IVOTY Report
THE ONLY WAY IS UP
Like the economy as a whole, inflation has hit the light commercial vehicle sector, George Barrow assesses the impact on the UK market
A CODE OF CONDUCT
At the peak of the semi-conductor shortage manufacturers were struggling to source all manner of components, so much so that some models were leaving the factory without a few key bits of equipment. Of course, it was nothing that would compromise the safety or ability of the vehicle but some may have been delivered lacking heated electric mirrors (often standard equipment on vans these days) or heated seats for example, leading to a small apology to the customer and a gesture of goodwill. The ramifications, I’m told, however stretch far beyond the new market and into the second life of the van where the codes applied to vans for their residual values will no longer tally with the van presented for resale. There’s potential for a real mess in years to come. Fortunately, I think manufacturers and dealers will be aware of this and I’m confident it will get resolved in the long run, but while researching this article a statement I received from VW gives me hope that even though prices are rising there’s still value in our vans. “Model prices for Volkswagen Commercial Vehicles have increased because of ongoing inflationary costs. Volkswagen Group is doing everything possible to minimise the impact of these rising costs but it cannot fully offset them. We have also increased the standard specification of some of our vehicles. These changes have enhanced the standard levels of safety and driver assistance.”
George Barrow is the UK jury member for the International Van of the Year Award. Additional reporting by Liam Campbell.
Demand for online deliveries rocketed during the Covid pandemic
Whether it’s the price of food and energy or the rent or your mortgage, prices have sky rocketed. But how have they affected the van market? From rising energy costs brought on by the war in Ukraine to the semi-conductor chip shortage, there has been a perfect storm of reasons as to why the cost of a new vehicle has increased. Covid-induced vehicle shortages, brought on by closures in production facilities and the supply chain seem to have been the starting point for the position we now find ourselves in. Used vehicle prices were the first noticeable area to undergo significant rises largely due to the immediate impact it had on van sales in 2020. As a result, fewer used vans entered the market, and at the same time vans were playing an instrumental role in keeping us fed with more home deliveries from online shopping.
T New van registrations recovered
quickly, rebounding to just 3% lower than in 2019 but the trend to buy online
10 WhatVan?July 2022
he sustained and relentless rise in inflation is making everything feel like it is costing the earth.
remained and so too did the demand for both new and used vans to help supply our insatiable online shopping habits.
According to the Office of National Statistics (ONS) by the end of 2021 a massive 28% of all UK retail sales were being made online – more than trebling the figure of 9.2% of all sales in February 2012.
Always a good barometer for the state of the LCV market, data from British Car Auctions (BCA) shows that the average value of a used van sold at auction in December 2019 was £7,293 a slight decline from one year before but still considerably lower than prices seen in the market last year. Used values peaked in July 2022 last year with an average of £10,220 but have since surpassed that in April this year with an average of £10,325. But the price of a second hand van, even at just under five years and with around 60,000 miles under its belt, is not the only aspect of the industry to be affected. While many self-employed couriers aren’t shelling out for brand new vans to get themselves on the
home delivery ladder, the price of a new van has also been creeping up. Manufacturers are quick to point out that they are not immune from the pressures we, as consumers face, and that energy costs, raw material prices and most notably (for the UK) foreign exchange rates have all been significant factors in the continual increases in prices the industry is experiencing. No single manufacturer is
invulnerable to the reality that production cost bases are increasing. In fact, it becomes something of a self-fulfilling prophecy that wage increases needed by employees push up production costs, which increases purchase price – that’s the nature of inflation - however, the industry has seen some modest and some sizeable increases across a wide spectrum of vehicles.
Using the list prices published by
Glass’s Guide at the back of What Van? as the benchmark you can see that year-on-year from June 2021, June 2022 and June of this year, there have been incremental increases in prices, but it’s the scale of some of the 2022 to 2023 price rises which have
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