Friday, August 22, 2014
BATTLE OF THE VAN BRANDS IS ALL ABOUT THE BADGE, SAYS CAP
An explosion in new van launches is sparking more intense brand rivalry than even that seen in the car market.
But the bad news for some manufacturers is that victory will be determined by the badges on the van, rather than technical excellence or even reliability.
That's the view of experts at CAP Automotive, the independent car and van information experts for motorists and businesses.
This year has seen more new vans brought to market than since 2006 as manufacturers vie with one another to take advantage of the UK's economic recovery.
So far in 2014 the giants of the van world - Ford, Iveco, Renault, Vauxhall, Fiat, Citroen, Peugeot and Mercedes - have all launched new products into the light commercial vehicle market.
Now the lines are drawn for a battle of the badges as each manufacturer claims class-leading status for its new vehicles.
Although sales are the ultimate measure of success, the most important factor early in the life of a new van is the expectation of its value in the future second hand van market.
Ken Brown, of CAP, argues that although every new van launched this year is better built, safer, boasts superior economy and driving experience than any of its predecessors the badge still remains the single most important factor determining what buyers will pay in the future used market.
Expected future used values are the ultimate key to success for all new vehicles. This is because large fleets - who are responsible for the bulk of new sales - always want to limit their exposure to depreciation. Lower expected depreciation means they can set more competitive leasing rates.
Ken Brown explained: "Unfortunately for manufacturers it is never as simple as just building the best van - you have to have the best brand image to win the residual values war.
"We often see new vehicles from one manufacturer that are every bit as well built as those from a rival - or even superior to the competition - which eventually slip behind on values when they reach the used market.
"The proof that badge brand image is the most important factor influencing what people will pay for a used vehicle is found among what the industry calls ‘badge-engineered' LCVs.
"These are effectively the same vehicle with identical features and where the only tangible difference is the badge.
"For example Fiat's Fiorino light van is also badged by Citroen as the Nemo and by Peugeot as the Bipper. Although prices paid day to day for used examples vary, the long term trend for average trade prices clearly shows that buyers are willing to pay around 7.5% more for a Citroen Nemo than a Peugeot Bipper and 9.5% more than a Fiat Fiorino.
"Whilst there are many similar examples throughout each LCV sector the perhaps the most extreme has to be the Renault's Kangoo which also carries the highly regarded Mercedes Benz badge on the Citan. With a considerable gap between the two badges in the desirability pecking order and whilst there are some subtle differences in design and specification between the two vans, you can expect to pay around 20% more to buy a used Citan than the nearest equivalent Kangoo.
"The holy grail for vehicle manufacturers is reaching a higher position in that perception pecking order of desirability.
"As this latest round of new LCVs enters the market, it would seem fair that the manufacturers who have paid the greatest attention to design and innovation will reap the greatest rewards.
"But unfortunately the law of karma doesn't apply to LCVs. In reality it's the manufacturers who have built the strongest brands over an extended period of time that almost always come out on top."
That's the view of experts at CAP Automotive, the independent car and van information experts for motorists and businesses.
This year has seen more new vans brought to market than since 2006 as manufacturers vie with one another to take advantage of the UK's economic recovery.
So far in 2014 the giants of the van world - Ford, Iveco, Renault, Vauxhall, Fiat, Citroen, Peugeot and Mercedes - have all launched new products into the light commercial vehicle market.
Now the lines are drawn for a battle of the badges as each manufacturer claims class-leading status for its new vehicles.
Although sales are the ultimate measure of success, the most important factor early in the life of a new van is the expectation of its value in the future second hand van market.
Ken Brown, of CAP, argues that although every new van launched this year is better built, safer, boasts superior economy and driving experience than any of its predecessors the badge still remains the single most important factor determining what buyers will pay in the future used market.
Expected future used values are the ultimate key to success for all new vehicles. This is because large fleets - who are responsible for the bulk of new sales - always want to limit their exposure to depreciation. Lower expected depreciation means they can set more competitive leasing rates.
Ken Brown explained: "Unfortunately for manufacturers it is never as simple as just building the best van - you have to have the best brand image to win the residual values war.
"We often see new vehicles from one manufacturer that are every bit as well built as those from a rival - or even superior to the competition - which eventually slip behind on values when they reach the used market.
"The proof that badge brand image is the most important factor influencing what people will pay for a used vehicle is found among what the industry calls ‘badge-engineered' LCVs.
"These are effectively the same vehicle with identical features and where the only tangible difference is the badge.
"For example Fiat's Fiorino light van is also badged by Citroen as the Nemo and by Peugeot as the Bipper. Although prices paid day to day for used examples vary, the long term trend for average trade prices clearly shows that buyers are willing to pay around 7.5% more for a Citroen Nemo than a Peugeot Bipper and 9.5% more than a Fiat Fiorino.
"Whilst there are many similar examples throughout each LCV sector the perhaps the most extreme has to be the Renault's Kangoo which also carries the highly regarded Mercedes Benz badge on the Citan. With a considerable gap between the two badges in the desirability pecking order and whilst there are some subtle differences in design and specification between the two vans, you can expect to pay around 20% more to buy a used Citan than the nearest equivalent Kangoo.
"The holy grail for vehicle manufacturers is reaching a higher position in that perception pecking order of desirability.
"As this latest round of new LCVs enters the market, it would seem fair that the manufacturers who have paid the greatest attention to design and innovation will reap the greatest rewards.
"But unfortunately the law of karma doesn't apply to LCVs. In reality it's the manufacturers who have built the strongest brands over an extended period of time that almost always come out on top."
DATED: 22.08.2014
FEED: HA
