In its attempt to address a key issue plaguing the auto industry, the government has decided that payment made at the time of booking a vehicle should not be more than 50% of the total cost, while the price and delivery schedule – not exceeding two months – must be finalised then and there.
A delay would result in the company offering a discounted price at Kibor plus 2% prevailing on the date of final delivery, a move aimed at shortening the timeframe of the process.
The current scenario sees buyers paying a substantial amount, sometimes 100% of the total cost, to have their vehicles booked and then be subjected to a long waiting process before getting final delivery. In case of price escalation, consumers are then required to pay the extra amount as well on the date of delivery.
This entire process has helped the black market flourish where consumers, looking for prompt delivery, are forced to pay ‘own’ money.
However, the auto-policy, announced by the government earlier this month, features some measures to safeguard the interest and welfare of consumers.
In addition to the guidelines on vehicle delivery, the policy is seeking development and enforcement of safety regulations, compulsory installation of immobilisers in cars by the Original Equipment Manufacturers, while a product recall system shall be put in place in line with global practices.
“Consumer welfare has not hitherto been attached high priority and therefore issues of affordability and quality have not been addressed in the past,” reads the policy statement. “There is general perception that vehicle assemblers/manufacturers in Pakistan have higher prices and low quality standards.”
The policy indicated that Pak Suzuki – the Pakistani arm of the Japanese carmaker – has a monopoly in the small car segment while the larger car market is split mostly between Honda and Toyota. Hyundai, Suzuki’s last competitor, has been out of production since early 2014.
A senior official said that the Engineering Development Board (EDB) will set up a monitoring committee with a mandate to ensure the implementation of these measures approved in the new auto policy. Before the announcement of this policy, the government had repeatedly asked the local car assemblers to ensure timely delivery of vehicles, but to no avail.
“Local car assemblers take four to six months in delivery of cars,” the official said, adding that the government has now introduced a “mark-up against money deposited” to assemblers if they fail to deliver vehicles in the stipulated time.
Published in The Express Tribune, March 29th, 2016.