Wednesday, January 20, 2021
Advice Should You Buy A Demo Vehicle At The Dealership?

Should You Buy A Demo Vehicle At The Dealership?

Demo vehicles exist in a kind of grey zone between new and used cars

  • Buying a demo vehicle can be a great move, but there are a few things to consider

  • If you can find a demo that offers everything you want, it’s worth considering

There are new cars for sale, and there are used cars for sale. And then there is the weird hybrid that is the demo vehicle. Sold by dealerships and looking practically new, demos can be a great way to get a vehicle that’s almost new with a significant rebate.

What is a demo?

A demo (short for demonstrator, obviously) is a vehicle that has already been registered and driven. It may have been used by the manufacturer for an event prior to arriving at the dealer, but more often than not it’s a vehicle that has been used by a member of the dealer’s sales team.

Sales reps and managers will use the vehicles they are selling as their everyday vehicles, it’s one of the perks of the job. And so when a sales representative takes a particular vehicle for his or her own use, that vehicle becomes a demo. The vehicle will sometimes be used for test drives with potential buyers, but more often than not a demo has been used exclusively by a salesperson.

What are the pros and cons of a demo?

The price is the number one benefit of a demo. Because it is already registered and has some mileage on it, a demo will get a significant rebate. Maybe not enough to make a vehicle you couldn’t afford new suddenly attainable, but you can get a few thousand dollars off the price that you wouldn’t get if the vehicle wasn’t a demo.

Moreover, you usually have access to the same rebates that are offered on new vehicles, or at the very least the same financing. So, let’s say there’s a $2,000 rebate on a new Volvo XC60 with 2.9% financing. A CX-9 demo will get that same $2,000 and that same low interest rate, but may also offer an additional $2,500 rebate.

Because demos tend to have less than 10,000 kilometres (6,250 miles), they can represent a great deal. You essentially get a new vehicle for less money.

On the other hand, the vehicle’s warranty began the second it was registered. Back to our XC60 example, it has 10,000 less kilometres (6,250 miles) on its warranty, and if it was registered six months ago, than that’s six months off the warranty.

Also, the demo may be from a previous model-year. That can lower the resale value in time. For example, let’s say you are planning to sell your vehicle in 5 years. Today, you have the option of buying a 2020 model or a 2019 demo. In 5 years, even if both vehicles have 100,000 kilometres (60,000 miles), the 2020 model will be more recent and will have a higher resale value even if both were purchased the same day.

As for potential quality or reliability problems with a demo, there’s very little need to worry. “Sales managers and sales representatives tend to take very good care of their demo. It’s their employer’s vehicle, after all, and they know they can be in serious trouble if they drive their demo recklessly”, says a sales representative at Queensway Honda, a Honda dealership in Toronto, Ontario, Canada.

Back when I was selling vehicles, two sales reps lost their jobs because of their demo. One because he was caught doing almost double the speed limit by a photo radar and the ticket was sent to the dealer, and the other because his demo was so dirty inside that we couldn’t use for a test drive and lost the sale.

In other words, demos are driven, but they tend to be driven carefully with a few exceptions, of course. If you can find the exact vehicle you want in a dealer’s demo inventory, they are worth considering.

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