Pre-registrations are a lifeline for hard-pressed dealers as well as a benefit for consumers and it is time to bring them out from the cold, says Philip Nothard of CAP - the used car pricing experts.
Nothard's call for transparency over pre-registrations follows an investigation at CAP that suggests up to 1 in every 3 recently reported new car sales has typically been registered by dealers themselves.
His 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% on the list price of a new car.
For dealers, the practice of ‘tactical registrations' can be extremely lucrative.
Nothard, cites the examples of one dealer group offered £500,000 to put more discounted cars on the road this summer, another manufacturer subsidising discounts on new of up to 40% in return for self-registering cars and a dealer group who reported an increase in new cars registered which masked an underlying 6% fall in actual new car sales.
He also identified 80,000 tactical registrations by just two dealers in July.
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 and to acknowledge the benefits to businesses and consumers that pre-registration brings.
He said: "The pressure on dealers to register new cars, regardless of whether or not there are immediate customers for them, is not universally popular. In fact 70% 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.
"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'?
"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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