As sure as day follows night, the first week of each new month sees the publication of Britain’s new car registrations.
These numbers – collated and reported by the Society of Motor Manufacturers and Traders (SMMT) – reveal how many new vehicles were registered in the previous month. They’re important because they provide a vital insight into how the economy is performing, much like how high street retail data is viewed.
However, new car registrations are frequently – and erroneously – reported as new car sales, but the clue is in the name, the data refers to the number of new cars that were registered – i.e. how many were given a registration plate.
Happy ending not guaranteed
There’s no hint to what actually happens to these cars after they’re registered. In an ideal world, they’d go to a loving owner and live a long, happy and purposeful life, and in most cases, that’s probably true.
However, a significant proportion of all new cars registered in the UK are ‘pre-reg’. This means the cars are registered by dealers to bloat sales figures to hit targets and make it look like they’re doing better than they actually are.
A recent investigation by the BBC suggested that up to one in five new cars are pre-reg, and motor industry analysts Cap HPI reckon it could be as many as 100,000 cars a month.
These cars may very well end up being sold, but it’s just as likely they won’t, ending up in storage in a field with thousands of other unloved vehicles. It’s enough to bring a tear to your eye, ain’t it?
The SMMT says the pre-reg approach allows dealers to manage stock efficiently, and car salesmen like it because they can sell the cars to consumers at discounts of 20 per cent and more, provided the car is kept off the road for 90 days.
The dealership is happy because they risk losing monthly bonuses from the manufacturer if they fall short of targets.
The manufacturer is happy because everyone thinks they’re doing really well with all these cars ‘sold’.
And the consumer is happy because they’ve just bought what is essentially a brand new car at a knockdown price.
So what’s the issue? Who’s the victim?
We’ve already said that the figures are regularly cited as a bellwether for the economy but they’re tough to believe when they’re blatantly bloated and skewed every month.
The SMMT acknowledges that pre-reg goes on but ask the body which day of the month typically has the most pre-reg cars and they’ll straight-up refuse. That’s because it is almost definitely the last day of the month, as dealers desperately scrape to hit those targets.
Pre-reg can lead to cashflow problems too, according to one anonymous car dealer who told the BBC that he had become dependent on pre-registering cars due to such narrow profit margins.
“You need to do it to get the bonuses but the more pre-reg you have, the harder it is to shift new cars,” he said. “It’s a vicious circle and can create cashflow problems.”
There’s also the issue of warranty. Once a car is registered, its warranty has been activated. So if a car is sat on a forecourt for six months, that’s half a year warranty gone with just delivery mileage on the clock.
That won’t matter to many motorists, who hope they’ll never need to cash in on their warranty anyway. The fact is that the new car industry isn’t doing as well as you probably thought and in an age where people are used to being lied to, consumers deserve a little transparency.