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When is a new car sale not a new car sale?

publication date: Apr 18, 2016
 | 
author/source: Captain Pugwash

 

The SMMT claims that more than half a million buyers took advantage of the popular plate change which resulted in March becoming a record month for new car sales. 

 

It may have been a record for new car registrations but that doesn’t mean each of those vehicles had a home to go to.

According to the SMMT new car registrations were close to 520,000 but actual new car transactions may have been as low as 470,000. Industry sources suggest that the level of pre-registration activity is usually somewhere between 10 – 15% of total registrations no matter what the SMMT and some manufacturers may claim. Compounds around the country full of registered cars with no homes to go to would support this suggestion.

Pre-registration activity isn’t new, it’s been a part of new car sales culture for several decades. The upsurge of ‘sales’ in the last few days of a month pre-dates the Western Group.

Is this a problem? Probably not as manufacturers need to shift cars they have built and dealers can gain financially by pre-registering cars which will help achieve a sales target imposed by the manufacturer and earn a bonus payment. The dealer then has a ready-made used car to sell – actually it’s a new car with delivery mileage. However that can then be something of a challenge as the dealer needs to make sure that the price is right.

Too low a price and customers may be distracted from buying a new car which could result in the need for more pre-registrations at the end of the month to achieve those sales targets. Too high a price and it may not sell and be stuck on a dealer’s forecourt for several months as incentives on new cars and the financial attractions of a PCP deal may be too good to ignore.

Does any of this really matter? Probably not for the UK country managers and sales directors who can tell their masters in France. Germany, India, Italy, Japan, South Korea or the US of A that sales continue to increase, nor for consumers who have more choice.

But spare a thought for the franchised dealers who are damned if they do and damned if they don’t.

 



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