Little love, but lots of growth in LCV remarketing
Cars – you either love 'em or hate 'em. LCVs? Meh. There is very little emotion involved in picking and choosing a light commercial vehicle. And that has consequences for remarketing as well.
As moderator Luc De Moor remarked, this was the first time in its three-year history that the Fleet Europe Forum, last Tuesday in Barcelona, touched upon the rather complex, very utilitarian and rapidly growing segment of LCV remarketing.
Oliver Marte, Senior Manager International Used Van Management at Mercedes-Benz Vans, presented his company's views on marketing and remarketing LCVs. Vans is one of Mercedes-Benz's five business divisions - “squeezed between the Cars and Trucks divisions”, as Marte put it – and has grown rapidly in recent years: from 252,000 units worldwide in 2012 to 321,000 units last year, equivalent to a growth rate of 8% per annum. Sales for this year up to and including Q3 are at 261,000 units, representing revenue of €9.4 billion and a return on sales of 10.8%.
More new vans, that means more used vans down the line. But just as apples are not oranges, vans are not cars: “As an investment good, LCVs subject to higher price-sensitivity by their buyers. Transporting used LCVs comes at a significantly higher logistics cost. They are also used more intensely and for longer periods than cars, which has consequences for the wear and tear to be expected, and ultimately for residual values”.
Perhaps the most complex aspect of remarketing LCVs – and the biggest difference with remarketing cars – is the fact that so many LCVs have been fitted for very specific jobs: from ambulance to delivery van to maintenance truck. The online environment can be a great help in connecting a very specific offering of used LCVs to a correspondingly specific demand.
Mercedes-Benz Vans is pushing its strategic focus on used-van optimisation in two ways. On the one hand, wholesale optimisation, with a European damage catalogue, regional wholesale centres and internal service providers (for logistics, among other services). On the other, retail professionalisation, centred on a European Certified-Pre-Owned programme – to be launched in key European markets in 2017. Add to that the goal of developing digital capabilities for both retail and wholesale, and those are the highlights of Mercedes-Benz Vans' agenda for next year.
“Our dealer network needs to transform into a digital network – but the customer will continue to require human touchpoints”, says Marte.
Jean-Laurent Paris, speaking as Managing Director for Dekra Automotive Solutions, put the complexity of LCV remarketing in perspective: “It's not rocket science. We are recycling the value of an asset into cash”.
An increasing amount of cash, going by the figures: in the first 8 months of this year, just under 9.8 million used cars were sold in the EU, up 8.1% over the same period last year. Used LCV sales for the same period this year amounted to just over 1.2 million – a lot less, but 14.5% more than in the first 8 months of 2015. “In Italy, for example, used LCV sales are even up by around 40%”.
Rocket science or not, Paris made no bones about the fact that the LCV market is different. “Looking at France – but similar figures apply in other markets – no less than 73% of used vans sold in the first half of this year were at least 5 years old. That implies a different remarketing strategy than for used cars, which are much younger on average”.
One element of an LCV-specific remarketing strategy: “Don't just think of the next buyer, but of the next buyers – plural”. And: “For some types of conversions – ambulances for example – it is nonsense to do a refit. So those specific categories make it even more essential that you know your remarketing channels even better than for cars”.
Thomas Johansson, VP at Modul-System, joined Marte and Paris for a panel discussion moderated by Bertrand Donck (Macadam). Johansson said that, as a determining factor in remarketing LCVs, “payload is critical. Determining how much material and equipment you can bring, and whether that means you will have to drive more than once, is an important consideration”.
Left to right: Bertrand Donck, Thomas Johansson, Oliver Marte and Jean-Laurent Paris
Image: Fleet Europe