Is the Worst Over for Van Sales?

The news this morning that the UK has finally exited the recession (let's all agree not to say credit crunch) will be welcomed by many. Whilst we wont be expecting everything to return to normal just yet it is a clear sign that recovery is on its way. Those in the commercial vehicles industry will be pleased to hear that the economy is growing again after a difficult year.



Sales of used vans and new vans were badly hit by the recession as personal and business spending was greatly reduced. Most businesses kept outgoings to a minimum in order to secure jobs so increasing fleet size or investing in new vans wasn't an option. It is now hoped that sales of new vehicles will increase. This would most likely lead to an increase in used vans sales also.

Sales across Europe dropped by almost a third in 2009 although this eased towards the end of the year. The government's 'bangers for cash' scheme was criticized for focusing on private vehicles rather than supporting the commercial vehicles industry. Despite this sales have improved as spending has increased with December of 2009 only seeing a drop in sales of about 10% compared to 2008.

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VW to bring SmallCars to the European Market

Volkswagen have continued their plans to expand buy purchasing a 20% stake in the Suzuki Motor Corporation. This was a calculated move on Volkswagen's part which reflects the changing face of motoring. As fuel become increasingly expensive (despite the drop in the price of oil) and ecological concerns become heightened smaller cars are becoming more popular. Volkswagen are hoping to combine their knowledge with that of Suzuki who have a reputation for building high quality small cars.

“Europe is shifting to compact and small cars due to rising petrol costs as well as concerns of climate change. Suzuki has the expertise to make small cars, Volkswagen does not. The German company has the expertise in environment friendly technology and has invested large sums. Combining the two will reduce cost of making new cars. Volkswagen, which has a stronger dealership network in Europe compared to Suzuki, could source small cars from India and sell them under its own brand name,”
R C Bhargava, Chairman of Suzuki

Between them Volkswagen and Suzuki are aiming to create the first small car with widespread appeal. The Mercedes Smart Car is the most common small car in the UK thus far but Volkswagen hope to be able to provide something even more popular. It is not yet clear what will be produced but given recent events it can be assumed that a more environmentally friendly car is likely to emerge.



The Suzuki-Volkswagen collaboration is also expected to target the Indian market. Suzuki currently sell 20% of their vehicles to India where the small car market is booming. India is developing at such a pace that car and van manufacturers are seeing it as a vital market with thousands of potential new customers.

“VW’s presence in the Indian market is fairly at a nascent stage, while Maruti (Suzuki) has over 25 years of experience. When you develop new cars, you need to tune them to the needs of the local market. Suzuki will bring about a number of such intangible resources that can greatly benefit VW operations in India,”
Abdul Majeed, auto head, PricewaterhouseCoopers

Scrappage Scheme: 250,000 Vehicles So Far

The Governments car and van scrappage scheme is being haled as a success by some as it reaches the milestone of 250,000 cars scrapped. According to the SMMT 251,629 new cars where purchased via the scrappage scheme by the end of November 2009. This means that 21.6 percent of new cars sold in November had money off in exchange for the scrappage of a older model.

Commercial vehicle scrappage has been less significant accounting for 1.5% of the total vehicles scrapped. According to the SMMT 3,882 LCVs were traded in up until the end of November which accounted for 3.9% of new vans purchased. This could be down to the fact that used vans are popular with small businesses who cannot afford to upgrade even with the reduction in price provided by the scrappage scheme.

"Scrappage continues to have a positive impact on vehicle registrations ... it has helped to generate consumer confidence."
SMMT Chief executive Paul Everitt