02 March 2016

Old Car, New Car: Buying Pre-Reg and Selling Used

We bought a new car last week. Our old car we bought used in 2004 (2001 model) so got plenty of use out of it. We were again going to buy a used car so didn't look at anything new (in nearly 30 years of owning cars I've never bought a new one), just set a budget and figured out what we'd like. For years we'd been assuming our next car would be a VW but since they've gone evil we ruled them out and decided on BMW 1-series 5-dr hatchback.

We ended up buying what is essentially an actually new car. Looking at used cars I was a bit confused to see very low mileage cars in newest vintage that weren't demos. I hadn't heard of "pre-reg" ("pre registration"). Apparently it's a thing! At the end of the year, dealers can find themselves in a situation in which they are short a manufacturer's quota but can net themselves profit by buying their own inventory just to the point of hitting the quotas and getting their bonus from the manufacturer even if they then are obligated to sell those new cars as technically used and thus at a discount.

The dealer we went to explained that some years they have none, this year they had five. The price actually dropped several times by the time we bought ours. How big a discount? Well, the list price of it new was about 20% above dealer cost, and we bought it for about 7% below dealer cost (about 23% below list). I was still skeptical until the moment we got it. 10 miles on the odometer. Hadn't even been on the lot, still wrapped and in the distribution centre.

So I'm now a fan of pre-reg!

Then we sold the old car. I thought we'd try webuyanycar.com to see how it went and it went... surprisingly well! You give registration and put in as many details as possible and the site spits out a quote that's good for 7 days, pending an in-person check. They buy then sell on only through trade auctions. They've got kiosks all over the place. The nearest to us was a 14-minute drive away. The guy was really nice and marked down for some external damage, which was entirely reasonable, and the adjusted quote was well within our "yes we would sell it for this and not at all feel ripped off" range. A very simple and painless transaction all around. Would use again.


JustJoeP said...

The dealer's "Pre Reg" metrics are silly, but it's wonderful you can take advantage of their incentive metric silliness.

I'd not heard of the webuyanycar option, but it makes sense. Nice that it worked out for you.

Last December, I was volunteering at a charity event in Atlanta (as part of a work / team building exercise) packing boxes of food for home care patients, and there was a whole green t-shirted team of about 20 people who all worked for the same auto-auctioning company, packing away at their boxes and tasks; a very happy spirited group. As a former summer-time box assembler in Hammond at my father's print shop when I was a young teen, I was able to increase their volunteer output of pre-built boxes about 5X. In chatting with them, it turned out they were the SE US 800 pound gorilla of car auctioning, handling used rentals, internet sales, dealer liquidations, etc. by a volume and $ figure that was more than 10X bigger than their next closest competitor. So there's a significant profit margin in used cars, for parts, for collectors, and for the over-seas markets.

If you purchased a white BMW, good for you! The Volvo dealer's used car sales manager (he helped fill in when our sales person was out sick for 2 days) where we purchased our XC70 stated that in getting a white XC70 (we wanted a navy blue or a silver one), we were actually helping to increase the value of the car at the end of its life. "White cars always sell for $1000 to $2K more than identical cars of a different color. Silver is a close second, but white consistently sells higher at used car auctions than any other color".

pyker said...

Weird that white cars retain their value better. Wonder if that is true in the UK as well.