The Used LCV Market

New BCA Report highlights key role of LCV sector

LONDON – June 30, 2010: BCA has today published ‘The Used LCV Market Report 2010’, a new publication aimed at highlighting the critical role LCV’s play in the wealth and prosperity of the UK.

The report has been authored by Professor Peter Cooke and the team at Buckingham University Centre for Automotive Management. The report examines the United Kingdom LCV market in detail and analyses the dynamics and changes in the sector over the past few years, looks at the routes to market and the implications of supply and demand on price, and identifies some of the strategic implications of the recession on the market.

Duncan Ward, BCA’s general manager, commercial vehicles commented “LCV’s are a part of everyday business life and – as such – deserve analysis and scrutiny just as much as other transport sectors. The state of the LCV market is likely to be one of the most accurate barometers for the health of UK business as a whole and economists and policy makers ignore it at their peril. To that end, BCA is delighted to support the publication of this study into the LCV industry, the recession and recovery by Professor Peter Cooke.”

In the report, Cooke underlines the importance of LCV sales volumes in gauging the UK’s recovery from recession. He says “The true role of LCVs in the economy should see the sector given much more prominence. Used LCVs are commonly the preferred mode of business transport for small and medium enterprises (SMEs), as new vehicles are very often beyond their financial reach, while used LCVs serve their purpose exceedingly well. Used LCVs also have a significantly longer ‘business life’ than cars, two or three more businesses using them, whereas cars typically have just one business user before being sold to a private motorist.”

The report identifies the likely key drivers for change in the used LCV market over the coming years. These include carbon footprint and CO2 emissions, balanced against cost and reliability issues; the potential rise of electric LCVs; road pricing and congestion charging; Duty of Care; Fuel strategy; Corporate tax; and climate change as that becomes an increasingly hot political topic.

Cooke also identifies the changing pressures on LCV fleet operators as they ride out the recession. Will fleets be managed internally or outsourced – and to whom? Would it pass to a fleet management or leasing company? The level of outsourcing could impact on acquisition practices too.

According to Cooke, used vehicle disposal will become increasingly important, particularly for businesses that wholly own their fleets where optimum disposal can have a significant impact on the total cost of operation. He also sees a future for alternative providers of LCV capacity, particularly with the continued growth in Internet shopping; which is likely to have a significant impact on demand for LCVs.

The report also examines the effect of the recession on both the new and used LCV markets. Cooke suggests that when new LCV sales plummet and remain relatively low for a long period of time, it has a powerful impact on the mix and age of the parc – and a knock-on effect for used LCV sales and stock availability in particular.

Cooke comments “Used LCV retailers selling older LCVs will increasingly benefit from access to a greater number of older vans from the ageing parc. However, franchised LCV dealers, and retailers specialising in younger LCVs, are likely to experience a growing shortage of used LCV stock in the traditional age band their businesses focus on.”

He added “There is nothing can be done about the steadily ageing LCV parc in the short term. The decline in new LCV sales has been so great, and the recovery likely to be so agonisingly slow, that a return to a plentiful supply of younger used LCV sales will not happen for a good number of years.”

Cooke concludes, “The LCV sector is one of the few markets where a whole industry has grown up with buyers rarely seeking to buy a new unit. Careful quantitative analysis of the used LCV market suggests the sector is generally under estimated and under valued and is possibly under exploited, even accounting for the highly professional players operating within it.”

‘The Used LCV Market Report 2010’, published by BCA and written by Professor Peter Cooke and the team at the Centre for Automotive Management, University of Buckingham is available as a gratis PDF download from both the BCA (www.british-car-auctions.co.uk) and University of Buckingham (www.buckingham.ac.uk) websites.