Sunday 16 June 2019

Van still the man as market battles Brexit and currency challenges

But firms wary of heavy investment until Brexit dust settles despite huge spread and variety of model options

Major player: Citreon Berlingo
Major player: Citreon Berlingo
The new and imminent Opel Vivaro

Eddie Cunningham and Brian Byrne

It's one of the great contradictions of the motor industry right now that these appear to be the best of times for the economy but not such great times for new car or van sales.

We've always tended towards the belief that van/commercial sales, in particular, were accurate and timely reflections of the economy's true state of well-being and performance, as that has historically been the case.

New van sales, especially, rose and fell in tandem with increasing or declining economic activity at the coalface of business and services over the years.

And that would very much have been the case up to relatively recently. Until a powerful force was roused from its slumber: used imports.

They have soared and surged these past few years on the back of weaker sterling and in the wake of the confusion around Brexit. Generally speaking, we have tended to view imports as being passenger cars only (100,000-plus forecast for this year).

But thousands of light commercial vehicles (LCVs) are being imported each year too.

Also fuelling the flight to used imports is the opportunity to exploit used van prices that are perceived to be lower than their second-hand counterparts here.

The extraordinary (galling even) thing is, as we outline in detail inside on pages two and three of this supplement, that there are some super new vehicles on the home market which should, in reality, be the targets of a much wider audience.

It goes without saying that were things different on the Brexit and sterling/euro exchange fronts, the number of new van purchases would be significantly higher.

Not alone would that benefit the industry and its workers in increased new car and van turnover, but we as taxpayers would not be losing out on revenue either.

From industry and Exchequer perspectives, the loss of revenue on new-sales tax is a major downside of imports.

New commercial van registrations for the first four months are down around 10.7pc on last year.

At the same time, used import volumes are down by roughly the same percentage.

But that still means the proportion of used import LCVs remains at around 26pc of total registrations. It's a big figure.

SIMI's director general, Brian Cooke, told Independent Motors: "Not surprisingly for the first quarter of 2019, registrations of LCVs were down 10.7pc as the impact of Brexit filtered into the business community."

He added that many companies are "stalling investments as they await a clearer picture on how Brexit will impact them".

Mr Cooke continued: "While there has been some recovery in recent weeks, perhaps as a result of less discussion in the media on Brexit, the remainder of the year is difficult to predict, as Brexit with undoubtedly be back in focus in the run-up to the exit date of October 31."

Economist Jim Power, who produces quarterly reports for the Society of the Irish Motor Industry, sums up the current situation.

He says Brexit is the "overhanging dark cloud" creating major uncertainty and caution in businesses across the economy.

In a challenging environment which also includes rising housing costs, high personal taxation and subdued wage growth, the uncertainty is reflected in reduced registrations of new cars and light commercial vehicles.

The biggest commercial brands being imported are Ford, Citroen, Peugeot, Toyota and Volkswagen. Between them they account for two-thirds of all used LCV imports. The most popular models are the Ford Transit, Citroen Berlingo, Toyota Hilux and Peugeot Partner.

It's interesting too that Toyota leads the pickup imports volumes with the Hilux. It is followed by the Ford Ranger and Mitsubishi L200. Almost all of the used imports are diesel powered.

The A-Z of every van and pickup on the market

Indo Motoring

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