Used Marketplace Trade Talk
Used Markets Remarkably Stable
Despite the, rather rocky economic road that the UK finds itself on currently, the used vehicle markets have remained remarkably stable, with a very much ‘business as usual’ stance.
There were some interesting warning shots fired during the month, about a possible post BREXIT manufacturing world, from outspoken Nissan CEO Carlos Ghosn. Ghosn, quite correctly, pointed out that any future investment decisions in the north east would depend on the new trade status negotiated with the EU by HMG.
And of course he is not alone, the entire UK economy hangs in the balance of just what terms for trade are eventually negotiated.
But in reality, the UK remains the world’s 5th largest economy, with whom many EU member states wish to continue doing business with, long after the BREXIT issue finally gets laid to rest.
That sets the background for the relative stability of the used markets this month and, as far as we can see, for the rest of this year. It is very much business as usual, buoyed by relatively poor savings rates, encouraging the public to spend their hard earned cash. Cars and vans come very close to being at the top of most people’s spending lists!
There is now much more volume coming into the markets, for both cars and LCV, but there is more than enough appetite to soak up that volume currently. And the volumes are normal for this time of year, with no unusual spikes to worry about.
So it seems that we can report good news this month, a healthy market through to the Christmas period!
Real Driving Emissions Tests
An EU initiative, this long overdue review of emissions based taxation will impact on the UK car and van industry, forcing manufacturers to review their entire model ranges. The new tests will be implemented on 1st September 2017, with all new models having to comply by September 2019.
A good example of why these tests are needed is the recent decision by Ogilvie Fleet to drop the new Mercedes C350e from its choice list. Aside from a technical issue with the Government plug in car grant (which the new C350e misses out on if fitted with anything other than standard size alloys), the real world running costs of this car are nowhere near the Mercedes claim of 150 miles per gallon.
In recent road tests the car achieved much less than half of that figure, which totally skews any whole life cost data.
It is the same for normal diesel engine cars too, with ever outlandish claims from manufacturers of 80+ miles to the gallon whereas, in reality the cars achieve around half of this figure.
It will be very interesting to see how manufacturers now develop their technical strategies to regain any ground lost because of these new tests.
New Model Updates
New Transit Key!
Whilst not strictly a new model, this new innovation from Ford must be welcomed in the LCV industry.
Ford have introduced a new ‘tough key’ for all Transit Custom and Transit models, designed to withstand extreme temperatures, submerging underwater and being dropped from great heights!
The key can even recharge its own batteries whilst in the ignition lock, reducing the need to replace the battery (which cannot be done as the key is completely sealed for life). Thus one downside is that on an older vehicle the key will need replacing, if the battery does go down. But overall, a good result from Ford’s.
In the days when I was partly responsible for new vehicle residual value setting, my premise was, and still is now, what is the first impression of a vehicle. Immediate reaction to the vehicle’s looks formed the first part of the process for setting RV’s.
My initial impression of the new Civic? It looks ok in ‘sporty trim’, which Manufacturers always use for their launch shots, but in ‘cooking model’ form it will look a trifle awkward.
It does look a whole lot better than its predecessor, but the looks of the new car are certainly not going to be enough to produce any kind of class leader.
A new petrol engine line up is interesting, starting with a high boost 1.0 petrol version pumping out 129bhp; quite how such a small engine in a relatively big car will feel on the road remains to be seen. But good from a tax perspective.
I would expect residual values for this new model to be broadly in line with the previous incarnation; I would not see any increase though.
New Discovery Breaks Cover
After many months of speculation and ‘spy’ shots, the new Landrover Discovery has finally been revealed, in time for the Paris Motor Show.
Now, taking the same premise as that for the Civic, i.e. first impressions, the car no longer looks like a Discovery. It has lost the family resemblance, although a slightly asymmetric tailgate and a very small sloping roof line are nods to the past.
For me, the car has lost the Discovery DNA and is pretty much the same as any of the other Landrover models now. Size seems to be the only thing separating them these days and, in a line up on the forecourt from a head on perspective, it would be hard to name each car.
But that is where the similarity to the Civic ends; JLR will undoubtedly be extremely successful at marketing and selling this car, with a waiting list already gathering speed. It will be a huge success for them, with exports forming a large part of production. Residual values? That could prove interesting as the price of the car has moved up, compared to its predecessor, thus the RV’s would naturally move up with them. Certainly a honeymoon period will be there too, with early used examples commanding extremely strong prices. Quite where prices will be in 3 years’ time though is subject to some debate; as a family car it surely cannot command Range Rover-esq used prices?
New Nissan LV300
Not really a new van but, it is for Nissan! Clearly just a re-badged Renault Trafic, this new model to the Nissan range will achieve the same residual values as its Renault stablemate.
I would not see them any different especially as, the NV300 shares the same range of engines and payload weights as the Trafic.
Interestingly, we have seen some 5 year old Primastars sell at auction, where they have massively outperformed CAP; the word is that the Primastar represents something different for the forecourt, hence the premium being paid. But we would certainly not advocate applying any uplift to RV’s over the Trafic or Vivaro.