Additional tax suggested for curbing menace of premiums

PAMADA says early delivery demands encourage investors to exploit consumers

KARACHI: Additional tax on transferring ownership of a new car within three months of purchase will help curb the menace of premiums, an amount dealers and sellers charge on the sale of a new vehicle.

The recommendation was put forward by Pakistan Automobile Assemblers Dealer Association (PAMADA) Chairman Iqbal Shah.

His remarks come as consumers continue to pay a premium, locally called ‘own’ money, on the purchase of new vehicles that dealers and customers acquire through car manufacturers.

Disgruntled at late delivery, which can sometimes go up to six months, customers flee to dealers to purchase vehicles for ‘on-the-spot’ delivery and end up paying amounts ranging between Rs50,000 to Rs300,000 on top of the cost.

“Early delivery demands by customers encourage investors to exploit customers by offering vehicles on premium payments,” he said. “If customers book vehicles and secure delivery as per the schedule offered by companies, no such premium mechanism would exist.”

He clarified that vehicles are not commodity items that can be made and shelved. “They are manufactured against individual orders of customers and the industry has taken various steps towards discouraging premiums; such as refusing multiple bookings of vehicles on a single CNIC, displaying vehicle availability information at the dealership floors and on the company website,” said Shah.

“We request customers to book their vehicles only at authorised dealerships and wait for the delivery of their vehicles as per the given date,” he added.

He said that with customers’ support, the menace of premiums on car prices can be eliminated.

OEMs discourage premiums and have on various occasions run consumer education campaigns through advertisements. They have also made available the vehicle availability information on their website, however, demand of immediate delivery from customers against actual delivery time continues to encourage investors to charge own money.

The PAMADA chairman mentioned that due to government’s efforts to improve the economy and the stimulus in the market from the China-Pakistan Economic Corridor (CPEC), domestically manufactured vehicles are in high demand.

Speaking on capacity enhancement by various OEMs, Shah added, “Presently all automakers are operating at full capacity and resorting to production overtimes to meet demand, besides working on increasing their capacity.”

Published in The Express Tribune, March 19^th, 2017.

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