Will Van Sales Recover any time soon?

The motor industry has been hit hard by the recession, high value assets and a finance intense industry has taken it’s toll but particularly with the commercial vehicle sales side of the market. With the market down circa 30%, vans have been hit harder than cars and despite some fairly aggressive deals across all vans brands they are still struggling to move van stock.

However, within the car market we have seen an upsurge in sales aided by scrappage and also on the leasing side, a plethora of deals and increased support from the manufacturer to make interesting deals. In the last 3 months, we have also seen leasing companies request that cars are no longer extended and returned for defleet, this has mean’t businesses and individuals have had to seek new deals.

Predictions suggest that this same pattern will take place in the van leasing market not so much because of needing to return vehicles but more forced by age, mileage and maintenance costs. For example a 3 year old van at the tail of end of 2008 is now approaching 4 years old, based on average mileages these vans are also approaching 100’000 miles, escalating maintenance costs and wear of the vans will force users to replace their vans.

Remember the fundamental thing to consider is that people are not buying fewer cars they have delayed replacing the ones they have. Cars and vans don’t run forever and one way or another there comes a time when economic, mechanical or cosmetic considerations must come into play.

How to finance a van?

This has become an age old question for everyone associated with van finance. Which is the best method of finance for your commercial vehicles. Do you contract hire it, finance lease it or contract purchase it? In short, own it in the end or give it back?

The answer is difficult one and in part it really comes down to personal preference and of course how you want to show the finance on your accounts. Either way it beats outright purchase from a cash flow perspective however “van man” has also always considered the issue of condition at the end of contract. Working vans have a hard life and dents, dings and damage are par for the course. Typically, leasing companies haven’t allowed for this in full and it some have found themselves on the end of large defleet bill. Owning it at the end removes this issue as well as giving you the flexibility to continue running the van by paying the balloon or refinancing.

The defleet issue has subsided somewhat with the BVRLA’s addition of a special commercial vehicle end of contract return standard. Also contract hire provides the benefit of not having to find money for a balloon payment and also structure monthly payments at an affordable rate and this will be your only liability.

We are really keen to hear your views on this subject, so why not email us with your thoughts, send you emails to vans@ukcarleasing.info.