Where do these low mileage almost-new second hand cars come from?

[jido]

When I was finalising the contract for my CT 200h, I decided to do another test drive in the car I was about to sign for. However it was at the workshop because they were making it ready (I had already put down the reservation fee).

So the salesman offered to drive his car, which was same spec (F-Sport) but a 2016 model instead of a 2014 that I bought.

It is a Lexus franchise and the car is Lexus approved so I was not really worried. I already sat in the actual car I am getting.

I did the test drive in his company car. Then I learnt that the salespeople get to drive a new car at regular interval; once it is time to switch, the car they've been driving goes on the sales floor.

I am somewhat puzzled.

Why putting new cars through this regime? Do slightly used cars sell much better than new?

[Spacewagon52]

I am LED to believe the dealers get paid by the manufacturer for registering cars - over £1,000 for a Mitsubishi 15 years ago. 

Large companies, like Nat West Bank, buy in large numbers for their managers. The discount is very large. After just 6 months they trade-in for a new one. The value of the trade-in is sometimes more than they originally paid. They can claim back the tax. Poor old Joe Public effectively subsidies these deals. It is a way of registering more cars and keeping the sales figures up in comparison with the opposition. Whether this is still the case others on here might have more up-to-date information.

[rayaans]

11 hours ago, jido said:

When I was finalising the contract for my CT 200h, I decided to do another test drive in the car I was about to sign for. However it was at the workshop because they were making it ready (I had already put down the reservation fee).

So the salesman offered to drive his car, which was same spec (F-Sport) but a 2016 model instead of a 2014 that I bought.

It is a Lexus franchise and the car is Lexus approved so I was not really worried. I already sat in the actual car I am getting.

I did the test drive in his company car. Then I learnt that the salespeople get to drive a new car at regular interval; once it is time to switch, the car they've been driving goes on the sales floor.

I am somewhat puzzled.

Why putting new cars through this regime? Do slightly used cars sell much better than new?

All salesmen get company car from the dealer group. The rest are demo vehicles or vehicles owned by people who then changed for something else and the others are pre-registered (these only have delivery miles and arent driven)

Demo vehicles and slightly used cars sell much better than new cars as they have a hefty discount. Essentially you don't pay the VAT.

Also, most salesmen try to keep the car in a good condition so the dealership ultimately works on trust with them and therefore, they can retail the car for dealership prices with very little cost.

Additionally, as the car is a company car - they won't be paying the VAT (theyll claim it back), the dealer group can claim losses on it and they'll probably be selling for a profit regardless

[jido]

Wow, this all sounds quite shady.

So it is some kind of tax avoidance scheme?

[Spacewagon52]

Not shady - just big business.

[Spacewagon52]

A few years ago, I believe one of the big supermarkets was selling Gordons Gin for less than they were buying it. It was called a loss leader, to get customers into their stores at Christmas. They would make money on the tonic and other items people would buy. I can't remember the whole story in detail but Gordons got the hump and threatened to stop supplying the supermarket. The Lexus LS400 was a loss leader for Toyota for some years I believe.

[Vintagesixtysix]

Yes it been like this for donkeys years.

Manufacturers need to shift cars.....dealers need to hit the bonus numbers....as with any commodity there's ups and downs.

Sometimes manufacturers will incentivise dealers to take more stock with better intake margins or finance support etc.

The sales guys will be having a new car every six months or so to keep numbers rolling through. They'll have customers on the specific finance schemes they can call saying they have a low mileage " ex demo etc" if they would like to trade up for an extra £? Per month.

 

Manufactures themselves who run decent size fleets (JLR etc) change theirs around six months or so.

 

Fleet is big business and all about the numbers both margin (not really that high) and volume of vehicles....post 2008 many big fleets have gone to three or four year changes or 80k miles ish whichever comes first.

 

All pumps used vehicles into the market......some low mileage.....some high.

 

Avoidance is the wrong word as all the VAT and benefit in kind P11d stuff for companies and company car drivers is all above board and clearly described by HMRC.

 

 

Sent from my iPad using Lexus OC

[paulrnx]

Listers, a large dealership chain based in my area, recycle all of their company cars about every 3 months and a maximum of about 6k miles. Each company car driver in the chain gets to drive a new car every 3 months and they are then re-sold through the approved used scheme I believe. Other large dealer chains will do the same I'm sure

[paulrnx]

Nothing wrong with tax avoidance. It's tax evasion that is wrong.