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Want to buy your new car at an incredible discount, but get mad when its value drops like a dundee cake at a bun-throwing competition?
Like any product manufacturer, car makers have to protect the ‘brand value’ of their cars.
Most people, just like choosing a restaurant, an audio system, or a holiday, will choose it based on ‘brand perception’, ‘experience’ and ‘value’. If you choose a rosette-starred eatery over a burger joint, you clearly expect to pay a different price, have a different experience, and enjoy a different ‘value’.
Letting a brand de-value too quickly means the used-car prices plummet and the brand becomes a poor ‘residual value’ risk. No customer wants their car to depreciate too quickly, so activity to protect initial sale prices at sensible levels is in everyone’s best interests, long term....even yours, as the paying customer.
If too many cars in a manufacturer’s range hit the market too cheaply, too soon, that model dies on its feet at re-sale time, and the driver is ultimately devastated at the loss in value. That’s how a car brand gets a bad reputation. We can all think of car brands which pump huge amounts of money into the company car market to get it onto fleets in large volumes, but it has a direct and instant effect on used values as there are millions on the road, and their used prices reflect the cheap prices at which the vast majority hit the road at “new”.
There’s nothing wrong with the products, they are just pitched at the market differently to other brands...as in any industry.
BMW and Honda (for instance), on the other hand, have titanium-coated residual values, because they are careful to control dealer margins at the start and enormous discounts are impossible as a result of their pricing and marketing strategies, even to large company fleets.
Now you have had your basic lesson in car brand economics (!), lets look at how cars are hitting the road too cheap, too soon, and causing all the fuss..and causing you a problem:
Next Sections:
The Pre Registration Process, how does it happen?
Among all the adverts for ‘new car’ deals, how do I know what’s what?
So, what are the risks if I buy pre-reg?
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