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How does Pre-Registration happen, and what reason could anyone have to withold a logbook from a new buyer? There are two main situations in which a car can be pre-registered:
1) The legitimate way - the manufacturer needs to move unsold cars to avoid a stockpile, or they need to assist their dealers to ‘move metal’ to hit a quarterly target. They subsidise their franchised dealers with cash to get unsold stock registered to the dealerships and get them sold at a reduced price to buyers who will become the 2nd owner, but the car will only have delivery miles on it. Essentially the manufacturer and their dealers are taking the hit on depreciation to shift some units out of the way.
As the manufacturer has authorised the reduction in price and the initial registration, the dealer is free to sell the cars on to the 2nd owner as soon as he can and the new customer can have their name on the logbook straight away.
Clearly, legitimately pre-registered cars are not the ones most in demand, they will usually be the unpopular model, or engine, or colour/trim mix, as extra money is needed to sell them. Bear this in mind when looking at a dealer’s ‘bargain’ pre-reg’...that car is registered for a reason. A great deal, but it won’t be on the most desirable specification of that model range and that will be reflected at eventual re-sale-time again.
2) The ‘other’ ways!! - some dealers will decide to risk pre-registering cars themselves (without the manufacturer’s consent or cash) - taking a risk that they can sell enough of them to hit their sales target and get their money back by earning volume bonuses from the manufacturer. However, the manufacturer don’t want them hitting sales targets this way...as we’ve already seen - it de-values the brand.
If a dealer does this, then under the terms of his franchise contract with the manufacturer (which enables him to represent the brand with a showroom) he should run a pre-registered car as a demonstrator for 3-6mths (term depends on brand and his contract) before re-selling it. This clause is there specifically to stop franchised dealers from selling new stock too cheap, too soon, and ultimately ‘de-valuing’ the brand.
If he re-sells it straight away rather than wait the required 3-6mths, then the only way he can stop the manufacturer finding out is by having the logbook on his premises, still in his dealership’s name, ready for inspection when they are audited (usually once every 12 weeks). Unless the manufacturer’s auditor asks to physically see the car, he’ll get away with it.
The more common way for the masses of “pre reg’d “ bargains to be around is this:
A broker who cannot get good “first owner” prices the legitimate way, will (often with the help of a less than scrupulous dealer) set up a rental company as a ‘front’ (or will make use of an existing rental company with slack attention to the rules).
By telling a manufacturer that this rental company need to buy regularly and in bulk, the manufacturer will offer ‘fleet terms’ (higher discounts due to the volume that rental company might take from them). As in the dealership scenario, cars bought by rental companies also have a rule of 3-6mths restriction before any re-sale of the vehicle can be made to a new owner.
Of course, what they are actually planning to do is not use the cars as rentals at all, but will be making illicit use of the fleet terms to move cars onto new owners fast, and ensure the manufacturer doesn’t catch them out by witholding the logbook from the new buyer again...stopping that driver letting the DVLA know that he owns, and is responsible for, the car. If you are told the car will be registered to a company before your own name, that is why....especially a ‘rental’ type company name.
The dealers supplying these deals to ‘rental companies’ runs huge risks of being found out, and they usually are, at which point the manufacturer pulls the fleet terms away overnight and customers with cars on order are left high and dry as they should never have been able to order them in that way through a rental company at such a price in the first place.
Now, if you are told that as part of your new-car deal you won’t be able to get the logbook for some weeks or months...you need to hear alarm bells around the size of Big Ben..
A number of phrases may be used; ‘we need to hold on to it for auditing purposes’, ‘we have hold it at the dealership for manufacturer price inspections’, or even ‘it will take the DVLA 3-6 mths to process it’ .
All absolute tosh (even at busy times the DVLA take max’ 2wks to process new V5’s)! The simple fact is that the dealer has decided to pre-register without the manufacturers knowledge and has sold it through a broker (usually) or a rental set-up without running it for the 3-6mths as a demonstrator, as he is supposed to do under his franchise contract.
The ONLY way he can stop you alerting the manufacturer to its early sale is to withold the logbook so you cannot apply to have your name added as the current owner.
Next Sections, click the titles below to follow:
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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