Tax on early transfer to eliminate new car ‘own money’

KARACHI: Additional tax on the transfer of a new car within three months of its purchase would help the government to eliminate a common practice of a premium charge – extra money demanded from a consumer for an early automobile delivery, a dealer said on Saturday.

“Early delivery demand from the customers encourages investors to exploit them by offering vehicles on premium payments,” said Iqbal Shah, chairman of Pakistan Automobile Assemblers Dealer Association (Pamada) in a statement. “If a customer agrees to secure delivery as per the schedule no premium will exist.”

Shah said vehicles are not commodity items, which could be made and shelved. They are manufactured on customer orders.

The automobile industry has taken various steps to discourage premiums through, for example, refusing multiple vehicle bookings on a single computerised national identity card and displaying vehicle availability information at the dealership floors and on the company website.

“We request the customers to book their vehicles only at the authorised dealerships and wait for the delivery as per the delivery date,” said the Pamada chairman. 

He said original equipment manufacturers discourage premiums, run consumer education campaigns through advertisements and ensure the vehicle availability information on their websites. However, the immediate delivery demand continues to encourage investors to fleece the consumers through own money.

The automotive dealer said domestically-manufactured vehicles are in high demand due to government’s efforts to improve the economy and ongoing China-Pakistan Economic Corridor projects. 

Car production increased to 124,923 units in the first eight months of the current fiscal year of 2016/17 as compared to 121,755 units in the same period of 2015/16, showed the data by the Pakistan Automotive Manufacturers Association. A total of 5,691 trucks and buses were manufactured during this period as compared to 4,078 units in the comparable period.  

“Lead times on vehicle delivery arise whenever there is high demand and are a common phenomenon across the globe,” Shah said, referring to an almost six-month waiting period on certain Suzuki variants in India.

He said presently all automakers in the country are operating at their full capacity and resorting to production overtimes to meet growing demand and working on increasing their capacity.  The Auto Industry Policy 2016-2021 is attracting new entrants from all across the globe. “Their entry in Pakistan will result in more choices for the consumers and encourage healthy competition.”

The association chief said the production is at its optimal. In 2007, the industry invested in capacity expansion. 

“However, sudden relaxation on used cars import adversely affected the market, resulting in closure of three plants,” he said. “Therefore, in order to sustain the interest of global players in the country’s auto market, stability and consistency of policies is needed.”

Published in The News, March 19th, 2017