Why are minibus prices so dramatically different at the moment?

My team are being asked by customers all the time what is happening in the minibus market where prices are concerned? These are definitely exceptional times, let me explain.

Castle Minibus are and have always been, a steady ship and we understand all these fluctuations and know how to ride them out without putting our business or customers at any long term risk.

Why have used-vehicle purchase prices increased?

Used vehicle prices are climbing month on month because of a shortage of new vehicles. This has been caused by a shortage of semiconductors. A rise in demand for electronic goods during the pandemic and a fire in a key factory in Japan has meant that these chips, needed for the electrical intelligence in the vehicles, are in short supply. Ford shut its factory in Turkey for several weeks in reaction to this and so there is a knock-on shortage of new commercial vehicles including minibuses. Used van prices rose 18 per cent in June 2021 and demand shows ‘no signs of easing’ according to data compiled for Car Dealer by Auto Trader. Prices and buyer demand for commercial vehicles are at an unheard-of level, attributed to the rise of home delivery services during the pandemic.

The same article also reveals ‘that 60 per cent of buyers are in the market for their first-time van purchase, and 75 per cent were looking to buy in the next three months’ Those looking for a new vehicle are not willing to wait and so are looking for a nearly- alternative increasing further demand.

The Ford Tourneo Custom, a very popular vehicle for schools, was the 6th fastest-selling used commercial vehicle in June 2021 taking only an average of 12.5 days to sell, in comparison to the Ford Transit Minibus that is taking on average 58 days to sell. Still well above ‘normal’ selling times.

No new vehicles also mean that there are fewer part-exchange vehicles coming onto the market and leasing companies are not de-fleeting, shrinking the supply of available used-vehicles on the market.

At Castle, we have been encouraging our leasing clients to extend their leasing contracts for another 12 months to see them into 2022 when a new vehicle will become available.

As a dealer, we are not looking to purchase any new vehicles at these inflated prices. Castle have the UK’s largest fleet of used minibuses for sale or rental in the UK and as such have been able to keep prices at a constant with used 17-seat Ford minibuses from ￡13,495 (plus vat).

We are not willing to risk the loss other companies will suffer who are buying now to increase their rental/leasing fleet but will make a loss on the vehicles in 2-4 years time, a financial loss that inevitably will be passed onto their customers through price in due course.

Once new vehicle production is back on its feet then prices for nearly new and used will come down. We know that there are big orders with manufacturers so that when the shortages are over there should be plenty of used vehicles coming onto the market again but I wouldn’t like to predict when that will happen, certainly I don’t think we will see any new Ford minibuses much before Summer 2022.

What to do in the meantime?

I would recommend one of two options for schools looking for a new minibus for September.

1.??????Buy a used vehicle at a sensible price so that you will not make a loss when you come to sell it on. It may mean that you need to look at a larger vehicle like a used Ford Transit 17-seater that is not in such high demand as the 9-seat Ford Tourneo but the money saved could be spent on D1 driver training.

2.??????Order your new vehicle (securing 2021 prices, that are not affected by the pandemic price increase) and hire a used vehicle for 12 months while you wait. You will save money in the long term with 2021 prices and a lower consistent rental price for 12 months.

As mentioned before Castle customers have the option to extend their lease for 12 months, but this option is unlikely to be available to non-Castle customers.

Why customers are always coming back to Castle?

I have seen my fair share of price spikes and subsequent falls in the market and know that inevitably the customer suffers and if we lose customers they end up returning to Castle having taken an ‘offer’ from a competitor looking to attract customers on price while demand is high. The truth is the prices will fall and customers who have gone with a seemingly good deal will be let down in the long run. We react to changes in the market but in a measured approach that protects everyone.

We are not buying Ford Tourneos to buy or rent to schools desperate to have one because, in the end, their values will fall just as sharply as they have risen. We recommend an alternative like a used pre-2014 14 seat Ford Transit minibus that can be driven without a D1.

We don’t want schools to be in a panic about vehicles for September, tempted to pay above the odds for a used vehicle just so they have a ‘new’ one. No, rent one from us until a factory-new one is available in 2022.

My team is well trained and understands the marketplace. They will talk customers through their options and why there are such crazy prices out there at the moment. With boom inevitably comes a bust and it’s our job as Champions of Minibus safety to ensure schools are informed and educated so they can make the right decisions on what and how to increase their minibus fleets.?