How would you like to buy a brand new car at a hefty saving – perhaps as much as 25 per cent off? Of course you would! And there needn’t be a catch – it just depends on how much you value being able to choose the exact spec and colour of your ‘new’ car.

That term ‘brand new’ is open to interpretation though, because while the cars we’re talking about have never been used and will have covered only a delivery mileage, they’ll already be registered to someone else. Specifically the dealer that’s selling the car.

If this is sounding less appealing by the minute, don’t be put off by our slight lack of transparency, because these ‘pre-registered’ cars can be some of the best motoring bargains out there. You really are getting an unused car for much less than the new list price. It’s just that on paper, it’s a used car – which is why you can make a hefty saving.

Why do these cars exist?

There are two key reasons why pre-registered cars exist, and have done for decades. The first is that car makers produce too many cars for what the market can stand, and they have to sell them somehow. Unfortunately they can’t just make fewer cars, as their factories are only profitable at a certain level of productivity, so turning off the taps isn’t an option.

The other reason why pre-registered vehicles are so popular with car makers is that it’s an easy way of increasing (or maintaining) market share. Each month the new-car sales figures are released and each car maker wants to look successful, so they want to claim as many sales as possible.

But these ‘sales’ aren’t actually that – they’re actually registrations. And there’s a big difference between those two things. When a car is registered it’s being allocated to someone but when it’s sold, money is changing hands.

Car dealerships work on monthly targets – that’s how they earn their bonuses. So as the end of the month draws near, if they’re close to achieving their target but they’re not quite there, they can register a few cars to themself. There’s nothing illegal or underhand about it – it’s just a way of seemingly selling stock.

What happens next?

With the month end out of the way, the dealer then has to sell the cars that it’s registered to itself. But there’s a snag; anybody now buying these cars will be the second owner instead of the first, which means the car is worth less than before. So the only way of selling the car on is by cutting the price – by several thousand pounds.

There’s no alternative to this scenario, because if the savings are only small, any sane car buyer will opt for the obvious alternative – a spanking new car that’s exactly the colour and spec they want. To make this pre-registered car appealing, the asking price has to be slashed.

The really good news is that while the mainstream car makers have been doing this for years, some of the more premium brands are also doing it now, in a bid to increase their market share. The key is to go shopping at the start of the month when these cars are still in stock – that’s when dealers will be in full-on haggling mode, ready to do a deal.

The problem is, the window of opportunity to snap up one of these bargains can be very brief and it also tends to be unpredictable. One month a dealer might have a stack of pre-registered cars available then there might be none in stock for ages – it depends on the time of year, how tough the targets are and how readily any pre-registered cars find buyers.

In some cases a car maker or dealer will pre-register a big number of cars in a bid to ‘shift’ unsold stock. Sometimes it’s because of a facelift or replacement model having been announced, and the easiest way of selling the outgoing cars is by pre-registering them.

If there are lots of examples of these cars to sell, instead of flooding a dealer forecourt with them they might be offloaded to a used car supermarket. So keeping an eye on these can turn up some fantastic bargains – supermarkets tend to focus on shifting lots of cars and making just a small profit on each one.

So is there a catch?

The problem with buying a pre-registered car is that you can’t choose the colour or spec and you’ll be the second owner. So when you come to sell you can’t say that the car has had one owner from new – because on paper this isn’t the case. But you’ll save far more cash buying a pre-registered car than you’d ever recoup from being the sole owner at sale time.

You’ll also get a shorter warranty because the countdown on this starts ticking from the point that the car is sold. So if it’s pre-registered then kept in stock for a couple of months (which is quite possible), the guarantee will be that bit shorter.

Before buying a pre-registered car you must make sure that the V5C comes with the car; some dealers can be very tardy in handing these over. It’s essential that the supplying dealer signs their portion of the form and sends it off to the DVLA so the car can be registered in your name.

Finally, before you sign up for a pre-registered car, make sure that the deal really is the best you can get. It could be that you can negotiate a sizeable discount on a new car ordered to your spec for not much more than the discounted price on the now-used alternative.

Richard Dredge

November 2015