Government to Ban Resale of New Vehicles

[CSPK]

The government is likely to ban the resale of new vehicles as it aims to curb the practice of charging premium/ on money by car dealers. As per sources, the government will approach Council of Common Interests (CCI) for legislation aimed at banning resale of new vehicles within six months by imposing transfer tax as percentage of price of vehicle.

This was decided at a recent meeting of officials of Ministry of Industries and Production and EDB with existing car assemblers. The meeting was presided over by Prime Minister’s Advisor on Commerce, Textile, Industries and Production and Investment, Mr Abdul Razak Dawood.

Related: Non-Filers Not Exempted from Income Source Probe

The meeting was convened in compliance with the decision of the Federal Cabinet on 20th March 2019 wherein it was decided that a regulatory framework will be developed including penal provisions, if required, within three weeks to check the illegal practice of charging premium by car dealers from genuine buyers over and above the invoice price of the vehicle; in doing so capacity and production standards of different car manufacturers and vehicle safety standards may also be focused.

Abdul Razak Dawood directed the participants that the ECC decision and matter of premium is a serious issue and CEOs of firms should attend such high profile meetings. The participants should have full authority to give any statement /commitment.

Related: Dealers Involved in Charging Premium will be Blacklisted

He further read the ECC decision and told the participants that Ministers have signed and confirmed ECC decision to resolve the issue, and stated that Cabinet has rejected the claim of OEMs that no such practice of charging premium exists in the market.

After detailed discussion, it was decided that the federal government will initiate the legislation so that resale of new vehicles may be restricted to within six months by imposing transfer tax as percentage of price of vehicle.

Read more: https://www.carspiritpk.com/2019/04/23/government-to-ban-resale-of-new-vehicles/

 

[war&peace]

But how will it discourage charging of premium?

 

[CSPK]

But how will it discourage charging of premium?

The government will provide legal cover to OEMs that if a dealer is found involved in illegal practices then his dealership will be blacklisted across the board and such dealership will not be allowed to do business in automobile industry on same address/CNIC/ or some relative CNIC for any other OEM.

It was also decided that such companies will be banned and pinned down by FBR by their tax profiles that are using their black money to buy cars and are promoting the practice of premium.

 

[Imran Khan]

at least one year time then they can sale

 

[1Paki$tani]

But how will it discourage charging of premium?

They dont call it premium. They call it "own" meaning you pay and walk away with your car.

What happens is that many dealers seek investors to book multiple cars and as the cars take many months to deliver people have to wait. So these investors book in advance and when the vehicle is close to becoming available they will market it through dealers and charge extra so those with money can walk away with the car.

I dont see a problem with that provided appropriate tax is paid on the profit by the investors. The buyers have a choice (a) waiting for vehicle to become available through manufacturer or (b) pay extra to the person who already owns a vehicle (investors) and have vehicle available straightway. It is question of supply and demand.

Why does GOP wants to intervene in this? provided both parties, buyer and seller, are aware of what is happening.

at least one year time then they can sale

why? How is it hurting the economy? in fact it will suppress car dealership business thus hurt employment.

 

[war&peace]

They dont call it premium. They call it "own" meaning you pay and walk away with your car.

What happens is that many dealers seek investors to book multiple cars and as the cars take many months to deliver people have to wait. So these investors book in advance and when the vehicle is close to becoming available they will market it through dealers and charge extra so those with money can walk away with the car.

I dont see a problem with that provided appropriate tax is paid on the profit by the investors. The buyers have a choice (a) waiting for vehicle to become available through manufacturer or (b) pay extra to the person who already owns a vehicle (investors) and have vehicle available straightway. It is question of supply and demand.

Why does GOP wants to intervene in this? provided both parties, buyer and seller, are aware of what is happening.

People should wait for it..why are they so impatient? It is not an existential necessity.

 

[1Paki$tani]

People should wait for it..why are they so impatient? It is not an existential necessity.

But why restrict economic activity? what negative impact does this have on the economy?

 

[Mav3rick]

But how will it discourage charging of premium?

New cars have to be booked against a valid CNIC. If the same CNIC is used to book multiple vehicles in a short span of time and if those cars are then sold within 6 months of first registration it would mean that the CNIC is being used to circumvent the Government's ban on non-filers to buy new cars (certain engine threshold) and also mean that the car is being booked for premium.

 

[Verve]

How is it hurting the economy? in fact it will suppress car dealership business thus hurt employment.

It hurts the end customer having to pay above Retail Price for a brand new car.

It doesn't hurt the dealership's operating profits or employment therein.

Putting a stop to it will hurt the middle frigging men and those dealers who are tax evading on the off the books cash profits!

 

[maithil]

So automobile sector will be hit now. Good job.

 

[yesboss]

People always find a way around. It won't help, it should, but it won't.

 

[Materialistic]

This illegal activity must be stopped. Governments in the past also used to issue warnings for not matching demand. These car manufacturers intentionally keep the production rate lower than demand resulting in unrealistic delays in delivery. When a dealership can sale X number of vehicles then it should have the capacity to produce and deliver those timely.

A buyer should drive away with his car from dealership or wait a few days at maximum unless its a rare color or configuration.

Unfortunately this practise is so old and deep rooted that some people consider it a standard industry practise now.