As it stands, the new and “nearly-new” car sales sector has a big issue in the current retail market. The black and white of it is, manufacturers and retailers are setting ambitious sales targets for the year and only being able to meet said targets by pre-registering vast amounts of vehicles. By pre-registering, these dealers are effectively buying the vehicles themselves, and becoming the vehicle’s first “previous owner”. This means they can then sell them on for around 70% of the list price, which looks very attractive to customers.
During March 2015, the number of cars sold that were under a year old had risen by 91% when compared to six months ago (October 2014). Rupert Pontin, Glass’s Head of Valuations has stated that the “unavoidable conclusion, based on what we are seeing in the market, is that the vast majority of these are pre-registrations.” He also said that it’s unlikely that the pressures on values of this kind of car will remain for some time to come, and the situation will only change if more realistic targets were set by manufacturers.
Another contributing factor is the affordability and appeal of vehicles on Personal Contract Purchase deals affecting sales of nearly-new cars. PCPs work on the basis that you pay an initial deposit on a car, followed by monthly instalments, with a future value agreed on the vehicle – over these monthly instalments, you’re effectively paying off the depreciation.
Thomas Beakin, Motor Trade Sales Advisor at One Sure Insurance finished up with, “At the end of your agreed time paying said instalments, you can either pay the agreed value to buy the car outright, hand it back, or use it as part exchange.”
When looking at PCPs in black and white like this, you can see why the many options will be more appealing to potential customers, rather than paying more in one go and buying a car outright. This then brings us back to why manufacturers are filling these sales targets with pre-registered cars – the real sales numbers just aren’t there. This goes to show that Rupert Pontin is very right in saying that more realistic targets need to be set – only then will the situation change.