“A lot of our key customers are in the key worker area”
Despite the fact that we see them everywhere, vans are often the forgotten link in the logistics chain. Automotive news is led by the passenger car market, while talk of haulage and deliveries leans towards heavy trucks. Yet, the van sector has become an increasingly vital part of the logistics business.
Light commercials also excel in so many other areas, not just home deliveries. Indeed, in the current climate, vans have played a vital role in keeping the UK running throughout the pandemic lockdown. From ambulance chassis to highways workers, utilities to supermarkets, LCVs are an essential force on the roads.
“A lot of our key customers are in the key worker area,” said Iveco’s Light Business Line director Mike Cutts.
To meet the needs of these customers, Iveco’s 18 UK dealers kept their 88 workshops open and working throughout this year, maintaining the company’s Assistance Non-Stop 24-hour roadside recovery service to support customers in all industry sectors. However, while workshops remained in operation, showrooms were understandably less busy.
That has changed though, with dealers reporting strong demand for new vans, both to replace existing ageing vehicles, but also to meet new demand, particularly for home delivery.
“We re-engaged with customers in May,” said Mike, following an almost total shutdown in March and April.
“We saw a big spike in order uptake initially. That has quietened down, but we’ve seen a step by step build of orders. We believe we will still finish the year strongly.”
Indeed, he has been warning customers that they need to get their orders in soon to guarantee delivery of new vehicles this year. With pent-up demand due to closures in the spring and a rise in demand through the summer, manufacturing plants are coming under intense pressure, at a time when they are only now getting back to full production levels. There is also the danger that delayed delivery may well lead to higher prices.
“The biggest threat is tarrifs and on light products that is 10% on the list price of the vehicle,” said Mike.
If the UK fails to sign a trade deal with Europe, then vans from the EU will need to be physically in the UK and invoiced before December 31 this year, to avoid the tariffs that will come into force in 2021. With more than 60%
of UK Daily orders sold as chassis, rather than panel vans, it will be possible to invoice chassis cabs before they have been bodied, but they still need to be in this country before the end of the year.
Overall numbers are down against 2019, but Iveco is improving its share of what market there is. The company took 4.3% of the UK heavy van sector (over 3.5-tonnes) in 2019 and that market share jumped to 5.2% in the first six months of this year. Mike is keen to maintain at least a 5% share going forwards.
The most recent initiative is the launch of a Business trim for all Daily models, excluding Daily 4×4 and Minibus. Business trim groups together a range of popular options, such as air conditioning, cruise control, fog lights and electrically-heated door mirrors, delivering a 34% saving over choosing each of those options separately. The trim line will also include an identifying badge on the outside of the vans, which will help to differentiate the vans come resale time. Indeed, research by industry specialist CAP predicts that a Business model will retain around £1,000 of the uplift after a year on the used market.
But Mike reports that a growing number of customers are not just looking for the actual vehicle from Iveco. Many are also asking calling for more involvement from the dealer and the manufacturer as a partner in their business, with connectivity in particular driving change in the market. That includes a rise in telematics and connected services, as Iveco builds its share of that sector. This in turn is resulting in improved services, including more responsive repair and maintenance packages.
“Telematics allows a deeper level of understanding of downtime for customers, to proactively prevent downtime and breakdowns,” said Mike.
Iveco also continues to push the benefits of Compressed Natural Gas (CNG) in its larger vans, though in the UK at least the numbers remain low. He says that for those with access to a CNG filling station, there are potential cost and environmental benefits to gas power. Yet, despite being a pioneer of alternative drive solutions, the company is still some way off a full return to the electric market. Indeed, the second-generation Daily Electric is not expected in the UK until at least 2022. That said, while the original failed to take off in the UK, he is confident that the next Daily Electric will appeal to UK buyers.
“When we do bring it to market, the market will be ready for the product,” said Mike.
“It will also be about making sure that electric works across our whole range, not just in panel vans. We have to wait a bit longer, but it means that we will have a vehicle for every single mission.”