Addressing the issue of pre-reported car sales

Public news

For some time new car dealers around the country have reported their concerns the practice of dealers reporting new vehicles as sold that are not actually sold (also known as pre-reported, pre-RDA or cyber cars).

The Victorian Automobile Chamber of Commerce (VACC) has put together a short survey to assist in its investigation of this practice.

The survey is available to dealers nationwide and MTA members can have their say by clicking here to access it.

The survey will be open until Friday September 14. The MTA urges dealers to complete it as any information gained will assist in lobbying efforts.

All information provided by members is confidential and unidentifiable.

How do new car dealers get caught up in this practice?

Members advise that typically the practice of pre-reported cars involves them being offered incentives by the manufacturer at the end of the month to hit or exceed sales targets. Quite often dealers are pressured to report a certain amount of stock as sold or risk missing out on a significant bonus.

These cars are either registered or sold as demonstrators in the following months or may sit idle in a dealer holding yard until a purchaser can be found.

What does the practice of pre-reported cars result in?

This practice provides manufacturers with greater reported sales volumes and allows them to report higher sales figures to their overseas head offices. However, the practice may have ramifications in future dealer target setting. Dealer reported sales in a Primary Market Area (PMA) will therefore be overstated and any future target setting may not be achievable and so the cycle continues.

Members advise that the practice of pre-reported cars can have the added following impacts:

  • Potential breaches in dealer agreements with Finance Companies which can place some Dealers in an invidious position
  • Finance Companies could or will lift the level of audit or reconciliation processes
  • A potential uneven playing field for Dealers who do not participate
  • A Dealer left with pre-reported cars could create a credit risk in timing of payment
  • Creation of distorted PMA market results against other brands
  • Potential customer claims under ACL, particularly with issues with warranty start dates.
  • This practice is an inducement to bring forward false profits
  • Inability to engage in mutually beneficial “stock swaps” between Dealers
Cars sold under this guise are anecdotally believed to amount to 10-15 per cent of reported new car sales and provide a set of data that distorts the true state of the market.

Could you please complete the survey by Friday, 14 September 2018. Your assistance is greatly appreciated.

Dealers are encouraged to contact Nathan Groves by clicking here with any queries or suggestions on this issue.