Volvo's buy-back scheme 'brings down car prices'

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The Independent Online
Volvo has boosted its sales figures this year by "buying" almost a quarter of its own cars, according to internal industry registration figures.

They show the Swedish manufacturer at the top of the league table for captive sales, where cars are registered not to private or company buyers, but to the car makers.

Between January and July, Volvo's captive sales accounted for a huge 23.6 per cent of its total registrations, or 3,776 out of the 16,000 cars sold. Only low-volume manufacturers such as Lotus "buy" more of their own stock, while the industry average for self-registrations is just 5 per cent

This year's figures for the company are not a one-off. During 1995, Volvo self-registered no less than 6,250 cars, or 16 per cent of its total sales.

Volvo claimed that most of the cars had been leased to its UK employees for a year on "favourable" terms. After 12 months they go to dealers to be sold as used cars.

"Volvo are very generous to their workers," said a spokeswoman. "The leasing scheme is not just a perk for senior management. All administrative staff are entitled to lease a car at subsidised rates."

Captive sales, which generally include demonstration models used by dealers, have been the subject of intense criticism by some in the motor trade, who accuse manufacturers of flooding the market with nearly-new cars, making new models look less attractive.

In recent weeks prices of nearly-new cars have fallen because financial incentives offered by dealers to sell new cars have attracted buyers. However, Volvo insisted there was a shortage of used vehicles and the ex-leasing cars were not being "dumped".

Quentin Wilson from the BBC2 Top Gear programme said: "I find it hard to believe that 4,000 cars could be soaked up by Volvo employees. Unless it's properly handled, self-registering 25 per cent of their cars could spell complete and utter disaster for residual values of cars bought new."

This year's captive sales figures include another surprise. Honda, which has one of the highest reputations for quality and reliability, "bought" almost 17 per cent of its cars in the first seven months of the year, with more than 4,000 self-registrations.

Like Volvo, Honda said it ran a popular leasing scheme for its employees. After a year, the cars are sold by dealers as used stock.

A spokesman explained: "We are responding to the public demand for nearly- new cars."