Life Motor Talk

Sunday 31 August 2014

Motor chief warns: sales figures mask market reality

Buyers are the real losers as the value of their purchases are hit, it is claimed

Eddie Cunningham

Published 02/07/2014 | 02:30

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Steve Tormey of Toyota Ireland with rugby star Jonathan Sexton earlier this year. Photo: Cathal Noonan/Inpho
Steve Tormey of Toyota Ireland with rugby star Jonathan Sexton earlier this year. Photo: Cathal Noonan/Inpho

A MOTOR industry chief claims cars are lying on forecourts and in fields because some brands here are significantly inflating their market share by registering vehicles that are not sold.

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Toyota's managing director-elect Steve Tormey says it is impossible to know how many cars have been bought by ordinary people and how many are registered just to maintain market share.

Mr Tormey takes over the helm at Toyota in January after current chief Dave Shannon retires on December 31.

He warns that the industry and buyers are being seriously affected by the practice known as pre-registering. That is where a dealer/distributor registers cars and then moves to sell them as 'nearly new' or 'newsed' – but at a lower price.

Mr Tormey says: "Given the prevalence of the pre-registration of vehicles by certain car brands within the Irish market, it is very difficult to get an accurate picture of what the real level of sales are in Ireland.

He adds: "While the numbers show the market has increased by 24pc over 2013, this does not reflect the reality of pre-registered vehicles sitting on dealer forecourts, and in fields, which have no customers."

He told Independent Motors that the second-hand value of cars is being undermined because the price of pre-registered vehicles becomes the norm for the model involved.

It could mean the value of a car bought by someone at 'normal' price early in a month will fall significantly when the pre-registered models are sold for a good deal less subsequently.

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"The people I feel sorry for are those who have had the value of their car written down in a month."

He said some customers have voiced their concerns at dealerships.

He drew attention to how some brands here register upwards of 20pc of their 'car sales' on the penultimate or final day of the month to keep up market share.

"You can't push sales too far beyond the limits of natural demand. I am not being flippant when I say I don't know what the real market is."

He added: "Customers of these brands, who are encouraged to purchase a pre-registered vehicle when they visit a dealership, may think they are getting a good deal.

"However, any upfront saving a customer may think they are receiving will be lost come trade-in time – coupled with the other obvious knock-on effects."

Mr Tormey said: "This phenomenon has created a lot of confusion for customers.

"What vehicle are they going to be pushed towards when they go to their dealership? A new vehicle or a pre-registered one?

He added: "How is a customer to know if they have received the best deal possible on their car from a brand that engages in the practice of pre-registration?"

His comments will reignite a hotly-contested issue between those brands who pre-register as a strategic means of keeping market share and those who claim it is giving a false impression and damaging the residual value of many models.

They also coincide with the start of the new 142-registration period – a vital time for brands to boost sales and market share.

Indo Motoring

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