Buying barely used demo cars

Canny buyers can slice through the red tape of new car ownership and pick up a few thousand dollars in savings on the way out.  It's not rocket science - all it takes is a keen eye, knowledge of your desired car and ambivalence to some specifics - like colour, trim and even location.

This is the backyard of the price-conscious and bargain-hunting motorist - a person who is willing to go the extra kilometre to save some money. But though it sounds easy, there are some pitfalls. Dealers often market new-model vehicles aged about three months or less and with no more than 5000km on the clock. It doesn't have to be customer demonstrators as dealers also clear cars used by service personnel, loan cars, business directors and sales staff.

"It's an opportunity for new-car customers to save some money,'' says AHG general manager of WA Operations, Tony Salerno. "They get instant delivery of a vehicle that may be packed with accessories for which the buyer would normally pay a lot extra.

"One of the savings is a potential reduction in stamp duty if the car is aged less than 60 days.'' Stamp duty costs are difficult to quantify - it depends on many factors including the purchase price, accessories fitted and so on and even which state you live in. Every case is different but savings could be there. The most expensive the car, the higher the stamp duty and so the higher the possible savings to the buyer.''

Demonstrators are registered by a dealership, usually in conjunction with a subsidy from the manufacturer. In some cases, where for example a model is rare or hard to get - as with the supply problem with the 2011 tsunami - then a dealer may register a demonstrator for the convenience of prospective buyers. But buyers are cautioned that savings may not be significant.

The dealer principal of major WA Ford dealer Lynford, Henry Brown, says the days of big savings were over. "Perception is greater than reality,'' he says. "A decade or more ago, buyers would expect a demonstrator or dealer fleet vehicle to be significantly less than the new retail price. "That's not the case anymore. Manufacturers are very, very price conscious as they drive for market share.

"You can see that by the fact that cars cost today roughly what they did 20 years ago, yet equipment levels and safety features are far better. "That's not to say there aren't savings to be had - merely that they're not as big as history once told us.''

Many dealers prefer only to put on top-end demonstrators. Mr Brown says his business has 20-25 vehicles and says many are the better-equipped models that were better suited to what buyers aspire to drive. They are also much quicker at finding a new owner when it's time for the dealership to sell it.

"The market for an entry level car as a demonstrator hasn't the strength  of a well-equipped model,'' he says. "The demonstrator market is more about potential value, not so much the price.'' Car buying service company, Sydney-based Private Fleet, says buyers must consider a demo as being a used car. "Buyers must compare the price against a brand new one and make an informed decision,'' says director David Lye.

"Though a demonstrator may have only 2000km on the clock and look as good as new, remember that the average test drive is around 10km max which means 200 people have probably put this car through its paces, giving it a real workout. "Combine this with a likely build plate of the previous year and a compromise or two - such as a less-attractive colour - and suddenly the deal may not seem as rosy as first thought.''

THE GOOD OIL

• Cheaper (usually)  
• Drive away now (no waiting weeks or months and the car is already licensed)  
• Demos are usually the upper-spec models.  
• The savings are real, but watch the deal.
• One price (no extra payments for registration, insurance and dealer delivery)
• Well maintained (peak condition because it is a test car for buyers)
• Run in (all the bugs are ironed out)
• Better resale (less loss on life of ownership)

THE BAD

• Less time left on the new-car warranty. Be aware that many manufacturers start the warranty from the time the car is made - not when its sold. So if you're buying a 2011 model car in 2013, be aware that it may have been made in late 2010.
• Watch the deal. Some aren't as discounted as you'd first think.
• Be aware that some car distributors and dealers register cars early to inflate sales figures. This can create a glut of like-model cars hitting the market. This will damage resale values.
• You may not get the engine specs, colour, trim levels or options that you want.
• Demonstrator cars are just that - they're driven by a lot of people over short distances and sometimes with harsh treatment.

DEMO EXAMPLES

2012 Suzuki Alto GLX 
Odometer: 20km
Demo price: $11,788 drive away
New-car price: $12,490 (plus on-road costs)
Saving: approx. $3500  
Find similar cars - Read reviews on this car

2012 Holden Cruze CDX
Odometer: 20km
Demo price: $26,990 drive away
New-car price: $31,040 (plus on-road costs)
Saving: approx. $3500  
Find similar cars - Read reviews on this car

2012 Mazda CX-5 Maxx AWD
Odometer: 512km
Demo price: $33,990 drive away
New-car price: $32,300 (plus on-road costs)
Saving: approx. $2500  
Find similar cars - Read reviews on this car

2012 HSV Senator Signature E3
Odometer: 1511km
Demo price: $79,990 drive away
New-car price: $83,990 (plus on-road costs)
Saving: approx. $9000  
Find similar cars - Read reviews on this car

2011 Lexus IS250 Prestige
Odometer: 5703km
Demo price: $49,990 drive away
New-car price: $55,800 (plus on-road costs)
Saving: approx. $11,000  
Find similar cars - Read reviews on this car

2012 Hyundai i20 Active
Odometer: 159km
Demo price: $12,990 drive away
New-car price: $16,590 (plus on-road costs)
Saving: approx. $3000  
Find similar cars - Read reviews on this car

2012 Ford Falcon XR6
Odometer: 3250km
Demo price: $34,490 drive away
New-car price: $39,990 (plus on-road costs)
Saving: approx. $10,000  
Find similar cars - Read reviews on this car

2012 Holden Commodore SV6 Sportwagon
Odometer: 1800km
Demo price: $37,999 drive away
New-car price: $45,790 (plus on-road costs)
Saving: approx. $12,000  
Find similar cars - Read reviews on this car

2012 Volkswagen Golf 90TSI
Odometer: 356km
Demo price: $26,770 drive away
New-car price: $27,490 (plus on-road costs)
Saving: approx. $4000  
Find similar cars - Read reviews on this car