New Car Scam To Beware Of

Thursday, 30. October 2008

Manufacturers were going a bit crazy last week as they warned contract hire companies and brokers from selling on hugely discounted new cars. As though this was earth shatteringly new! It isn’t, how do you think the car supermarkets have been able to sell new cars more cheaply than main dealers can buy them for? The practice of daily rental companies selling on brand new cars to car wholesalers who then sold on to car supermarkets has been going on for years and something I have spoken about in my book An Insider Guide To Car Finance. You would have to be totally mad to think that manufacturers would do anything about this as they need to keep their production lines going so it’s only if a daily rental company gets caught out that they get punished by removal of their fleet code, which gets them their high discount, for a short period before they receive it back again. There is something that the reports didn’t mention and that is the sub spec. cars that are often supplied to the daily rental companies, again something I refer to in my book. I used to facilitate the funding of the bulk purchase cars by the wholesalers. They would buy 100 vehicles at a time and then split them down into batches of 10 to sell to the supermarkets and leasing companies. But on more than one occasion the cars that were sold were cobbled together by the manufacturer to maybe use up excess stock. For example, as I mention in my book, one batch of cars were built as lets say a GL model but with LX trim and some parts missing such as fog lamps and cup holders which were standard on the GL. This didn’t matter because the daily rental company bought the cars as sub spec and saved a further £250 per car. They are contracted to run them for 3 months or 5,000 miles after which they could sell them but they would be sold as used cars and sold as seen so there were no losers. But in this case the cars were sold to the wholesaler who knew about the sub spec build but of course didn’t tell the car supermarkets as they made an extra £250 per car. They in turn sold them to the public and leasing companies who didn’t know that the cars weren’t perfect so didn’t tell the buyers. And I believe this went on a lot. So beware when you take a cheap car from an online broker that you may be taking a sub spec. car. By Graham Hill