In a bid to curb the practice of ‘Own money’, local car manufacturers and the government are looking to join hands. They hope this will help boost customer oriented policies in car booking and dealership practice. One of the proposals made is levying a Transfer Tax of PKR 100,000-200,000 on an attempt to resale a new car within six months of purchase.
While a small transfer fee is deducted by provincial Excise and taxation Departments across the country, there is no such bar on the resale of new cars which leads to car dealers using this loophole to profit on customers by promising early delivery – leading ‘own money’.
During a meeting of Ministry of Industries and Production (MoIP) and Original Equipment Manufacturers (OEM), this issue was discussed at length and amongst the attendees were Abdul Razak Dawood, Prime Minister’s Advisor on Commerce, Textile, Industries, Production and Investment along with representatives of the largest three local manufacturers namely, Honda Atlas, Toyota Indus Motor Company and Pak Suzuki.
Senior members of Engineering Development Board (EDM) – an organization within MoIP and helps regulate the auto industry – were also present.
The proposal to ban the resale of new cars was brought up by OEMs during the meeting and MoIP is mulling over the policy and may talk to the Council of Common Interest (CCI) in a bid to discuss this. The car manufacturers have asked for legal backing if any car dealer is excluded for extorting ‘own money’ and have asked the government to take back the 10% FED.
Earlier, the government had proposed a policy under which, car dealers demanding ‘own money’ would be blacklisted. According to media reports, this course of action was taken by Abdul Razak Dawood.
The local automakers were directed to provide a written guarantee that they would take action against the dealers involved because the customers are extorted by dealers for early delivery. The new policy will help curb this.
Prime Minister Imran Khan, while chairing a cabinet meeting earlier this month, had directed a committee to help devise a policy that would regulate the purchase of new cars –amongst the members of the committee were ministers for law and finance.
It is alleged that automakers are in cahoots with the dealers despite them denying it. The dealers have oft stated that due to the difference in the demand and supply of new cars, they are left with no other option but to charge ‘own money’.
While the federal cabinet had ordered a halt on ‘own money’ terming it exploitation of consumers late last month, it hasn’t been able to stop it because of a dispute on the obligation of the government bodies. Earlier, the Ministry of Industries had stated this fell in the domain of the Competition Commission of Pakistan as it dealt with issues like this.