Following indisputable signs in the first five months of this year that the new car market is levelling off, registrations of light commercial vehicles (LCV) appear to be following suit.
Having set a new record in 2016 with 375,687 registrations of vans, pick-ups and commercial 4x4s, the market is currently tracking 5.3%, or 7,689 units, behind last year.
Almost all segments have been affected, but dealers representing brands with a pick-up truck in their range, such as the Nissan Navara and Mitsubishi L200, appear poised to capitalise on a product line that bucks the trend.
Registrations of pick-ups, which neared the 50,000 mark in 2016, are already 19%, or 3,556 units, ahead year-on-year in the five months to May 31, to total 22,234. The market could grow further, as the segment is poised to welcome new entrants, such as the Renault Alaskan and the Mercedes-Benz X-Class, although the latter vehicle’s target audience is likely to be lifestyle customers and SMEs.
The success with pick-ups was demonstrated by overall market-leader Ford in 2016, whose Ranger achieved 13,292 registrations and was the 10th most popular vehicle in the whole LCV market. However, five months into 2017, Ranger registrations have declined by 2.4% (4,995 vs 5,116 by the end of May last year).
The Nissan Navara currently leads the segment, with a 55.8% year-on-year rise in the period to May 31 (5,325 vs 3,418 at May 31 last year). Mitsubishi’s registrations are up 34.9% (4,730 vs 3,506 at May 31 last year), and Toyota’s Hilux is up 42.3% (3,638 vs 2,556). The Fiat Fullback, which launched in the second half of 2016, is having a tiny impact on the segment, with 359 registrations.
Examination of additional market data shows fleets are taking on pick-ups in greater numbers. Fleet demand has risen by almost a third (31.8%) so far this year, to 15,973 of the 22,234 total. In contrast, retail orders have declined by 4.5%.
In dealers’ favour, the segment has fresh products to tempt customers. Mitsubishi’s L200 is now only 20 months old, Nissan launched the Navara in January 2016 and deliveries of the new Volkswagen Amarok started in January 2017.
Marketing activity is also strong. Nissan offers 2.99% APR finance and a £650 test drive incentive for the Navara, Volkswagen’s business contract hire for the Amarok starts at £380 per month, and Mitsubishi has an L200 Titan on a £199-per-month business contract hire deal.
Van market at full capacity
Data for the remaining LCV market segments suggests that van sales have reached saturation point after four consecutive years of growth.
Mike Hawes, SMMT chief executive, said: “LCV registrations have experienced a period of stellar growth in recent years, so this decline was expected as the market stabilises. To put this performance into context, overall demand remains strong, with year-to-date registrations up 51.2% compared with the same period five years ago, and we expect demand to remain stable at similar levels throughout the year.”
The growth in pick-ups may be at the expense of demand for small vans (with gross vehicle weight below two tonnes), which has dropped by a quarter so far this year, continuing the downward trend seen in this segment in 2016, when volumes dropped from 43,018 to 36,918 units. Declines have been heaviest in the Citroën Berlingo (down 25.2%), Vauxhall Combo (down 24.7%) and Vauxhall Corsavan (down 42.5%) ranges.
Vans in the 2- to 2.5-tonne GVW range have remained stable, but registrations of 2.5-3.5-tonne vans, the largest overall segment, declined 4.2%. Demand to the end of May is 4,044 units behind the same period last year, so the segment is unlikely to match its record 232,341 registrations at the year-end. Vauxhall is performing poorly, with Vivaro down 30.4% and Movano down 29%, but this is partly offset by growth in demand for Mercedes-Benz Sprinter (up 9.4%), Fiat Ducato (up 21.5%) and Peugeot Boxer (up 2.1%).
The SMMT recently downgraded its 2017 forecast for the LCV market to a 4.6% decline to 358,000 registrations from an initial forecast of a 4.3% decline, recovering to a 361,000 market in 2018.
Andy Picton, chief commercial vehicle editor at Glass’s, said 2016 was a phenomenal year for the industry, with businesses buoyant and confidence apparently unaffected by the EU referendum result.
“It’s also safe to say that if we are to achieve similar successes in 2017 and beyond, it will be essential that the economic conditions that have kept this sector so buoyant in recent years will need to be maintained,” he said.
However, he warned against complacency in the strong segments, pointing out earlier this month that 4x4 pick-up values have come under pressure in the used market due to oversupply.