Boom time for LCVs

Back in April 2020, the best-selling vehicle in the UK was the Mercedes-Benz Sprinter. A reflection on the bizarre times in which we were living and, to a lesser extent, continue to do so, as car dealerships shut up shop and supermarkets clamoured to catch up with the incredible demand for online shopping.

Wind the clock forward a year and a nervous optimism has returned to the car industry, but alongside it demand for light commercials continues unabated.

Indeed, the light commercial vehicle market recorded its busiest April this year since records began, according to the Society of Motor Manufacturers and Traders (SMMT). It said that 30,440 new vans were registered during the fourth month of the year – an eightfold increase on the same month of 2020.

Registrations were also ahead of the five-year average, with April 2021 up by 23.2 per cent.

With some 127,796 vans registered so far in 2021, uptake has returned to levels last seen in 2019 – and they’d be even higher if supply could keep up with demand.

SMMT chief executive Mike Hawes said: ‘Businesses are investing in new vehicles as they grow in confidence, driven by a more positive economic outlook stimulated by the vaccine rollout.

‘There has been particular uplift in larger van uptake, both from established demand in home delivery, but also more broadly as other sectors emerge from lockdown looking to maximise their payload efficiency.

‘With a fragile supply chain still subject to risk of disruption and ongoing Covid restrictions, there is some way to go before we can say business is back to normal, but after a very difficult year, the outlook is much brighter.’

From a dealer’s perspective, a van franchise is seriously hot property right now, not least because the experience of multiple national lockdowns has changed consumer habits forever.

According to research from Deloitte*, the first half of 2020 saw the equivalent of five years of growth in online shopping, and despite the high street now being largely reopen, it’s a trend that’s showing no signs of reversing any time soon.

‘We have a new baseline for e-commerce sales which will grow through 2021 and beyond, bolstered by increasing investments in online and more and more consumers feeling the benefits of online shopping,’ said the report.

What this means for the LCV market is that demand continues to outstrip supply, with

Model Regs

Ford Transit Custom 4,581 Ford Transit

Mercedes-Benz Sprinter 2,099 Volkswagen Transporter 1,661 Ford Ranger

Vauxhall Vivaro

Citroen Berlingo

Vauxhall Combo

Peugeot Partner

Citroen Relay

Vauxhall Vivaro

Ford Transit Custom

van manufacturers selling every vehicle they can build both for the UK market and in most overseas territories, where similar trends have developed.

In Britain, the SMMT is forecasting a record year overall for van sales, with projected volumes of almost 370,000 – a number that would actually be a lot higher were it not for an issue that looks set to affect the entire automotive industry in the second half of the year.

The global semiconductor crisis, caused by a surge in demand during the pandemic for consumer electronics and a recent fire at a key supplier in Japan, is impacting on the ability of all automotive manufacturers to produce vehicles equipped with certain components, according to The Procurement Partnership.

The scenario has led to manufacturers stalling production, with Ford closing the Transit factory in Turkey until June 13. That’s bad news for the UK’s best-seller, which will see disrupted supply.

Volkswagen, too, has suspended production of the Crafter and its sister model, the MAN TGE, while Stellantis – owner of Peugeot, Citroen, Vauxhall and Fiat – is advising customers of ‘longer than usual’ lead times on new van orders.

But it’s not necessarily bad news for dealers, as the shortage of new supply expected through July, August and September will mean stronger residual values and extra demand for used models.

Geoff Flood, Aston Barclay’s national light commercial vehicle manager, said: ‘Demand for every age, mileage, make and model of light commercial vehicle has been strong over the past two weeks. You can ignore the used value guides, as vehicles are making what dealers are prepared to pay to secure the van.

‘Some vans have gone under the hammer for two to three times reserve and this trend will continue until such time as we see factories reopening and used supplies improving.’

But for dealers with good stock levels already on the used forecourt, it’s time to make hay while the sun shines, with average used van values up by more than 10 per cent in April 2021.