Need to buy a new Van…the market post Covid 19 has changed dramatically as buyers are caught in a perfect storm
If you have tried to buy a new van in the last 6months, you will know that supply has been very limited. One impact of the Covid 19 pandemic was that manufacturers around the world mostly closed their factories. After the first wave and initial lockdown, the production lines had to be reworked to ensure compliance with Covid Secure work practices. This led to few vehicles rolling off production lines at first and even now running vastly below capacity compared to Pre-Covid production levels. When you consider that Pre-Covid, manufacturers were churning out around 350,000 vans per year and this has fallen by around 30%. So there are around 100,000 fewer vans being produced.
However, you may think that demand has also fallen. WRONG. Demand has shifted but it certainly hasn’t fallen. The market has seen exponential growth in the home delivery market as more and more of us shop online. Even with a reduction in demand from some sectors the home delivery market has more than taken up the slack. This has led to a shortage of new vans as dealers have run out of stock and every new van is now on factory order with lead times of 12-16 weeks. Van drivers have been forced to run their current vans on for longer which has led to a knock-on shortage of vans entering the used market at the same time. The demand for new vehicles has had to be met by the used market. This shift in demand to the used market at a time when the supply of used vans has also fallen has resulted in the perfect storm for buyers as values of used vans have rocketed in recent months with sellers reporting an increase in residual values of 30-50%.
If 2021 is the year you will need a new van, now is definitely the time to engage with your supplier. It's likely you will have to pay more, as manufacturers push up their prices to balance their books, but at least you will get more for your old van…if you have one.