Semiconductors and raw materials dull UK light–commercial vehicle demand in July

11 August 2021

There were a further 23,606 new light-commercial vehicles (LCV) on UK roads in July. This was down 4,095 units (14.8%) on a COVID-19 -impacted July 2020 and the first decline since December last year.

Semiconductor and raw-material shortages continue to affect production volumes, with widespread opinion expecting this fragile supply chain to last well into next year. The main drivers of this level of LCV demand are from increasing home-delivery, construction and essential service-delivery vehicles.

In a disappointing month, every sector recorded demand declines. The biggest reductions were recorded in the 2.0 – 2.5 tonne, under 2.0 tonne and the pickup sectors, with registrations down 41.4%, 38.2% and 26.3% respectively. Demand for larger vans in the 2.5-3.5 tonne sector – which made up 70.5% of all vans registered in July – fell by 5.2% to 16,653 units.

Stellantis secured a strong month with the Vauxhall Vivaro, Peugeot Boxer, Peugeot Partner, Citroen Dispatch and the Citroen Relay all positioned in the top 10. However, Ford secured top spot with the Transit Custom again outselling all its rivals. Its big brother, the Ford Transit, secured third place, whilst the Ford Ranger was in fourth place.

Top five LCV registrations

YTD 2021 July 2021 July 2020 
Ford Transit Custom30,545Ford Transit Custom3,567Ford Transit Custom3,405
Ford Transit19,402Volkswagen Transporter1,944Mercedes-Benz Sprinter2,581
Volkswagen Transporter14,530Ford Transit1,758Ford Transit1,785
Mercedes-Benz Sprinter13,065Ford Ranger1,485Volkswagen Transporter1,545
Ford Ranger11,339Mercedes-Benz Sprinter1,410Vauxhall Vivaro1,381

Source: SMMT

Although there is an expectation that the LCV market will return to near 2019 levels by the end of this year, there is still a huge level of caution as the effects of the pandemic continue to distress the automotive industry. Many manufacturers have already started to prioritise production as a combination of COVID-19 restrictions, the slow but steady fleet switch to clean-vehicle technology, and ongoing supply-chain shortages continue to affect vehicle production. Extended lead-in times are in place for many vehicles and with this fragile supply chain expected to last into 2022, there is still some way to go before the industry returns to normal.

Used market strong but volumes low

Driven by the never-ending demand for retail-ready LCVs, the used market for July saw average values remain strong. Euro 6 stock accounted for over 60% of all vehicles sold during the month, but only 8.5% of those vehicles were under two years old. First-time conversion rates dropped 4.3% versus June and are now at their lowest point during the last 12 months. Retail sales in July were also the slowest in 12 months.

Although demand is healthy for new stock, production and raw-material issues have resulted in extended lead-in times for most vehicles. This in turn has seen the majority of de-fleets delayed, with current vehicles not likely to be replaced until Q2 2022.

The lack of new stock entering the used market is of a growing concern, with volumes expected to remain low for at least the next three months. As a result, used prices look set to remain high not only for the remainder of the year, but into H1 2022 as well.

July in detail

Glass’s auction data shows the overall number of vehicle sales in July decreased by 17.4% versus June 2021 and was 15.7% lower than 12 months ago.

Average sales prices paid decreased by 1.34% versus June but remain 25.06% higher than at the same point last year. This decrease is a result of the average age of vehicles sold increasing from 71.1 months in June to 73.3 months in July, and the average mileage increasing from 71,658 miles to 75,917 miles. The latest average mileage is 2,446 miles (+3.23%) higher than in July 2020.

Medium-sized vans were the most popular at auction, accounting for 39.7% of all sales in July, whilst the highest proportion of all LCVs sold (36.7%) were in the over six-years-old age bracket.