Monthly News Digest – December 2015

Christmas Markets Very Buoyant

The markets in the lead up to Christmas have been surprisingly buoyant, for both cars and LCV product.

This is largely due to the canny traders stocking up for a busy Christmas on their forecourts; they also know that they can often get some cheap stock, with many vendors anxious to get money in the bank before the end of the year. This has created a good trading position this year, with most stock being sold outright, for the desired money.

PCP Car Sales

The one issue causing a storm currently amongst the trade are the new car PCP deals, which are becoming so strong and competitive, they are removing large quantities of used car buyers from the markets.

A typical 1 year old family car would cost around £150 a month over a 3 year deal; compare this to a brand new example of the same car, often costing as little as £160 a month, with the same deposit. It is of little surprise that many customers are choosing to buy new rather than used.

And this issue is being felt further down the chain too, as a typical 3 year old family car would still cost around £130 a month and, possibly even more on more normal finance methods. The new deal is just too close to prevent buyers from buying new.

The trade are becoming very concerned; especially the non-franchised ones, because it is stripping out many used buyers. This of course reduces their requirements at auction, which in turn creates poor results for vendors trying to move their used stock.

And this phenomenon could soon affect the LCV trade too, with Manufacturers now turning their attention to this lucrative sector of the market. This is definitely one to watch carefully in 2016.

VW Emissions

As the VW emissions scandal continues to rage on, the one question on everyone’s lips is, will it affect the used values? The answer at the moment is no. We have not seen any decline in demand or drop in prices for any VW product thus far, other than the normal market adjustments month on month.

XBG VW Emissions

Going forward we believe that VW Group will withstand the flack and come out the other side in a stronger position commercially. Had this happened to a less popular Manufacturer, it does remain to be seen how that would pan out though.

BT Vivaro Stock

XBG Vivaro stockBT Fleet has, for most of 2015, been de-fleeting their ageing stock of Vivaro vans. Initially they were largely non-runners and cannibalised vans, but more recently they have been selling stock direct from their operational fleet, some of which were seen at Haydock this month.

The Vivaro van and, to a lesser extent the Trafic and Primastar versions, have been holding their values extremely well thus far; we can only hope that the volume influx from BT will not affect their performance too much. Certainly at the Haydock sale they did not; our client stock of Vivaros made their mark against Book without being affected by the BT stock.

Electric Vehicle Popularity

The thorny issue of electric vehicles has again raised its head this month. There is a general view however that the used markets are starting to accept the electric vehicle, because of the huge rise in propaganda material from the Green Lobby.

Certainly there is a need to get the public ‘on side’ in order to sell the used stock that will, in the not too distant future be returning to the used markets. But more importantly, it is the Used Dealer Trade that needs to accept the technology, in order for them to buy at auction and sell to the public!

XBG BG VanWithin the trade there is much discussion about battery life, reliability and range, all of which is negative. Most traders would not stock EV’s on their forecourt because of the concerns over cost and warranty.

And yet Manufacturers are making great gains in this technology; Nissan already have a large trial of their e-NV200 van with British Gas and, further afield with other fleet operators.

Tesla, in particular, is now selling new cars very successfully, largely due to their extended battery range of circa 300 miles, and because their product looks more ‘normal’ (some automotive writers are saying “stunning design”) to the public eye.

XBG Silver carThis is all fine for new product but, until the trade ‘switch on’ (excuse the pun!) to used electric vehicles, the whole life costs will simply not work, as the residual value will be as it is currently, scrap value.

So what can be done? Manufacturers need to pay far more attention to the used markets for a start, and they need to react to the normal associations of poor range, battery life, recharging points and reliability.

XBG FedEx

For example, I do not suppose many traders are aware that the modern battery packs have a life of around 120,000 miles, more than most diesel engines!! And with relatively few mechanical parts to go wrong, reliability should not be an issue either.

There is without doubt an education process to go through, as indeed there was with the first versions of Hybrid cars and vans. That process took an age to accomplish and, even now there are used buyers that will not touch Hybrids.

A Government sponsored scheme may help, but more than anything, the SMMT should perhaps be educating the used buyers to accept the technology; only then would they be happy to SELL to the public.