Kuala Lumpur, 17 June 2011. "The Hire-Purchase Act amendments that was implemented on 15 June 2011 is not pragmatic and may halt the growth of the automotive industry ", said Armin Baniaz Pahamin, President, PROTON EDAR DEALERS ASSOCIATION MALAYSIA (PEDA).
OBJECTIVES & SPIRIT OF THE AMENDMENTS
1. PEDA understand and support fully the objectives and spirit of the Hire-Purchase act amendments which we understand to achieve the followings:
(a) To protect customer from losing their booking and deposits paid to unscrupulous sales advisors and car dealers.
(b) To avoid unnecessary delay in refunding customers monies paid for booking and downpayment in the event of any cancellation of purchase or failure to secure hire-purchase loan.
(c) To avoid customer from having to pay unnecessarily for their Hire-purchase monthly loan repayment without taking possession of the car or before at least 21 days of taking possession of the car
(d) To avoid customers that cannot afford from buying the car by paying at least 10% downpayment from the car OTR
(e) to avoid customers being cheated of road-worthiness condition of the car and/or not cheated of a promised vehicle specification (including accessories)
2. National automotive industry is always subjected to phantom bookings on speculation. Without any booking fees allowed to be collected at the point of booking, buyers can place a reservation at multiple outlets
3. This bookings made at multiple outlets for 1 buyer is a waste of processing-resources and create inefficiencies.
4. With the implementation of the Hire-Purchase act amendments, buyer will only be required to pay booking fees after being served with the duly completed Schedule 2 (part 1 and 2). Banks will only issue Schedule 2 after the HP loan is approved. The approval for HP loan is now averaging around 3 days from the point of submission.
5. With an average of 3 days before the actual payment for a booking fees, Customer may miss and be deprived to secure a promotion when the promotion ended before the booking fees is paid/loan approved. Booking for car is not secured until booking fees is paid.
6. The ‘Turn-around’ time for the delivery of cars too will take an average 7 days extra from the normal practice. The expected 7 days delay in the buyer’s car delivery was due to no short-cut in complying with the documentation, availability of Bank marketing officer and for cheques/monies to be collected and deposited to Bank as the owner of the eventual car.
7. Payment for car downpayment can only be collected by Banks or its authorized personnel. Currently, majority of Banks have not allow car dealers to collect monies on the Bank’s behalf except only AMBank.
8. Customer too would need to pay more visits to the outlet and banks to signed documentation that can only be produce on a piece-meal basis. Example: FIRST VISIT: Customer’s visit the outlet to view the car and prepare documentation for hire-purchase loan application. SECOND VISIT: To pay booking fee, signed and be served with second schedule (part 1 & 2) upon HP –loan approval. THIRD VISIT: To pay full downpayment and signed HIRE PURCHASE Agreement. FOURTH VISIT: take delivery of vehicle and signed Delivery Notice.
Current practice, Customer only needs to visit outlet once after paying the booking fees.
9. Dealers will face serious CASHFLOW problem because the booking and deposit must be first paid to the bank to equate the vehicle ‘On The Road’ price before the Bank is allowed to disbursed out to the car dealer. Dealers would be short of the booking fees/downpayment as a working capital to pay for the cars that they ordered from their principle.
10. Dealers would have to pay their Principle once they received the cars that they ordered.
11. Bank facility such as Payment Before Registration (PBR) that almost 100% of the dealers subscribed to, are also frozen and suspended since the new HP Act amendments was implemented. EON Bank was the first to suspend the facility to car dealer.
12. Used car prices will also be affected when it is costlier and more restrictive for second-hand car trader to buy and sell cars. With 70% of new car sales depends trade-in vehicles, the new car sale is also expected to be adversely affected.
With a suspended bank facility, less working capital, more stringent requirement for hire-purchase loan approval and tougher trade-in cars to buy new vehicle, the overall national automotive growth is expected to be affected.
The implementation of the amendments that was gazetted without prior discussion with automotive stakeholders should be defer indefinitely and re-visited and reviewed by all stake-holders to ensure minimal affect on the industry's growth. PEDA and other stakeholders are aware of the objective and spirit and is ready to work with the Ministry to achieve the objective with minimal impact to the industry.