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OFT relaxes view on ‘three month’ rule

Dealers who pre-register cars do not have to keep them or their registration certificates for three months to qualify for manufacturers’ bonuses, the Office of Fair Trading ruled this week, after AM again took up the issue.

The only exception would be if a manufacturer was judged to have put pressure on its retailer, but that is unlikely to be acknowledged on either side.

The OFT ruling contains the caveat that dealers can only claim bonus if they “do not have an agreement” in place to receive a financial incentive from the carmaker. However, as any agreement is unlikely to be provably, it opens a loophole to exploit.

Last September, AM drew attention to the grey area surrounding the interpretation of the New Cars Order 2000. In April 2005, the OFT had written to carmakers following a meeting with DVLA. The Supply of New Cars Order 2000 specified that dealers could be paid bonuses if they registered stock to be used as demonstrators, but that the cars had to be retained for three months.

Some dealers were said to be illegally retaining ownership as ‘keeper’ for three months of cars sold to customers, so that they qualified for manufacturers’ bonuses.

Carmakers were accused of encouraging dealers to infringe the three-month rule via ‘try and buy’ campaigns.

According to the OFT, such vehicles would fall within the definition of ‘pre-registered’ if sold to an end user, and would not qualify for bonuses or incentives. Dealers and purchasers would be “in breach of the law”.

In January, the RMIF, OFT and DVLA met again but no statement was issued afterwards. When AM again took up the issue last week, Alistair Manson, operational head of the NFDA, said he had heard nothing since from the OFT. “Let me know if you hear anything,” he said.

“We know from talking to our members that dealers are still remaining keepers of cars that have been sold. The difficulty is that some manufacturers try to enforce the three-month rule while others turn a blind eye.

“The rule has probably outlived its usefulness and we gained the impression from the OFT in January that new legislation is unlikely.”

Last Friday, an OFT spokeswoman said: “We are still considering the issue.”

The RMIF issued a press release, welcoming the OFT’s decision – apparently made over the weekend – that the Supply of New Car Order 2000 does not require dealers who voluntarily pre-register cars to keep them or the registration certificates for more than three months before reselling.

The OFT has since confirmed to AM that dealers can still receive their sales bonus.

“The OFT confirmation is good news for our members who will no longer need to fund such vehicles for three months,” Manson says.

“Only vehicles that are pre-registered by agreement with, or at the request of, the supplier in return for a financial or similar incentive are in breach of the Order.”

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