New Light Commercial Vehicle (LCV) Market
The light commercial vehicle (LCV) sector continues to navigate a period of instability, remaining sensitive to economic changes. The typically quiet month of August returned a disappointing 16.1% decline in demand for new LCVs. Overall, only 19,407 new LCVs hit UK roads during the month, as all sectors returned declines in registrations.
After eight months of 2020, year-to-date registrations have declined 36.4%, with 155,984 units recorded. The instability of the LCV market is a reflection of the wider economy. Some fleets have delayed decisions on new vehicle purchasing until the end of the furlough scheme, some until the UK’s Brexit strategy is clearer. This combined with extended lead times on the majority of factory orders, has meant a lower level of demand for new registrations. Breaking the month down by sectors reveals that registrations declined 2.4% for pickups, 3.2% for vans between 2.0-2.5 tonnes, 18.2% for vans between 2.5-3.5 tonnes and 35.0% for Vans under 2.0 tonnes.
Top five LCV registrations
The latest July SMMT new LCV registrations re-forecast for 2020 suggests the market will end the year down 26.3% to 269,000 units. Lockdown has placed all businesses under great financial pressure, with underlying weaknesses in the market.
With eight months of the year completed, UK registrations remain nearly 40% down on the same point last year. The pandemic has affected many businesses with the stop-start nature of localised lockdowns affecting many towns and cities across the UK. With this in mind, it is difficult to understand where the suggested additional volume is going to come from to meet the latest forecast.
The interconnected nature of the UK economy means that there is likely to be more uncertainty ahead as business nervousness continues. Moving forward, fleet renewals will be critical to a successful restart given the crucial role light commercial vehicles play in the UK economy.
Used Light Commercial Vehicle (LCV) Overview
With August typically a holiday month, most observers’ expectations were for auction volumes of LCVs to reduce and prices to ease. Whilst there is weakness in the minibus sector, the used LCV market overall continues to deliver outstanding performance.
De-fleets are currently lower than normal as businesses try to understand their post-pandemic requirements. The impending end of the furlough scheme, coupled to an increasing number of localised lockdowns and the UK’s delayed exit from Europe is not aiding longer term planning either.
Glass’s auction data suggests the overall number of LCV sales in August was up 34.9% versus August 2019, but down 22.2% on July 2020. First-time conversions were down 3.1% during the holiday month compared to July, but up 10.2% on August last year.
There is a continued appetite for good quality stock requiring the minimum of retail preparation across all ages. Supporting this enthusiasm is the increase in the number of online buyers reported by the auction houses. During August, average prices across all ages and sectors have risen over 40% versus the same point last year. August prices were at the highest level for the last twelve months.
August in detail
The average age of sold stock in August rose from 72.0 months in July to 72.4 months. This figure was 0.9 months lower than the same point last year.
Average first-time conversion rates stand at 88.0%, down from 91.1% in July and up from 77.8% 12 months ago.
Average mileage for sold vehicles rose slightly from 73,471 miles in July to 73,634 miles in August. This is 5,861 miles lower than at the end of August 2019.
Glass’s continues to monitor the LCV market closely and has an open dialogue with auction houses and manufacturers, leasing and rental companies, independent traders and dealers as well as the main industry bodies. This information, combined with the wealth of knowledge in our CV team ensures Glass’s valuations remain relevant in the market place.