Pakistan: Dealers continue to charge premium for prompt delivery of cars

By Hina Mahgul Rind

KARACHI: The problem of premium money (own money) on various brands of cars is still prevailing despite claims by local assemblers that production capacity has increased in order to ensure immediate delivery and to discourage premium.

However, authorised or unauthorised dealers are both charging premium at negotiable rates. A market survey conducted by The News found that authorised dealers were offering negotiable premium on early delivery.

Despite the fact that the previous government accepted all the demands of local assemblers. This included reducing permissible age of imported cars from five to three years, in a bid to end the own money menace. However, automakers failed to fulfill their end of deal.

A reliable source in the banking industry disclosed that even through car financing, the client has to pay a premium for immediate delivery. He said that a few years back, banks were financing the premium amount along with the car. However, this trend has been stopped now, but still if the client availing any car financing product wishes to get immediate delivery, has to pay the premium to dealers, as the banks always opt for authorised dealers and sub-dealers.

Pak Suzuki, the most favorite and economical brand for consumers is still on top, as far as premium is concerned. The most demanded car of Pak Suzuki is Mehran and the premium on all varies of Mehran is from Rs10,000 to Rs15,000. Otherwise the delivery period for the car is five to six months.

Similar is the case with other Pak Suzuki vehicles. Ravi pick up premium ranges from Rs20,000 to Rs25,000, and on booking the delivery period is four to six months, Bolan Van premium is running from Rs20,000 to Rs30,000, and on booking the delivery period is five to six months. On all Cultus and Alto VX models, the premium is around Rs10,000 to Rs12,000. However, there is no premium on Liana car.

Toyota products are also in a similar situation. Toyota Corolla GLI premium is around Rs25,000 to Rs30,000 and on booking the delivery time is two months. The premium of XLI is Rs20,000 to Rs30,000, 2.OD and 2.OD saloon’s premium ranges from Rs10,000 to Rs12,000. There is no premium on Altis models.

The other small car that is very popular is Daihatsu Coure. The premium on this car is also running from Rs15,000 to Rs20,000.

Another locally assembled brand is Honda. The premium on all Honda models is at the highest, from Rs40,000 to Rs50,000, and on booking it is available after two months.

However, the auto industry’s stance is different from their authorised dealers. They say that Original Equipment Manufacturers (OEM) are not responsible, or are benefiting from premiums. It is the unauthorised middleman that rips off the end customer and actually makes the most profit. This profit is also tax-free, as middlemen like roadside dealers/investors are not income tax registered, do not pay sales tax, and conduct transactions in a non-documented manner.

Premiums are a practice instigated by roadside dealers, investors and resellers. Thus, consumers should always buy fromauthorised dealers. If there is information on a specific case of premium charging by an authorised dealer especially Indus Motor Company (IMC) with proof, the Company will take action against the dealership.

Pak Suzuki denied any premium is being taken at their authorised and sub- dealers. However, they agreed that some of the Pak Suzuki products on booking are available after four to five weeks.

Responsible OEMs, such as IMC, have initiated surveys, surprise visits and campaigns to ensure that premiums are curtailed, and quality customer service is ensured. IMC has also taken various other measures to restrict this, for example taking the NIC and NTN number of the buyer and making it compulsory for the payment instrument to carry the buyer’s name. The Company pays interest on vehicles that are delivered over 60 days. Furthermore, it will refund the entire amount if the customer decides to cancel the order anytime before the delivery.

OEMs including IMC have increased capacity, ensuring immediate delivery for consumers, thereby negating the excuse for premiums. Of course, if a customer wants a specific color in a specific variant of a model, then there may be some delay, as production of cars is done in lots. Each lot of cars is of the same color and variant.

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