Govt mulls cancelling ‘own money’ on purchase of new vehicles

• PM’s advisor says govt is chalking out a plan to cancel the registration of dealers who are involved in this illegal business

ISLAMABAD: Advisor to the Prime Minister on Commerce Abdur Razzak Dawood has hinted at cancelling the registration of dealers who charge “own money” from the customers while selling new cars.

In an interaction with media on Tuesday, Dawood said, “I discourage the unnecessary charging of ‘own money’ and I have raised this matter with the stakeholders. We are chalking out a plan with regard to cancelling the registration of dealers who are involved in this business.”

Last week, the finance minister had also asked the advisor to meet with the stakeholders and address this issue as early as possible.

It is pertinent to mention own money is an ‘illegal’ selling practice by car dealers in Pakistan. The dealers earn an additional Rs0.3 million to Rs0.5 million ‘own money’ from the consumer on each vehicle they sell. This additional sum is excluded from the profit margin which the dealers already receive from the automobile manufacturers.

The main reason behind this malpractice is the long delivery time, which stems from the demand for cars. Some customers even have to wait for up to six months to get their hands on the new vehicles. In order to get an immediate release, the consumers pay ‘own money’ to car dealers despite knowing that they are being exploited by the dealers.

According to Automotive Development Policy (2016-21), price and delivery schedule should not exceed two months from the time of booking. Any delay over two months results in a discount at KIBOR+2 per cent prevailing on the date of final delivery/settlement from the final payment, which is a measure to discourage any delay in the delivery time beyond 60 days.