With new car sales continuing to struggle during the COVID-19 pandemic, the market is experiencing a surge in the number of demo vehicles becoming available.

As dealers around the country look for ways to hit tough sales targets, the number of demo vehicles listed for sale on Carsales has almost doubled to 30,000.

Demo vehicles represent an attractive option for consumers, with savings of thousands of dollars available on vehicles with minimum kilometres driven.

However, due to a recent overhaul in VFACTs car sale data, which now requires a car to be registered before it is counted as being sold, the Australian Automotive Dealers Association (AADA) chief executive James Voortman believes some manufacturers could be forcing demo vehicles on dealers as a way of boosting sales numbers.

“VFACTs considers a registered demonstrator as a new car sale, so there is a perverse incentive for some manufacturers to boost their published market share by strong-arming their dealers into taking on a high number of demonstrators,” Voortman said to The Australian.

“I would hope that the high amount of demos is not a reflection of manufacturer’s overly aggressive sales targets for dealers. I would also hope that these demos are not leading to a situation in which dealers are significantly overstocked.

“Purposely overstocking dealers during this very difficult time is extremely unethical.”

Leading the way in the number of demo vehicles for sale on Carsales was Mitsubishi who had 2,800 vehicles listed, followed by Mazda with 2,500 and Volkswagen with 2,400.

Holden still had 1,110 demos listed for sale despite dwindling stock numbers, while Toyota, the number one car seller in Australia, had 690.

While the overhaul of VFACTs data has been a welcome improvement, Voortman believes the industry still has work to do to ensure sales figures accurately reflect the number of vehicles leaving dealerships.

“Requiring a vehicle to be registered before it is sold is an important step, but it is only a first step and the whole industry should be working together to ensure that cars are only reported as sold when a genuine customer takes delivery of the car,” said Voortman.

“It’s an open secret in the industry that a number of major manufacturers set incredibly aggressive sales targets, placing immense pressure on their dealers to achieve these targets by reporting cars as sold, despite there being no end customer.

“These practices… undermine the credibility of new car sales numbers reported through the VFACTs product, which is used by investors, economists and the government in assessing the health of the industry and the broader economy and then making key decisions off the back of that information.”

Source: The Australian (subscription required) | Car dealers wrestle slump in sales

1 May 2020