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Discount deals hurt LCV residuals
Page 9
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By Julian Mitnes LCV-MAKERS are flooding the market with heavily discounted vehicles as the fleet and rental markets continue to collapse, This is eroding operators assets, argues Simon Elliott, Volkswagen commercal vehicle director.
He says: "There are such distressed deals out there that the market is being confused rather than stimulated.
"Since certain manufacturers aren't winning any rental business due to the downturn, they've got too much stock on the ground. They are transferring the same sales terms (from the rental market) into other sales channels.
This is just causing confusion and is distressing the market, which is affecting everyone's residual values.
"An operator may have bought several vans at what they believe is a competitive price, but the previous week, several thousand units were shifted at a severely discounted rate, harming residuals."
He believes certain brands are now being avoided by buyers as the situation intensifies.
"Some brands are not going down that road, but some are.
"We have been told that there are certain manufacturers that operators will not touch in case of being burned."
Elliott also believes the current economic period will also be one of consolidation in the LCV industry, with a significant shift towards the second-hand market as financial resources continue to become scarce during the recession.