How buying a demonstration model could save you thousands and still deliver all the benefits
A barely used current model car at a second-hand price? For people walking into the showroom with serious intent, dealers often make demonstrator models hard to walk past, offering thousands of dollars off the new car price. They’re barely run in – it’s hard to find one with more than about 5000 km on the clock, and most have lots less than that. And they’re meticulously maintained, cleaned, polished and vacuumed daily. After all, being used as they are to sell new cars, they have to emulate them.
Indeed, many demonstrators go one step beyond that. They are in fact new cars. This hails from the way dealers buy stock from auto makers. It starts with the incentives the factories give them, of anything up to $4000, to register the cars they take for stock as demos whether they intend to use them for the purpose or not.
“That factory incentive is enough to encourage dealers to take many more units as demos than we’re actually going to use for demonstration purposes,” a Holden dealer told Aussie.
“You might hear dealers talking about ‘undriven’ demonstrators – they’re new cars that have been registered as demos to take advantage of the factory incentives. They’re actually new cars, right down to having no kilometres on the clock,” he said.
“That’s why, if you look in the papers, you’ll see all the stock some dealers have are demonstrators.”
That incentive immediately gives the dealer more margin with which to negotiate. On some cars, says our Holden dealer, that can increase their haggling ambit to up around $10,000.
“It’s a valuable thing, having that extra room to move in a market as competitive as the one we’re in now.”
And let’s not forget Holden is not alone in using this tactic. All the major brands, even prestige marques use exactly the same methods to help market their new vehicles.
This works out as a win-win-win for the factories, the dealers and the buyers. The manufacturer or importer/distributor moves more stock to meet its sales targets more easily. It positions the dealer to move the stock faster and the buyer walks out with a smile on their face.
There are other hidden benefits for buyers, too. One is that the dealer absorbs the transfer fees of 3-5 per cent that go with the sale of any car. That slices well over $1000 of the registration cost of most cars.
Another major advantage of buying a demonstrator is that it’s only classified as a used car on paper.
“The only ones who know it’s a demo are you and the dealer. For all intents and purposes, it’s a one-owner car when resale time comes around.”
Examples our dealer had in stock at the moment?
At the high end, an HSV Senator with 5000km on the clock: “It’s the managing director’s car, fully optioned up, so the recommended retail price is about $98,000, which means over $100,000 with on-roads. This one you can have for $86,000 driveaway.”
Down the entry-level end is a junior sales staffer’s Cruze CDX.
“Not a bad ride for a junior. It’s the top end of the Cruze range. When I started out, my first company car was a Barina. This one’s an auto, the recommended retail is $30,490 driveaway. Our demo has a couple of thousand kilometres on the clock and you can pick it up for $27,000, driveaway of course.”
Deals are not restricted to the mass market end of the business, either. Dealers in key prestige brands are known to disguise discounting on new models this way. No matter what sector of the new car market takes your fancy, there’s never been a better time to walk into a showroom and flash your cash.
Trade-ins provide another useful way for dealers to finesse their figures. On top of a demonstrator deal, this can slash many thousands more off the price.
Sydney buyer Leanne Goncalves is a case in point. Looking to downsize from a Toyota Landcruiser, the empty-nester set her sights on a Volkswagen Golf and found a limited edition Pacific TDI diesel demo with a tiny 500km on the clock.
“It had the DSG auto and the optional leather interior, which put the recommended retail price at about $37,500 on their books.”
But it took very little effort on Goncalves’ part to get that down.
“I just asked for the best price they could do here and now and down they went to $34,000. It helped, obviously, that they knew the next generation of Golf was coming, but that was a good many months away. Plus they gave me a terrific trade-in on the Toyota. After we’d reconciled the finance on the Golf with what I owed on the Toyota, it amounted to more than I would have got on the open market.”
Weighed up against disposable incomes, like so many other consumer goods, the car has become progressively more affordable with the passage of time. The horseless carriage began life a century ago as the exclusive preserve of the extremely rich. The advent of mass production with Henry Ford’s Model T opened up the opportunity for the middle classes to enter the new world of motoring.
As the decades progressed, the opening up of a second hand market saw it percolate down to pretty much anyone who wanted a car.
The automotive industry has been one of the great beneficiaries of globalisation. Enough that not much more than a century after the internal combustion engine was invented, a combination of global production efficiencies, mass market economies of scale and cheap finance mean it’s never been easier to buy a car new.
A by-product of those production efficiencies and the worldwide platform-sharing intrinsic to them has been a broadening and deepening of consumer choice. More brands, more models under each, more substrata within each model range, more options.
Some examples: Ford’s Focus shares much of its underpinnings with the Mazda3 and Volvo’s S40/V50, while the top-end Focus XR5 Turbo gets Volvo’s muscular 2.5 litre turbo five. The Ford Fiesta shares much in the same way with the Mazda2, while the larger Mondeo platform was parlayed — not very successfully — into Jaguar’s X-Type.
MINI uses Peugeot engines. PSA Peugeot Citroen puts models bearing each brand on shared platforms, too: Peugeot 308 equals Citroen C4, 407 equals C5 and so on.
Audi, which owns Lamborghini, uses Lambo’s V10 in its upper end RS and R8 models; Volkswagen, which owns Audi, shares its Golf platform with the A3 range, along with a number of its engines and its DSG twin-clutch transmissions.
With baby Polo models starting in this country in the low $20,000s, Volkswagen effectively acts as an entree brand for Audi. And Toyota invented Lexus partly as a way of keeping the buyers they found young as they progress through life and become more affluent.
Toyota and Mazda have long performed well in the youth market with cars like the Yaris and the Mazda2 combining distinctive looks, Japanese build quality, reliability and the resulting high resale values with price tags little enough above the entry-level Korean brands to make the stretch tempting.
Past master at the game, however, was Hyundai, whose second generation Excel from the early-mid 1990s delivered market leadership with a combination of standout aesthetics, interior space, performance and a warranty of three years and 60,000 km — triple the industry standard. As the rest of the industry cottoned on, Hyundai, knowing it was on a good thing, kept ahead of the pack. It remains there to this day, with five years and unlimited kilometres.
It has, however, set out to grow up with its buyers, now deliberately distancing itself from the cheap-and-cheerful image that won them early on. The i30, still eminently affordable starting at around $20,000 on the road, is palpably better built, tighter and more technologically sophisticated than the Excel. The smaller i20 due here shortly will ultimately replace the popular Getz, putting more distance again between Hyundai and rock-bottom.
These days, that honour goes to Suzuki’s tiny Alto, which delivers some of the nation’s best fuel economy figures — 4.5L/100km combined — with change from $15,000 on the road. During January it went down to $12,490 driveaway. Suzuki has done very well out of the little Swift, too, for its combination of a sharp silhouette and sharp mid-teens pricing.
With model updates coming on stream faster than ever before — VW’s last fifth generation Golf lasted only three years before gen six arrived, rather than the usual five or six — there’s a bigger chance of finding runout deals at any given moment, too. For example, with Hyundai’s i20 on the way, it’s a good time to go looking for a Getz.
Downward pressure in the new car market has forced second hand sellers into sometimes unbelievable giveaways. ABC motoring commentator Will Hagon told radio listeners of a mid-1990s Bentley Turbo R — half a million dollars new — knocked down from $45,000 to $28,000 in a single conversation.
Wherever you plan to go, learn to flex your haggling muscles, make it clear you’re serious and you have a better chance than ever of coming away with the car you want at a price that’s right.