LCV Marketplace update - April 2020

Andy Picton

05 May 2020, Editorial

New Light Commercial Vehicle (LCV) Market – Apr 2020

With the whole of the UK in coronavirus lockdown during April, it was no surprise to see new registrations decline dramatically. The UK new light commercial vehicle (LCV) market fell by a distressing 86.2%. Overall, only 3,387 new LCVs hit UK roads during the month - 934 fewer registrations than cars – with the majority rushed through to support the NHS, emergency, pharmaceutical, food distribution and home delivery services.

With this in mind, the Mercedes-Benz Sprinter achieved an impressive 24% LCV market share, outselling the next three highest registering LCVs combined and outselling April’s best-selling car the Tesla Model 3. This is the first time since 1990 that an LCV has outperformed the entire motor vehicle market in terms of registrations.

Nevertheless, performance year-to-date has declined 44.0%, with over 56,000 fewer vehicles registered than in the same period last year. This is a crisis of unprecedented proportions, with significant declines in demand across all sectors. Breaking the month down by sectors reveals registrations declined by 91.8% for Pickups, 92.3% for Vans under 2.0 tonnes, 90.4% for Vans between 2.0-2.5 tonnes and 83.1% for Vans between 2.5-3.5 tonnes.

Top five LCV registrations

The latest April SMMT reforecast for total registrations in 2020, show the original 4.8% market decline versus 2019 is likely to rise to 28%, delivering 263,000 total registrations for the year. Lockdown is affecting most UK households, with high street shops closed except for essential stores. As a result, many companies are struggling to remain in business. Effectively, large parts of the UK economy are on pause. The interconnected nature of the UK economy means that the coronavirus crisis is affecting everyone.

For the UK LCV market, the Coronavirus pandemic has effectively frozen new and used LCV sales for an undetermined time. The lives we previously knew are on hold. Increasingly, economic forecasts suggest significant negative effects on the economy.

Whilst the economy remains reliant on operators and drivers who are currently working flat out supporting the NHS and other vitally important services, new and used LCV sales operations are unlikely to resume normal operations. The adoption of social distancing measures, deep cleaning and appointment bookings are likely to become the new norms across the industry. These measures will ensure the safety of staff and customers similar to the measures already witnessed in UK supermarkets. The additional essential costs to dealerships will affect margins however; they will help prevent further surges in the spread of COVID-19.

April Auction Market Overview: Light Commercial Vehicles (LCV)

Due to the coronavirus lockdown, sold volumes at auction during April came to a near standstill, with year on year volumes dropping by 99%.

Of the LCVs that were selling, all were in the small and medium panel van sectors and all were over four years of age.

The average age in April was 83.0 months, 17.2 months older than twelve months ago and 8.4 months older than last month.

Average first-time conversion rates declined by 50% on March and by more than 42% to 33.3% on the same point 12 months ago.

Average vehicle mileage for the few that sold in April stands at 71,619 miles, a decrease of 8,911 miles on March and more than 6,200 miles less than April 2019. In line with the older age profile, the average sale price was down by nearly 40% against March and 45% down on the same point last year.

With an online auction sales programme slowly being re-introduced, Glass’s is monitoring the used market closely to see if there an appetite from SMEs or sole traders to replace their current vehicles in the short term, or whether they will defer any changes until the path ahead is clearer.

The CV team at Glass’s also has an open dialogue with many independent traders and dealers. Many are finding ways to work within the Government guidelines, whilst continuing to sell vans. Others, for the time being, are looking to reduce stock and in turn operating costs as this continued period of uncertainty remains.

About the author

Andy Picton

Andy PictonChief Commercial Vehicle Editor

Having worked previously for Barclays Asset Finance and LeasePlan in the commercial vehicle sector, Andy joined Glass’s in 2002 as part of the Commercial Vehicle team working closely with manufacturers, leasing and insurance companies, traders, dealers and auction houses. He was promoted to Chief Commercial Vehicle Editor in 2016 and manages our industry-leading team of valuation experts. He loves football, music and obviously commercial vehicles.