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SMMT wants clarification from OFT

Manufacturers have given a mixed response to news that the Office of Fair Trading has relaxed the ‘three-month rule’ for pre-registered cars.

AM reported on June 16 that dealers are now free to re-sell cars that they have voluntarily pre-registered immediately, even if they claim a volume bonus for those units. It followed a clarification of the Supply of New Cars Order 2000 from the OFT that only vehicles which dealers pre-register because of agreement, incentive or pressure from their manufacturer must be held for three months before re-sale.

Previously, the order inferred that all pre-registered cars must be kept for three months. Following our article, Peugeot GB issued a letter to all its dealers stating that, with immediate effect, it will act in accordance with the OFT’s revised guidance.

One dealer told AM he is seeking legal advice over whether he can claim bonuses Peugeot has already withheld because he hadn’t kept pre-registered vehicles for the required period. Peugeot says it will only apply the OFT’s ruling going forward.

The SMMT has requested a definitive written clarification from the OFT for its members. It says that the three month rule was the OFT’s attempt to prevent wide-spread pre-registrations, yet it would now appear dealers are being given the freedom to do so at will while claiming a volume bonus from their supplier.

Nigel Wonnacott, SMMT head of communications, says: “We understand that at least one member has received a confused message from the OFT about whether the order still applies. Until we hear advice in concrete from the OFT that these principles no longer apply our members have been advised that they should be extremely cautious and seek legal advice before any changes to policy.”

General Motors UK says it is making no changes for its franchises and is not paying bonuses for pre-registered cars. “GM UK has taken its own legal advice and as a result will continue to recognize the New Cars Order 2000. It will make no changes to its practices until the OFT definitively advises its position and will then review the situation,” says a spokesman.

Ford says it is keeping the original understanding that if vehicles are pre-registered, and not kept for three months, all incentives are to be paid back. “This is the situation here pending concrete guidance through the SMMT to the contrary,” says a spokesman.

The AM view

The OFT’s new ruling clearly has carmakers worried because until now they could claw back bonuses paid to their dealers if pre-registered cars hadn’t been held for three months.

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