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Van Insight: Recesssion puts brake on van sales

Van sales have always been a barometer for the UK economy. Businesses that are flourishing, will invest in vans to take their company forwards.

So it is, therefore, no surprise that as the recession started to bite, new light commercial vehicle regi-strations took a dive.
UK businesses are under intense pressure to keep a hold on costs so delaying the next LCV purchase becomes a logical decision.

Just two years ago, the new LCV market was at its highest level, with registrations up 3.2% to a record 337,741 units. And the industry was optimistic that the booming demand would continue into 2008.

Paul Everitt, Society of Motor Manufacturer and Trader chief executive, said at the time: “Overall, strong order books suggest bouyant commercial vehicle registration figures for many months to come, from what proves a solidly reliable business and economic indicator.”

However, that picture changed dramatically last year with a 14.2% fall in sales to 289,463 units in total. And looking ahead, the SMMT is taking a cautious view.

Everitt said: “We hope spending will stabilise in the second half of this year; with costs falling, credit markets recovering and government policies supporting recovery. 

“Confidence to invest in new vans should then return, but the revival may be slow, taking some years to repeat recent record volumes.”

The SMMT is predicting further turmoil for the new LCV market this year with an estimated 28.5% drop to 207,000 units.

Dealers should be focused on dedicating sales executives to look after their LCV customers, under-standing the difficult financial positions many businesses will be in and highlighting the bargains that can be bagged now before manufacturer prices rises come into effect.

Steady increase

The new LCV market had been on a very steady increase for nearly 10 years. There was a slight dip in 2005 and a record high in 2007. 

If the SMMT’s prediction of a 32% drop in new LCV registrations to 196,000 units this year proves accurate the new market will be 41,761 units below where it was 10 years ago.

Van registrations

New van registrations in March were down by 42.8% to 29,822 units for the month and 26.9% to 248,658 for the rolling year. However, the SMMT believes the introduction of a scrappage scheme for LCVs will boost demand.

Everitt said: “We expect the scrappage scheme to have a sig-nificant impact on demand and anticipate an increase of around 10%.

“Until manufacturers have full details from the Government it’s difficult for them to commit to the scheme, so it’s difficult to assess the likley impact on the 2009 forecast.”

 LCV Sales by Brand

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