CAP’s Philip Nothard is calling for transparency over pre-registrations following an investigation by the firm that suggests up to one in every three recently reported new car sales has typically been registered by dealers themselves.
The research revealed the financial significance of the practice to many large dealer groups in particular, to whom vehicle manufacturers pay large bonuses for registering ‘packs’ of new cars to meet volume targets.
These so-called ‘pack cars’ are generally sold as nearly-new or ex-demonstrators and offer savings to consumers of anywhere up to 40 per cent on the list price of a new car.
To read the Car Dealer’s investigation into pre-registrations in Issue 54, read it on your iPad free of charge.
For dealers, the practice of ‘tactical registrations’ can be extremely lucrative.
Nothard cites the examples of one dealer group offered £500k to put more discounted cars on the road this summer, another manufacturer subsidising discounts on new of up to 40 per cen in return for self-registering cars and a dealer group who reported an increase in new cars registered which masked an underlying six per cent fall in actual new car sales.
He also identified 80,000 tactical registrations by just two dealers in July.
CALLS FOR TRANSPARENCY
CAP’s research is bound by confidentiality – which means not naming the dealers or manufacturers in question – but Nothard argues that it is now time for transparency.
‘The pressure on dealers to register new cars, regardless of whether or not there are immediate customers for them, is not universally popular,’ said Northard. ‘In fact 70 per cent of dealers we polled said the main ‘winners’ are the manufacturers. But the rest say they could not survive in the current retail environment without that kind of support.
“There are also some risks associated with increasing supply in this way because it can devalue used cars in general, which can be costly for everyone exposed to heavier depreciation.
“But there are some very significant benefits too and strong arguments can be made in support of pre-registration.
‘One dealer described the current situation to me as “hiding behind bushes and continually looking over your shoulder whilst registering pre-reg cars for customers, so they can benefit from a discount, and we can make some money”.
‘My own 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 is time for everyone to acknowledge reality.’
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