Boss warns how new car market is ‘overcooked’

Mercedes chief hits out at trend towards ‘sales’ that have no actual buyers, all to bolster figures

THE new car market is 25pc to 30pc “overcooked” because some brands continue to register vehicles for which there are no immediate buyers, it is claimed.

Ciaran Allen, passenger sales manager for Mercedes in Ireland, caused a furore last September when he claimed the new car sales bubble was in danger of bursting because dealers were artificially inflating ‘sales’ figures.

He blamed dealers and distributors for registering thousands of cars at the end of each month to bolster sales figures, even though they have no real buyers for them.

The practice is called preregging. The pre-regged cars are sold for less than new price subsequently as nearly new or ‘newsed’.

Speaking at the recent launch of the new A-Class, Mr Allen (pictured) again responded to questions on the issue.

He said pre-regging continued to account for 25pc to 30pc of the new car market, though he pointed out it has been “tamed back” a bit this year. “Maybe common sense is kicking in.”

But he said some brands continued to register big percentages of their total sales in the final days of each month – a sure sign of preregistering. In 2017, around 28pc of cars were pre-regged on the last three days of the month. And it looks like it is continuing, possibly on an abated level, this year.

“You can only sell so many in a limited pond,” he added, underlining how he believes pre-regging in the long term is unsustainable.

He used the analogy of the financial crisis to underline how just because everyone is doing it doesn’t make it right.

He insisted he was not trying to “be holier than thou”. Mercedes have been accused of subsiding prices to hold sales and critics say there is little difference in cost between pre-regging and discounting.

But Mr Allen insists there is a difference, claiming they are pitching discounts to hold firm against the lower prices of used UK imports, whereas those who are preregging are doing it to boost non-existent sales.

Imports are setting the price and tone of the market. Mr Allen reckons that newcar registrations will dip to 118,000 from an initial estimation of 130,000.

He said it was impossible to forecast when the volume of used imports will taper off. They are projected to top 100,000 this year. Some experts predict the gap between new and used could narrow dramatically.

Speaking about preregging last September, Mr Allen accused several brands of “reckless trading” and forecast a crisis for dealers and consumers.

Mr Allen said then: “We are being asked to believe that 34,000 people who bought a car this year did so in the last three days of the month.” He added: “When this finds its own level, people will definitely get caught out.”

In the past, companies associated with pre-regging have been adamant that it is part of a strategy to sell cars in a tough environment and claim it is not unique to Ireland.

Several sources have described it as a tool of the trade. They also argue that other brands use promotions and deals which are at least as costly as pre-registering.