The demand for new vans can be seen as a barometer of the health of the wider economy. When the economy is strong then new vans are needed by sole traders, builders, SMEs, delivery firms, utility suppliers and fleets. Vans are, after all, working tools which generally lead hard lives with punishing schedules and a tendency towards high mileages.
However, when the economy falters then vans replacement plans tend to be put on hold and vans are worked a little harder.
It’s fair to say that with Brexit negotiations dragging on, interest rates rising, inflation creeping up and business confidence at a low ebb, the UK economy is taking a pounding. This has filtered through to the sale of new vans which dropped by -7.4% year-on-year in October with just 24,968 units registered pushing down the 2017 year-to-date volumes by -3.5%.
However, it’s worth pointing out that 2016 was a record year for new van sales with 375,687 units registered, marking the fourth consecutive year of growth. The van market fell sharply during the recession but bounced back quickly once the economy showed signs of improvement, so any year-on-year comparisons should be viewed in light of what has been an extremely strong market, stronger than elsewhere in Europe.
October’s sales declines were experienced across all sectors from small car-derived vans up to the top-end panel vans. The only exception was pickups which operate under different rules as they are just as likely to be acquired by a builder as a working vehicle as they are by a private customer in need of a recreational vehicle befitting their outdoor lifestyle.
The Society of Motor Manufacturers and Traders (SMMT), the trade body which represents the interests of vehicle manufacturers operating in the UK, keeps a close eye on the van market and expects total sales to fall by -2.7% by the end of 2017.
“While the market remains at a very high level, the recent decline in business confidence, caused by economic and political uncertainty, is now having an impact on van registrations. Government must, therefore, address these concerns and create the conditions necessary for the market to prosper,” said SMMT chief executive Mike Hawes.
For most buyers, a van remains an essential purchase far removed from the typical three-year cycle in the new car sector, where vehicles are traded in for something newer in a different colour and with more creature comforts.
Vans purchases are invariably made as the result of a hard-nosed business decision, with the full expectation that the vehicle has to pay its way by providing a safe, secure and reliable working environment for its owner, whether it be for deliveries or to carry materials and gear from job to job.
So what are the key factors to consider when buying a van?
Size matters
If one of the main starting points for buying a house is location, location and location, then size, size and size should be applied to van purchases. It’s obvious really but the type of van you buy should be dictated by precisely what it is going to be used for. If it’s too small then you run the risk of overloading, which is both dangerous and illegal. Too big and you’re running around with a van with unwanted capacity, which you’re paying for.
Check the van’s Gross Vehicle Weight (GVW). This is the weight of the vehicle including the maximum load that can be carried safely when it’s being used on the road.
There is a noticeable move away from small sub-2,000kg car-derived vans and this is being driven by practicality, running costs and legislation.
When a van’s GVW exceeds 2,000kg, there are VED and speed limits implications that need to be factored in. Fleets might take the view that if they are going to be affected by these things, it no longer matters whether the GVW is 2,001kg or 3,500kg, as those costs and implications will be the same. So there has been a tendency for sales to lift in the over 2,500kg weight categories for medium-sized panel vans such as the Ford Transit Custom, Citroën Dispatch and Peugeot Expert.
Fuel type
Diesel has had plenty of bad press in recent years, with commentators tending to demonise all diesel engines as heavy pollutants and not making the distinction between ultra-clean new units and dirtier older ones.
Diesel remains the fuel of choice for van buyers because of its cost-effectiveness. The key to buying a diesel-engined van is to future-proof it by choosing one powered by a new generation Euro 6 (2015 and onwards) engine.
It’s worth noting that urban emission zones, such as London’s new T-Charge, are applied to Euro 4 engines (2006-2011) and older units. Top tip: if you’re offered a used van at a knock-down price and which was registered before 2011 then avoid it!
Although many van manufacturers offer petrol variants, the take up has traditionally been low and remains so because of the prohibitive fuel consumption cost penalty of running laden vans with petrol engines. Petrol engines in vans rarely make economic sense.
What about electric and hybrid vans?
While electric vans tick the ultra-green box, their practical use is severely hampered by their limited range, especially once laden, making them best suited for lightweight jobs by local authorities with ready access to charging points.
One solution could be the introduction of plug-in hybrid petrol-electric vehicle technology, already available in a growing number of cars, into vans. Ford is currently road testing 20 Transit Custom PHEVs in London ahead of a national fleet trial in 2018 before making the vehicle available to buyers in 2019.
The challenge facing Ford and other van makers is the weight penalties associated with adding a battery pack to the mix. This is a particular problem for vans weighing in at 3,500kg GVW, where manufacturers cannot make the vehicles any heavier without incurring a payload penalty. Ford reckons to have cracked this with an ultra-compact battery pack. We’ll see.
In the meantime, despite the bad press, diesel is unlikely to become significantly less popular in the van sector anytime soon because there is no cost-effective alternative. Also, Euro 6 diesel engines are pretty much as clean as their petrol counterparts.
Financing
When it comes to budgeting and financing, monthly payments are as important to van buyers as they are to car buyers.
While personal contract purchases now account for most new car purchases, it only has limited appeal in the new van market where high annual mileage requirements are an integral part of agreements – and that’s before you factor in wear and tear.
The most popular forms of finance for new and used vans continue to be hire purchase and leasing amongst sole traders and SMEs, with contract hire favoured by fleets.
When it comes to choosing the best deals, some of the finance packages offered by main dealers, which are underwritten by the manufacturer’s own finance company, are a good place to start.
Dealers can often also offer third-party low deposit and 0% VAT deferral deals from other finance providers as well. After all, the last thing a van buyer wants to do is to tie up capital in metal.
