a new model is properly controlled after launch, there are great rewards to be reaped.

This is so much healthier than the old policy of massive fanfares for new product, followed by a period of throwing silly money after new sales.

We are now seeing forward thinking.

This is not easy for manufacturers because they are, after all, in the business of moving metal and dominating markets.

So you have to take your hat off to any which are prepared to think forward and perhaps resist the power of the bulk buyers who, understandably, demand the best possible new prices.

But if you look closely at the daily rental market you can see for yourself, from some of the residual values, where the cheap new deals are done and where they are resisted.

We cannot criticise anyone for wanting to get more vans from one source than they would get from another for the same money. But it is worth the rental companies understanding that it is they, in the first instance, who stand most to benefit from the firm control of value perceptions and supply into the used market.

We have long argued that this is necessary for a truly healthy market and the fact is that it ends up making sound business sense for everyone in the chain.

Now daily rental companies are understanding that running vans for six months does not make as sound business sense as keeping them for 12. And other factors have contributed to this – such as the new-style plates. Because you cannot as easily tell the age of a van today simply by glancing at it, disposers do not have to work as hard to portray their offerings as only the newest vans.

Thus they can afford to run them for longer and even enjoy some profit at disposal. Therefore the entire industry is playing its part in managing a healthy and more stable market – and deservedly reaping the rewards.

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