“…wars and rumours of wars”
Whether you have heard this old expression referring to a state of international unrest or not, it can’t be ignored that the current fragile nature of relationships between the most powerful world leaders does nothing for our sense of personal security, or for economic certainty in this part of the world.
Mixed sentiments remain around the calls for ever increasing proportions of our national GDP to be spent on defence. The latest being a massive 5% proposed by NATO chiefs, which would certainly be a shot in the arm for the UK’s significant Defence Industry. But moral standpoint considerations, plus the distraction and redirection of tax-payer’s money away from badly needed domestic concerns is a hard pill to swallow for most citizens.
Meantime, the erratic US tariff pendulum swings backwards and forwards creating chaos at docksides and within manufacturing planning right across the world, such is the size of the US consumer market. All the while on these shores, a quiet but building invasion continues. With just a 10% non-EU tariff levied on Chinese vehicles, the number of manufacturers bringing models to market continues to grow. MG and BYD (the world’s biggest EV manufacturer) have been joined by Jaecoo and Omoda, and now Leapmotor, Skywell, and Xpeng are all starting to make their presence felt too.
While previous years of growth in the BEV car market were led by high value models, with skewed BIK benefits making it very difficult not to choose an EV as part of your company benefits, the new fighting ground is in lower price range vehicles suitable for the Retail market buyer who wants a new car rather than the now all too common three year old Model 3, with all of its glitches and build quality issues.
The response of the established manufacturers has been to release a number of basic, smaller models that will provide the most basic of transport such as the Dacia Spring, the Hyundai Inster, and the Citroen E-C3 etc.
While the Chinese proposition is to supply larger, very high specification cars at a keen price point, under cutting the mainstream manufacturers who are still mostly busy competing mainly in the company car market.
Many of the Chinese OEMs were originally set on a direct supply model, but now increasingly realise that using experienced dealers that already have databases full of Retail customers is the way forward.
Of course, this has happened before, and some of us that are old enough remember the first Japanese arrivals in the 1970s. Providing reliable transport with luxuries such as a passenger side door mirror and a heated rear screen, they dragged the likes of Ford and Vauxhall up and are now often amongst the most sought after of retro classic cars. This would have seemed unbelievable at the time. Will these new Chinese models be viewed in such a way in the future?
LCV Market
June has seen a distinct shortage of wholesale auction stock with volumes being some of the lowest seen this year. Manheim Gloucester has traditionally been one of the busiest auction locations, regularly seeing 350-400 fortnightly entries. But, with low levels of fleet churn, backed up by some of the lowest new vehicle registration figures for 12 months, entries were down to around 230 each fortnight by mid-month. CAP-HPI report overall auction volumes down by 15-20% year on year.
The upside of this is that values remain stable on most stock even though Retail is not particularly busy. Trade buyers trying to invigorate their Retail activity are chasing ever diminishing pools of stock which keeps the values up. That said, two of the big rental companies are seeking to thin out their LCV volumes, and all of this could change in the next few weeks if they decide to dump large numbers into the market.
There are some vehicles bucking this trend for stability, and one such vehicle is the humble Corsavan. This particular model has been a regular feature of our sales over the last few weeks and has seen prices build to the point where CAP values increased by 10% month on month. And this is still a little way behind what is actually happening.
At the other end of the spectrum are lifestyle versions of Double-cab pick-ups, a subject we have picked on many times before. It seems the market is now fully aware of the BIK changes on these, and more expensive versions are really struggling to find homes with hammer prices well behind book values.
The graph below shows 12 months of cumulative CAP value depreciation, now running at -14%, and with a significant down tick occurring in the last two months. These used to be one of the slowest depreciating vehicle assets, but this sharp downward trend seems set to continue for a while to come, making them an even more difficult proposition for Retailers to stock.
Conversely, work horse versions of these Double-cabs continue to hold up well. Rarely the vehicle of choice for a company user trying to avoid car rates of BIK, these are very firmly a tool for the job and are actually the slowest depreciating LCV sector at just 5% over a rolling 12 months. Graphs courtesy of cap-hpi.
Car Market
There is no doubt that the used car market is tough and becoming tougher still as the weeks progress. Many commentators are now using CAP Average figures less damage allowances as a benchmark for trade prices rather than CAP Clean figures that are often the preference for those involved in dealer network Retail selling.
This is a sign that book values are not keeping up with the accelerating depreciation in this area and instead are perhaps just ‘chasing the snowball down the hill’.
There is certainly a concern around the auctions, as the average attempts needed to sell a car climbs to 1.5. This may not sound like a lot on paper, but can be very hard to manage in reality, as new auction arrivals outstrip those flowing out of the gate, and buyer interest stagnates in the light of the poor Retail market.
Used electric cars continue to be some of the quickest sellers in the market, with some very attractive sale prices when levelled against the cost new. Normally this speed of sale would translate into nominal increases in trade values, but these are continually pinned back due to increasing proportions of this fuel type coming to market.
Trucks and Trailers
As expected, the used Truck and Trailer markets picked up this month, following a slow holiday period post Easter. There remain signs of a slowdown in volume arriving at auction too, which can only help to stabilise prices further. Of course, in the truck market supply can be a fickle thing, it only takes one major supermarket replacing stock which increases supply volumes exponentially. That has not happened this month with sales reported at auction centres as steady, to good.
The strongest money remains for those trucks with a good specification and anything specialist, with beavertails and car transporters amongst the strongest performers this month.
As is always the case in the truck market though, specification is key with any ‘less expensive’ fitments when the truck was new quickly being found out at used sale time. A good example is the Fridge Box; only the best fridge units will help the truck to sell, any cheaper units are much less desirable at sale time, with the truck often struggling to find a buyer.
The same can be said for bodywork, the cheaper bodies often do not last the course and present at used sale time as rather worn out. It is this sort of stock that is sticking at auction, often taking 3 or 4 sales to find the right price level and, therefore buyers.
Tipper trucks remain popular this month with most examples finding homes on their first outing at auction. 6×4 remain the most popular especially with cranes fitted, but all variants are selling, perhaps in part due to the promise from the Chancellor this month of a major spending spree on public infrastructure projects. In addition to a boost to the new housing market, all such announcements always provide a stimulus to the used tipper trade, with many bidders buying speculatively in the hope of some strong demand to come.
RCV’s remain stable this month too, with prices for useable Euro 6 examples good, if not strong. Again, in this sector, bodywork manufacture and associated fittings remains key
to achieving the best prices used. Older pre-Euro 6 examples are also selling well, although for parting out and scrapping rather than for further use.
Tractor unit values are okay again this month, helped by not having too many in the markets with previous volumes now dissipating. A well specified sleeper 6×2 remains the most popular, with the very strongest money being saved for any 6×4 versions that appear, which is rare these days. Supermarket spec basic day cab tractor units remain a struggle to sell, only doing so if ‘the price is right’.
Trailer sales are also stable this month and are selling okay. Clean tri-axle examples are selling for export and making strong money; a 10-year-old Schmitz curtainside example sold this month at auction for £4700, some £1700 over CAP and Reserve, such was the demand. It was very clean though and that is the theme. Older tatty examples are selling for parting out and scrap and will not make the strongest money, often faltering before the £1000 mark.
Plant and Equipment
Nothing new to report here, it is still very good news for the sales of plant and equipment.
Large excavators are around in fair numbers currently, but with a strong export market the supply is no barrier to strong prices, all of them making their mark. Construction equipment is likely to be a beneficiary of the Government’s spending plans on infrastructure over the next few years, inflating the already strong used prices for such equipment.
Smaller plant and machinery remain very popular too with everything selling for expected values.
From the Rostrum
Life on the rostrum has been fairly normal this month, following the ‘return to work’ by most of the trade following the post Easter and May holidays. We continue to very positively influence the sale prices of all assets though, through managing each sale with the auctioneer. The trade is becoming increasingly frustrated by ‘provisional bids’ and, more often than not by the time the auction go back to the bidder to negotiate, they have already bought something else and so ‘come off their bid’.
The used car markets remain the most difficult, with just about every vehicle needing some intervention from our Auction Managers to get it sold.
