Buying a demo car: what you need to know

2 August 2023 By: Byron Mathioudakis

Demonstrator cars sold by dealerships, or demos as they’re known, are one option for new car buyers looking for a way to pay less for a near-new car and to get around any stock availability issues.

Demos are usually only a few months old, rarely have more than 5000km on the odometer and will be cheaper than buying the same model new. Best of all, they’re available for immediate purchase, give or take a few days. But there are also reasons why they are cheaper.

Let’s explore what they’re all about, because there’s much more to a demo than meets the eye.

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What exactly is a demo?

New-car demos in Australia are owned by the dealerships that are selling them. They are current-model stock purchased from the importer by the dealer (just as dealers do with the vehicles they sell new) but which are then registered and put into service for the purpose of product demonstration.

While almost every dealer selling a new car, SUV, ute or truck in Australia will have a demo of some sort from the time that model is launched, they tend to be sold only after they reach certain milestones. These include:

• A pre-determined mileage cap, usually from about 5000km and rarely with more than 10,000km on the odometer, though it can be much less.

• A certain age – normally well under 12 months.

• A facelift or new model is about to be launched as a replacement.

Note that during the recent (and still ongoing in some cases) new-car stock shortages, many dealers kept their older demos beyond the first two milestones due to necessity and a lack of supply from the manufacturers. Thankfully, that situation has now eased.

Demo models are typically registered by the dealership as the first owner of that vehicle. They may also wear a temporary ‘trade plate’ licence plate that is transferable from vehicle to vehicle.

WA’s Department of Transport defines a trade plate as “being used by licensed vehicle dealers as well as repairers to test, transfer and deliver unlicensed cars, motorcycles, caravans, trailers and agricultural machinery.”

This is important to know because it means a dealer can sell you a demo as a never-before-registered vehicle, which results in the buyer being classed as the first owner, even if it has racked up a few thousand kilometres as a demo in the interim.

In some Australian states, it also has implications for when the new-vehicle factory warranty begins, which is usually the moment the vehicle is first registered.

In WA, a demo comes under the full manufacturer’s warranty in terms of time, regardless of whether it’s been previously registered in the dealer’s name, however the mileage limit on the warranty still applies. So, for example, with BYD’s six-year/150,000km warranty, a demo with 5000km on the odometer will only be covered for the remaining 145,000km (or six years, whichever occurs first).

Reasons to buy a demo car

Immediate delivery

In recent years, vehicle availability has become one of the biggest advantages of buying a demonstrator. If you need the car as soon as possible, you’ll only end up waiting days for it, not months or years.

Cost savings

Prior to 2020, you could expect up to 10 per cent off the recommended retail price for a demo. This saving could be even greater for less in-demand models or ones that were about to be superseded. If you found a dealer demo and haggled hard enough, there were good savings to be had.

Today, in most cases, you might save a few hundred dollars but currently, it’s the limited wait time that is the demo’s biggest advantage. That said, with production now finally returning to pre-COVID levels and wait times shrinking, we are slowly returning to a time when you might be able to haggle harder for a more substantial discount.

You’re still regarded as the first owner

Even if the dealership has registered the vehicle in WA, the service books and paperwork that comes with the demo is often left blank to be filled out when it is finally sold. In other words, there is often no record with the vehicle of it being a demo unless the sales documents and receipt show the odometer reading at the time of the sale.

Higher specification

As part of putting their best foot forward, dealers tend to choose their demos based on attractive colours and/or a more appealing specification. So, you might find a demo that is a top-of-the-range model, or close to it, has a more desirable paint colour, a more luxurious interior, such as leather upholstery and brushed metal finishes, a sunroof, fancier alloy wheels or other optional equipment packs - features that enhance the look and feel of the vehicle.

The downsides of buying a demo car

Unknown history

How was that demo really treated? Was it thrashed? Left out in the weather day and night? Neglected and abused? Some vehicles that are sold as demo models or ex-company cars have been used for marketing purposes, such as for filming. If that’s the case, it might mean they haven’t had an easy life.

On four-wheel drives, always check for evidence they’ve been driven on a beach or other off-road areas – telltale signs are sand and dirt lodged up high in the wheel wells and under rubber seals, and scratches and scuffing underneath the vehicle.

No scope for specification or colour choice

One of the most enjoyable aspects of buying a new vehicle is personalising and tailoring it to the colour and specification you like best. A demo is chosen to appeal to the broadest number of potential test drivers. That might include you, but if it doesn’t and you want a different paint colour or model, you might have to wait for it to be ordered and produced.

Reduced new vehicle warranty

While in WA, a demo must include the full warranty period just like a new car would, that does not apply to the mileage. You’re only covered for the remaining kilometres.

Many people buy new cars interstate because an east coast dealer might have the colour or specification they like. In the case of a demo and depending on which state you buy from, the dealer may not even have to honour the manufacturer’s full new-vehicle warranty, meaning if the car was registered six months prior, that’s when the warranty started. Our advice for buyers of interstate demos is to conclusively confirm what level of warranty remains.

How to avoid demo pitfalls

If you’ve found a demo you like and want to ensure it’s in top condition or you’re unsure of how it’s been treated, invest in an independent appraisal from RAC or a trusted qualified mechanic. The peace of mind is worth the small extra outlay alone.

Don’t settle for the dealer’s own mechanic. If the dealer won’t allow you to have the vehicle independently checked, walk away.