Penalise car makers if they don’t deliver within two months of booking

October 5, 2018

Photo: AFP

Automakers in Pakistan should be penalised if they don’t deliver cars within two months of booking, says the anti-cartel watchdog.

The Competition Commission recommended this in a policy document shared with the government on Friday.

The document is based on an open hearing of all stakeholders, automakers, consumers, and government, held on April 11.

Consumers shared their complaints about the industry, which they accuse of cartelisation, and recommended ways in which the new government can protect consumers and encourage innovation.

The report talks about the frequent and unjustified price increases, premiums charged for the early delivery of cars, long delivery waits and an absence of consumer protection.

The consumer watchdog noted that products were substandard, models out-dated, a lack of safety standards, and incentives for fuel-efficient hybrid or electric cars.

The Auto Policy for 2016 to 2021 says there will be a penalty (about 10% of the down-payment based on today’s interest rates) on car deliveries not made within two months. However, there is currently no mechanism to implement it.

The commission recommended the federal government to work with provinces to form an independent and empowered national vehicle standard and safety authority.

This authority should enforce standards for production, quality, safety, fuel efficiency and emission levels for local and imported vehicles.

Among other proposals, the commission said that, as opposed to current practices, any increase in automobile prices should not be applied to pre-bookings.

It should be made mandatory for consumers for new car purchases through pay orders.

This will help avoid multiple bookings by undocumented investors in the name of unrelated people—a practice where investors (not real buyers) book several vehicles and make profits by charging a premium in the name of early delivery.

Speaking to SAMAA Digital, a Competition Commission official said these are only proposals but they are hopeful that the new government will consider them as part of their reforms agenda.

However, she added the commission can penalise the cartel if it violates the Competition Act.