Research by CAP suggesting that one in
three new car sales are vehicles that have been pre-registered by
dealers has led to an appeal for transparency by Philip
Nothard, retail and consumer valuation editor at
CAP Automotive.
The research reveals the practice is
widespread, particularly among large dealer groups, which pocket
large bonuses from manufacturers for registering ‘packs’ of new
cars to meet volume targets. These ‘pack cars’ are usually sold as
nearly-new or ex-demonstrators to consumers who can save up to 40%
on a new car’s list price.
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Nothard claims one dealer group was offered
£500,000 to put more discounted cars on the road this summer, while
another reported an increase in new cars registered which masked an
underlying 6% fall in sales. He also identified 80,000 tactical
registrations by just two dealers in July.
While keeping the names of the dealers and
manufacturers researched confidential, Nothard does say the
practice is “ not universally popular”, with 70% of dealers polled
saying the main ‘winners’ are the manufacturers. The rest, however,
said they couldn’t survive in the current retail environment
without it.
Nothard warns that increasing supply in this
way risks devaluing used cars, which can be costly for everyone
exposed to heavier depreciation. “But there are some very
significant benefits too,” he contends, “and strong arguments can
be made in support of pre-registration. When you consider how many
manufacturer and supplier jobs depend on new car production, who
would seriously argue that a better option is to lay off hundreds,
or even thousands, of workers and take away the opportunity for a
consumer to afford a new car just to keep the registration figures
‘clean’?
Nothard recalls one dealer describing the
current situation as like “hiding behind bushes and continually
looking over your shoulder, whilst registering pre-rag cars for
customers, so they can benefit from a discount and we can make some
money”.
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By GlobalDataIn conclusion Nothard appeals for honesty
saying: “My view is that this is an already open secret and there
is no longer any purpose served by not reporting accurate and
honest statistics. The industry can mount strong arguments that
not pre-registering cars would hurt many people far more
than doing so. It’s time for everyone to acknowledge reality.”
