KARACHI: Penalty on car companies for failing to deliver order within 60 days of booking already exits but the government seems to introduce stern measure to make the law more effective, say analysts.

The government has recently announced penalties and would finalise it in the upcoming budget.

According to analysts, this law already was introduced in the fiver-year auto policy 2016-21 and the automotive companies sought time from the government to implement it or get delayed it.

The law provides that a consumer “under specific circumstances can demand refund of his payments with all interest if the car is not delivered on time.” This condition applies when the consumer had booked the car by making full payment.

If the company fails to do so, then it will reimburse a percentage of payment, they added.

The National Assembly Standing Committee on Industries and Production, recently chaired by Sajid Turi, decided to impose a fine of 3% plus KIBOR (Karachi Interbank Exchange Rate) on car companies that delay deliveries. The rate will be charged on the amount the buyer has paid.

This decision has been taken to resolve ‘own money’ problem, which the dealers charge from the customers on prompt delivery of the vehicle.  Own Money is the price an investor/dealer charges from a buyer. It is above a car’s actual price.

It is a common practice in Pakistan’s car industry, where assemblers take months to deliver an order. A buyer has to make a partial payment to book a car, that is delivered, in many cases, as late as six months.

Standing Committee member Hamid Atiq Sarwar said that no “dealer” can now book a car. The car company must keep checks and balances on bookings.

In the last five years KIA, DFSK, Changan Master Motor, MG Pakistan and Proton Pakistan have started their business in the country. They also failed to make deliveries in time. The delay in car delivery has become a norm in Pakistani auto market.

Hyundai Tucson deliver their order after around eight months, while Changan Alsvin after six months. Honda City, which has not even been officially launched, started pre-booking and its current delivery time is almost nine months.

At present, the KIBOR rate is 7.45 percent of the total price of a car, meaning the company would reimburse the amount to consumer.

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