Can vans deliver profit as well as goods?
13 January 2019 - 7:00pm | John Swift
It’s a bit more than a few straws in the wind when Vertu buys a £35 million-a-year online van dealer, when Evans Halshaw puts more emphasis on its Vauxhall Van Business Centres, when the SMMT, NFDA and others are queuing up to say how strong the 2018 van market was and when auction reports show LCVs fetching good money.
That’s all happened in the past week or so and underlines the belief that vans are strong business at the moment, have been for a while in fact; last year was the fourth best on record which is impressive going against the otherwise gloomy economic backdrop of UK plc.
There is demand there and there is money to be made, perhaps more so than cars in many cases.
Vertu certainly thinks so. Speaking of the Vans Direct buy-out, chief executive, Robert Forrester, said: “We expect Vans Direct to generate an earnings stream with higher gross and net margins than those typically earned by the group, and we believe that the future growth prospects for this new business are significant.”
Tradespeople, fleets, smaller businesses, home deliveries and parcel drops from Amazon etc are powering the 2.5 to 3.5 tonne sector, the biggest of any in the overall LCV market with about two-thirds of total sales, but pick-ups have accelerated into the fast lane too and it is worth keeping an eye on these as well.
Asking around this week, few people seemed willing to tell me what the profit per unit is on a van relative to a similarly priced car. The manufacturers say there is substantially less money in fact, because the volumes aren’t there to generate the economies of scale which is why so many vans are done collaboratively between a few makers. At the retail end of the business the picture is rather different.
Or as one used sector retailer said to me the other day: “It’s not the ppu that’s the attraction, it’s the demand which means we can turn stock around faster. Put a good van or pick-up on a pitch and chances are it will be sold quicker than the car next to it so we can fill it with another one. After all, we live by dealing and you can’t deal on stock which sticks. Vans don’t and to us that’s the attraction.”