Personal Cash-a termite consuming away govt’s efforts to cut back automotive costs


Pakistan’s auto industry has long been plagued by its own money (premium), which unfairly increases the price of already inflated car prices for most buyers.

Despite the recent push from new regulations and incentives to produce more vehicles, this has resulted in increased vehicle sales in Pakistan.

According to the latest data, industry sales rose 106 percent for the 7-month calendar year 2021, with total sales of 162,356 units compared to 78,683 units sold in the 7MCY20.

In the first month of fiscal 2021, total automobile production was 15,325 units, according to the Pakistan Automotive Manufacturers Association, compared to 8,280 units produced in the same month of the last fiscal year. For the month of July, this shows an increase in car production of 85.1 percent compared to the previous year.

Likewise, the production of jeeps and SUVs increased by 66 percent, and that increase was felt across all vehicle types.

However, this surge was not enough to reverse the predominance of self-owned money in the Pakistani market as consumers complain about late deliveries and premium payers pick up their cars on site.

It’s worth noting that own money is an illegal price a dealer charges from a buyer who wants to buy a car right away. It is above the original retail price of a car. It is a common practice in the Pakistani auto industry where delivery times of cars by companies can extend up to months, allowing dealers to exploit people who can pay.

There have been reports in the media that there are some cars where the premium has gone up to 1 million to get the car once you pay.

Read more: MG Motors Pakistan Accused of Cheating Customers

Reasons for the delay

In August, MG Motors Pakistan was accused of defrauding its customers in Pakistan. The company has struggled with delivery delays since it began selling its crossovers in the country, but has never been accused of fraud.

“The 70-80 cars booked in January were booked with a Rs 2 million prepayment to the company, and that alone accounts for Rs 2 billion for the booking to the company,” said a lawyer afflicted by late deliveries is, opposite Bol News. In January alone, 1,000 MG vehicles were booked from Islamabad.

Attorney Qasim Amjad also informed the host that his original delivery date was June and the constant postponement had resulted in new dates. Amjad said the company claims its car will now be shipped through September or October.

The attorney is not alone, however, and people at the time claimed that the company would further advance the delivery date for most people unless you couldn’t pay your own money.

However, MG responded to this statement: “The global automotive industry is currently facing a historic challenge, namely a serious shortage of semiconductor chips. This is beyond anyone’s control and deliveries are delayed for all brands. “

MG is not alone with this deficiency problem.

Read more: Government takes steps to abolish own money in the auto sector

A BMA Capital analyst told Samaa News that there are reports that many Kia Sportage compact SUVs have been assembled to the last bolt but remain unfinished because they lack semiconductor chips and the company cannot ship them to buyers.

Similarly, the Aspire variant will keep the new Honda City buyers waiting until March 2022 if they order / book it today, while other models will also have delivery dates in January and February next year.

Malaysian company Proton is also facing problems with car delivery as the country’s auto industry has shut down due to the pandemic, causing delays in deliveries of parts that the company uses to assemble vehicles and ultimately deliver a parent company’s car needs Malaysia.

While some blame it on supply chain problems, others argue that it has always been a problem in our auto industry. Cars like KIA Sportage, Hyundai Tucson and MG Crossovers are experiencing premiums of up to Rs 700,000.

Similarly, own money for cars like Toyota Fortuner ranges from Rs 700,000-900,000, followed by Rs300,000-400,000 for Corolla, Altis and Hilux from the same company.

For example, market reports suggest that the benefits the government is offering to bring vehicle prices down and make them more affordable for people will soon fade in the face of global disruptions in supplies, global semiconductor shortages, and soaring commodity prices around the world.

People protesting the MG’s late deliveries said in the media that they understand the supply issues, but why then do people who pay for their own money get cars before booking them earlier, arguing that cars are sold according to the Booking order should be delivered? .

Government Steps to Eliminate Ownership

Federal Minister of Industry and Production, Khusro Bakhtiar, said on July 7 that the government had taken measures to promote the automotive industry by lowering vehicle prices.

The minister said the government had taken steps to deal with the “own money” issue, adding that the government would levy between 50,000 and 200,000 rupees in taxes if the initial registration is not in the name of the person using the vehicle while it would also require manufacturers to pay a KIBOR + 3% surcharge for deliveries beyond 60 days, which would discourage them from delivering vehicles longer than two months.

Read more: Aliya Malik shares a snapshot of Pakistan’s upcoming auto policy 2021-26

In addition, he said the maximum advance payment when booking would not exceed 20% of the invoice value at the time of booking.