How to prevent pre-reg from impacting your used-car stockholding
15 November 2018
A new plate change brings pressure to pre-register cars, but staying on top of the stock problem is simple
By Ian Allen
The new ‘18’ plate is upon us, which will create pressure on registrations in a falling new car sales market. Thankfully some manufacturers have reduced their dealer targets in order to alleviate matters, however there is little doubt that there will be the customary pre-registering of cars in this quarter.
The downside of pre-registering is that if these cars are not sold in a timely manner they become transferred to the used car department, which then becomes overstocked with nearly new delivery mileage cars. This then adversely affects the number of used cars that can be stocked, along with the model mix and age range and your dealership runs the very likely risk of stocking the wrong used cars for your market area.
This is a very easy trap to fall into as new car target bonuses are not to be missed, however they become diluted if you don’t address this stock quickly enough. As a basic example, if you are a Ford dealership (clearly this can apply to all manufacturers) and you have a batch of pre-reg Focus, Mondeo and Fiesta in stock, this will adversely affect your ability to also stock more price range cars.
As such if a customer wants a three-year-old version of the same model, then not only can you not sell them the pre-reg, but you have hampered your sales volumes by not stocking the price-range versions of the same models. Perfect storm.
Holding pre-reg stock for too long will tie up your wholesale funding facility, thus reducing stock turn. The knock-on effects of this is that all areas of the sales profit stream are reduced, including finance penetration and the ability to generate quality part exchanges to go again with. At the other end of the scale, unless pre-reg cars are sold in a timely manner, they become several months old and then their price collides with that of a brand new un-registered car.
The solutions to these challenges are relatively simple, however. The key issue is that your dealership management own the problem and don’t let it drift as can often be the case.
Deposit contributions and low rate HP and PCP offers are tried and tested initiatives in the sale of pre-reg, along with two- to three-years free servicing, which is always a very welcome incentive, especially as servicing is a must when complying with a manufacturer’s warranty.
Product placement is an ideal additional way of selling pre-reg stock. This can take the form of shopping centre or sports venue placements. This can be quite expensive in terms of marketing, but not nearly as expensive as the loss of profit by holding stock for too long. Reaching out to your customer both online and physical will be an increasing discipline during this year. And beyond. A very early sign of this is the Rockar agreement with Next.
If increased used car sales are to plug the gap in decreased new-car sales, then speedy and efficient sale of pre-reg is more imperative than ever.