What’s the big palaver about pre-registration?

The practice of pre-registering cars to boost sales figures has been criticised, but does it mean better value for car buyers?

Tue, Apr 16, 2013, 18:37

When is something sold yet not actually bought by anyone? No, not a child’s riddle but the artifice of pre-registering, the practice whereby a car maker effectively sells its own cars to itself and its dealer network to artificially inflate its market share figures, and keep the accountants back in head office happy. It’s something of an old practice, but it’s one that has come in for more than a little flak lately, both here and in Europe.

Last year, a report revealed that as much as one-third of the German car market at some points in the year consisted of pre-registered vehicles, while in Ireland the practice has been condemned by Toyota and Ford, both of whom believe pre-registration artificially distorts the market. Toyota stated quite categorically to The Irish Times that it has not and will not ever pre-register cars.)

There are of course entirely practical and valid reasons why a car maker or importer, or indeed a dealership, would want to register vehicles to itself which are then later sold on. Company cars, dealer demos, press cars; all of these are what would be regarded as legitimate pre-registering, of one form or another.

The problem, if indeed it is one, comes about when new cars are effectively dumped on the market, registered purely for the sake of inflating a marque’s market share figure at the end of the month or financial quarter; those opposed to the practice claim that such actions are damaging to their business and to the car market as a whole.

While the internecine war within the car industry rages in the background, the over-riding question facing the consumer is: does it matter one way or another? If car companies want to play games with their figures, then does it really affect us or the cars we buy?

Good value to be had
“From the consumer’s point of view, I really don’t think it makes much of a difference for us other than that there’s some good value to be had once a car has been pre-registered,” said Shane Heskey, head of car history checking website Motorcheck.ie, in a recent Irish Times podcast. “Speaking to some of the premium manufacturers, last year they felt that the notion that you were buying a bargain or getting some sort of sharp deal on a 12 or 131 plate was more important than any consideration of whether the car was pre-registered or not. The car has delivery miles, the registration was put on it three or four weeks ago, and as a consequence you’re going to save possibly several thousand euros on it. It’s a good deal.

“There is a concern that having an extra owner in the logbook may mean that in three or four years time when you trade it in that it’s going to devalue the car, and yes, there’s an effect, but to be honest I don’t think it’s going to be anywhere near the level of discount you’re getting at the start, so it’s a good thing for the consumer if you ask me.”

So, a bargain car and all you have to do is accept that, technically, you’re the second registered owner. Case closed. We can all go home happy and let the motor trade get on with its own problems.

Not so fast – there is the warranty to consider. The warranty on any car commences as soon as it’s first registered, so If you’re buying a pre-registered car or one of those tempting “ex-demo” models, make sure you sort out with the dealer exactly when the warranty begins and ends.

Not breaking any rules
It’s worth making the point that the manufacturers and importers who are playing the pre-registering game are doing so without breaking any rules, and are simply using their financial muscle to improve their market position. Whether that’s for bonuses or simply bragging rights is of no matter to we, the car buyers.

There will never be enough volume in the Irish market for pre-registering to have a serious downward effect on residual values, particularly at the more desirable, premium end of things. A war between car makers simply means, for us, more bargains on the forecourts.