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Growing Number Of Pre-registrations Poses Residual Value Threat

Dealers face a threat of residual values of nearly new cars being undermined as franchised outlets unload more pre-registered stock and traders are being warned the situation could get worse later this year.

Industry sources say there is growing evidence that dealers and manufacturers are increasingly returning to self-registration to shift excess volume. They say this is being driven partly by the traditional factor of too many new cars being built chasing too few buyers and partly because of the RDE2 emissions legislation taking effect from September.

From that date, all new cars will be tested with a much stricter but more accurate real-world testing of nitrogen oxide emissions. New models must be compliant by next January and all new cars on sale must pass the standard by January 2021.

While few believe the test will impact the trade on the same scale as last year’s WLTP, there is no doubt that pre-reg is being used to get rid of cars which would be affected by the new test.

A Definite Rise In Pre-registration

At the latest meeting of the Vehicle Remarketing Association, members this week were told there is a definite rise in pre-reg vehicles, reversing the trend of the last few years.

Guest speakers, Mike Jones, chair of ASE Global, and Rupert Pontin, insight director at Cazana, both said there is a noticeable increase in pre-registration going on in the dying days of each month. They said that on the one hand, this demonstrates the depth of the crises in new car sales generally and on the other, the need to get rid of non-RDE2 compliant cars.

Mike said:

“There is little question that pre-reg vehicles are back. Over the last few years, that kind of activity had declined in a fairly dramatic fashion, especially with the shortages of some models that followed WLTP.  However, that has changed. There is now a lot of registration activity going on towards the end of each month. It’s yet another sign of the difficulties surrounding the new car market.”

Rupert added:

“Pre-reg vehicles are really an indication of production overcapacity and disorderly marketing, both factors that have become part of the new car market in the last year or so. It is not surprising to see their return at this point.

“While there is still a little time before RDE2 becomes compulsory across the board, models meeting the standard are going to start appearing in larger numbers quite soon and manufacturers will want to move on the old stock.”

Sam Watkins, VRA chair, warned of the threat to residual values, saying:

“Pre-registering is a safety valve for a new car sector that is suffering from a combination of negative factors, from Brexit through to the decline of diesel. However, it does bring a degree of uncertainty to the used sector, especially surrounding nearly-new residual values.”

For more information about what Click Dealer can do for your company, contact us on 01782 478220 or via marketing@clickdealer.co.uk. Alternatively, you can get in touch through our contact page.


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