The UK van market has never been more vibrant. Last year 357,000 vans were sold - a massive increase on sales of 195,000 10 years ago, according to the Freight Transport Association (FTA).
It comes as no surprise to learn the main market driver has been consumer uptake of online shopping. Good news for the automotive industry and multiples you may think, but it’s also good news for convenience operators, too. Regardless of whether you offer home delivery or simply use your van for the cash and carry run, the increased demand means better finance packages and leasing deals available to help put the best new and used vehicles within the reach of smaller businesses.
According to Lawrie Alford, sector head for automotive and leasing at the FTA, although the market remains dominated by Ford - with 25% share - other manufacturers are muscling in. “A few years ago there were some market leaders and some poorer vans, but nowadays most of the manufacturers have got some pretty reasonable vans,” Alford says.
Anyone wishing to check out the latest automotive offerings should visit the Commercial Vehicle Show at Birmingham’s NEC in April, says Alford. “Mercedes Benz is launching its new Sprinter and Ford is launching the new version of its Transit, so they’ll be a bit of a head to head.”
Before you make your way to Birmingham with your bag of cash, it’s worth giving a bit of prior thought to your potential purchase, says Robin Dickeson, spokesperson for the Society of Motor Manufacturers and Traders (SMMT). For a start, do you need a new van or will a used vehicle fit the bill? “It sounds simple, but it isn’t. Almost all vehicle makers, and many of their dealers, have factory-backed used-vehicle schemes, typically offering two-, three- or four-year-old hardware, fresh from contract hire, and repair and maintenance deals. That means they’ve generally been well looked-after and have a good few profitable years’ life ahead of them,” he says.
SMALL IS BEAUTIFUL
You may want to consider keeping the vehicle under 3.5 tonnes - anything above requires an operating licence, tachograph, strict adherence to rules on driving hours, not to mention yet another layer of bureaucracy. “Think about what you may be carrying in the future as well as today. If the business expands it’s no good buying a small van and finding in two or three years it’s not big enough,” says Alford.
Load is a critical consideration. “Some vans’ dimensions are huge in terms of volume but they still can’t carry any more than a smaller van in terms of weight, so people tend to overload, filling up without thinking about how heavy the load is.”
The same can apply to accessories such as trailers and tail lifts, which can really eat up payload. Again, it’s a balancing act. Platform lifts can be worth the loss of some payload as they can reduce the risk of injury to staff, says Penny Hydraulics. It offers a range of lifts including the Swing Lift and V ranges of medium duty cranes for use on pickups, dropsides and flat-beds and the Step Lift, Load Lift and Tail Lift lifting platform ranges for use on pickups, dropsides and vans.
If you have specific requirements, a new vehicle may be your best option. It’s worth bearing in mind that by 2008 London, at least, is likely to have Low Emission Zones (LEZs). “Trucks and vans are going to have to be cleaner, so you have to be careful what you buy now,” says Alford. “With the introduction of LEZs you’ll have to have a Euro 4 engine, which has cleaner exhaust emissions in terms of particulates and so is better for the environment, or to pay to go into London. That could also have a potential effect if you decide to sell the van.”
An alternative to outright purchase is leasing, for which there are two options, says Ashley Jones, managing director of ProLeasing - contract hire and finance lease. With contract hire you are contracted to use the vehicle over a predetermined period of time with an agreed mileage; this may also include maintenance, roadside recovery and a replacement vehicle. “Contract hire eliminates the need for someone within the organisation to look after and run the vehicle/fleet. It allows more time to focus on their core business and there won’t be disposal issues,” says Jones. Similarly, with finance lease the vehicle is funded over a predetermined period of time with an agreed mileage, but the operator is responsible for the residual value at the end of the contract.
Dickeson says a contract hire deal with maintenance is an attractive proposition. “You pay a fee, usually on a monthly mileage basis for the life of the deal. That cost includes the use of the vehicle and its maintenance and often covers roadside assistance and even provision for a replacement vehicle. Some deals include out-of-hours maintenance. These sort of ‘gold-plated’ deals used to be reserved for the new metal, but no longer; most manufacturers will do similar deals on used vehicles,” he says.
Meanwhile, Steve Crawshaw, light commercial vehicle manager (LCV) at Network - which provides finance packages to leasing brokers - says that although contract hire is still the most popular choice, a finance lease can fit better in some circumstances. “Historically, vans have not been treated that differently from cars when it comes to leasing arrangements. Leasing companies have adapted an existing car lease agreement to cater for the LCV market. Now times have changed and most brokers have recognised the need for specialist LCV funding and management solutions,” he says.
Either way, it’s essential to find an option that can reduce the impact of a breakdown on your business. “The age-old issue of downtime is a real bugbear for van fleets. A company car breaking down is an inconvenience, but when an LCV breaks down the operator instantly starts losing money. When vehicles are integral to a company’s day-to- day operations, it can be very difficult to do business as normal without them,” says Crawshaw.
If your needs exceed 3.5 tonnes there are larger vehicle leasing companies such as Ryder, which offers vehicles for as short a duration as one day. Vehicles available range from 3.5 tonnes to 18 tonnes with box, curtainside and refrigerated bodies, and many are available with side-loading doors and tail lifts with a simplified rental system. “Customers can now rent a van or truck for as long as they want, with no contract, and bring it back whenever they want. In essence, it couldn’t be simpler to rent a van or truck from us,” says Ryder director, commercial vehicle sales, Nigel Martin.
If you don’t manage to secure a deal that covers you for downtime, it’s wise to plan for the eventuality via your insurance. “The provision of a replacement vehicle if yours is off the road due to an accident may be vitally important to you - and therefore worth paying a higher premium for. You may require frequent cover for cross-channel buying trips to Europe - make sure you get a policy that includes this,” says Andrew Dunkerley, marketing director of A Quote Insurance Services.
Calculating insurance premiums is notoriously complex. “Insurance rates are calculated using a matrix including: the age of the driver(s) and whether they have had any claims or motoring convictions; no claims bonus; postcode; and expected annual mileage. The value of the vehicle and the manufacturer are also important as the repair costs can vary enormously between the various manufacturers,” says Dunkerley.
Of course, ensuring the vehicle is secure can obviate the need for making a claim for theft. Fortunately, van manufacture has come a long way, says Ray Benbow, LCV and business specialist for Holdcroft Hanley Nissan. “Most, if not all, modern vans are fitted with immobiliser and alarm as standard. Remote central locking is desirable, as are steel rear doors and full steel bulkhead,” he says.
SMMT’s Dickeson says all makers are working hard to improve security. “It used to be possible to hot-wire a vehicle but today very few can be stolen without the keys.”
COST OF FUEL
One thing you definitely want to keep track of is fuel consumption. You may not have any control over the global price of oil or even the number of miles you’re on the road, but there are still ways to save money while helping the environment. “Fuel consumption can depend on things that aren’t immediately obvious.” says Friends of the Earth spokesperson Roger Higman. “White Van Man is notorious for accelerating out of the lights and braking hard, which wastes a lot of energy and costs money. It’s much more sensible to be relaxed and accelerate smoothly and slowly - don’t brake unless you have to and don’t speed up only to brake later on,” says Higman.
In an attempt to reduce fuel consumption and encourage safer driving, the government launched a £1.3m advanced driving initiative in January. The Safe and Fuel Efficient Drivers Scheme (SaFED) aims to encourage safer, cleaner and cheaper driving through a one-day course that’s free to drivers in small- to medium-sized businesses. Results of trials are impressive and include an estimated saving of up to £500 of diesel per vehicle; a reduction in the drivers’ carbon emissions by a quarter; and reduced gear changes.
More information is available through SaFED on 0870 190 8440, http://www.safed.org.uk or email firstname.lastname@example.org.
Great strides are also being made in terms of fuel and its contribution to global warming. Liquid petroleum gas, which is slightly better for the environment, is now widely available, but it’s bioethanol that’s most likely to revolutionise the impact of vehicle emissions.
Bioethanol, or Biofuel, can be made from a variety of raw materials such as wheat and oil seed rape. and is almost emission neutral. Tesco is already selling a 5% bioethanol and 95% diesel mix, and by 2010 all fuel will have to contain at least 5% bioethanol. Somerset council is running some vehicles, supplied by Ford, on 85% bioethanol fuel, which eventually it plans to produce at a local processing plant using locally sourced raw materials.
Vans and the how they’re driven impact on the environment over and above their contribution to global warming. White Van Man already has a poor image and as more and more vans hit the roads pressure may be brought to bear to make drivers of vehicles under 3.5 tonnes carry an operator’s licence like their bigger brothers in the haulage industry.
In an attempt to pre-empt such changes the FTA is encouraging van drivers to exercise best practice on the road with the publication a Van Drivers’ Handbook and voluntary code of conduct. The handbook is designed to be an easy-to-use reference guide to the main driving rules, including drivers’ hours and records; towing; how to avoid overloading; dangerous goods and waste food. It is available from the FTA for £5. “The van drivers’ handbook was set up to promote good practice and better behaviour,” explains Alford.
The government, like the FTA, is recognising the role played by LCVs and their drivers, and with both industry and the authorities attempting to support users, there’s every opportunity to improve safety on the road for you and your staff, limit your impact on the environment and use your van to drive profit at your business.
Marketing on the Move
Purchasing or leasing a van is a major investment but it can also be a source of extra income and a means of free advertising. Regardless of the size of the vehicle, you’ve basically got a blank canvass which can be used to promote your own business - as well as other people’s.
AdsOnVans.com has been designing, printing and fitting advertising to vans and cars for three years. Director Michael Lyons says more and more businesses are realising the potential of using their vehicles as a free marketing medium. “It’s simply the most cost-effective way of advertising your product or services in your area - your van goes where your customers are and the cost, compared with traditional forms of advertising, makes it very good value,” he says.
In addition to essential details such as the name of your store, phone number and website address, the company will incorporate suitable images from their library, such as fresh food, to make the van more attractive and eye-catching. In accordance with the customer’s brief, the company will design the advertising, print it and fit it, either at the customer’s own location or, if it’s a full wrap, at one of its own workshops. Depending on the design, coverage and size of vehicle, prices range from £600 to £2,000. The wraps last three to five years and leasing companies are happy for customers to have them as they are removable and actually help protect the van from chipping.
Alternatively, you could offer your vehicle as advertising space to a third party by registering online with details of your location, the van’s main routes, percentage of time of the road and how many miles a day are covered. On average this could earn you just under £100 per month. You could even partner other local businesses.
You don‘t have to be Tesco.com to get a piece of the home delivery action. Whether you offer a telephone or internet ordering facility, the potential for the independent convenience channel to capitalise on shoppers’ demand for home delivery makes the van more important to the local retail economy than ever before, as Londis retailer Pami Sharma has discovered. Pami says he can make the same on a week’s deliveries as he makes from a day’s sales in-store, with average orders at £50. “I have a driver but also go out myself, particularly to meet new clients,” he says.
He’s been using his Ford van for eight years and minimises wear and tear by restricting use to home deliveries. And because it is used solely for his business, he incurs a benefit tax.
Emblazoned with the Londis logo and details of his store’s services, the van also doubles as a marketing tool. “If you see a need for a delivery service, offer it. Not only do you service people’s needs and secure them as customers but you can make a profit too,” he says.
On the Road
Gallaher is celebrating the national launch of Sterling cigarettes by offering retailers the chance to win a Vauxhall Vivaro 1.9 CDTi van, worth more than £18,000. Entry into the competition is via Gallaher representatives. To be in with a chance, all you have to do is contact your rep and ensure you stock five of the seven Sterling variants. A mystery shopper will visit and if the five variants are in stock, you will be entered into the draw.
Kia Motors has launched a commercial vehicle, the Kia Sorento XE-C. The van, which is based on the 2.5 CRDi XE Sorento, includes air-conditioning as standard and has the same specification as the existing XE model including part-time electric shift transfer 4WD.
Market leader Ford has launched its latest Transit van. Improvements to the new 2006 Ford Transit includes new interior and exterior styling; improved driving dynamics; upgraded safety features; and a range of high-tech features for the driver. Detailed changes in the suspension have made a significant change to the noise, vibration and harshness, cutting it by 20%. The new transit will be available in a choice of six diesel and one LPG-compatible engines.
Isuzu has launched the N-series of lightweight trucks featuring new cab styling and the new NEES Easyshift transmission. According to the company, the transmission provides reduced capital costs compared with conventional automatic gearboxes and better fuel consumption. It also claims to offer better fuel consumption than a manual gearbox in economy mode.