Up to a fifth of new car sales could involve 'pre-registered' cars bought by dealers, an investigation has found.
The cars are surplus stock sold cheaply to dealers, who then sell the as-new, low-mileage cars as used with a big discount.
The cars are sold to dealers who register them under their business name and effectively become the first owner. Once they've been off the road for 90 days they can be sold on to customers.
Some dealers have described the practice as 'like a drug' used only to hit sales targets.
James Baggott, editor of Car Dealer magazine, said that pre-registration was now out of control.
"I refer to it as a drug but only because that's how a lot of dealers refer to it themselves," he said.
"Once you are hooked into it, it is very hard to get off it."
However, Tamzen Isacsson, of the Society of Motor Manufacturers & Traders (SMMT), which represents the industry, said: "Let's be clear. This is driven by natural business demand and consumer choice.
"Self-registrations enable dealers to manage their stock."
But many buyers don't realise the pitfalls associated with buying nearly new. These include the fact that if the car has been sat on the dealer forecourt for six months, its manufacturer warranty will be that much shorter.
Large numbers of pre-registration cars can also skew new car sales figures as they are not actually on the road. Trade bodies and government agencies do not collect official data on how many cars are pre-registered by dealers.