Dealers charging ‘ON money’ on new cars to be blacklisted

The federal government has devised a plan to end the illegal business of ‘ON money’ or car premium on the purchase of new cars. According to this plan, several car dealers demanding ‘ON money’ for early delivery of new cars will be blacklisted.

As per media reports, the decision was taken in a meeting chaired by Prime Minister’s Advisor on Commerce, Textile, Industry and Production and Investment, Abdul Razak Dawood, on Monday. The officials of Engineering Development Board (EDB) – a body to regulate automobiles sector – were also present in this meeting.

ALSO READ: Government plans to end ‘ON money’

The local carmakers were asked to provide written “testimonies” of assurance that they will act against their dealers who charge illegal money. ‘ON money’ is usually charged from new cars’ customers over and above the invoiced price. The customers are literally forced to buy new cars at exorbitant prices for early delivery. The new regulatory framework is expected to keep a check on this illegal business of some auto dealers.

In an earlier cabinet meeting on April 2, 2019, Prime Minister Imran Khan had formed a committee to ban this practice. The committee, comprising ministers for law and finance, was directed to regulate the purchase of new cars through various steps, including penalties on dealers and manufacturers.


Although it is widely believed that carmakers support dealers in collecting ‘ON money’ from purchasers of new cars, they have time and again denied any involvement in it. Car dealers often maintain that due to the wide gap in demand and supply of some new cars, they are forced to charge premium money.

ALSO READ: Toyota IMC making efforts to eradicate practice of ON money

On March 20, 2019, the federal cabinet had directed to stop the collection of ‘ON money’ and called it exploitation of car buyers.

Meanwhile, the longstanding issue of illegal ‘ON money’ business is still persistent due to disagreement on mandate within the government bodies. Ministry of Industries had earlier reasoned that the Competition Commission of Pakistan should take strict action against local car assemblies as issues like cartelization are under its domain.

It is pertinent to mention that the previous PML-N government had introduced Auto Development Policy 2016-21 to create a more competitive auto market. The policy provides tax incentives to new car manufacturers entering the Pakistani auto industry.

Under the present policies, buyers of new cars cannot be charged over 50% of total cost. The local auto assemblers are bound to deliver the new cars within two months after payment of the advance. The carmakers will pay 2% fine if the delivery is delayed.

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Notable Replies

  1. Wah jee wah, account created 4 hours ago, first and possibly final post 3 hours ago that too a threat of going to 'other places'. PakWheels k admin to aapke jaane pe soug manaege bhai. :stuck_out_tongue:
    Don't mind but maybe someone who has enough time and is angry enough to create a new account just to reply to a post supposedly written by a '10 year old' needs a hobby or something dude :wink:

  2. Let me explain in detail what is illegal in charging Own money by these so called 3S stealers - i mean dealers. It is the auto company job to provide vehicle on time at the agreed price payable by the customer. A customer makes the choice of buying a particular car after looking at every feature along with the price. That price should not change just because the company is unable to provide the car on time.

    Now, if the excuse of not providing car timely to customer is too much demand (than supply) due to which the car cannot be delivered instantly to a customer and can only be delivered after few months, then how on earth they can magically give the same car to another customer at an arbitrary price higher than the actual price?? This is exploitation at its best. Not just it's illegal anywhere in the world, it is also by definition 'riba' or 'sood' in Islamic terms - if you read all the Hadees regarding riba, you would know that anything charged over its actual price is riba - whether it is money or dates (khajoor) or anything else.

    It is in fact a theft act committed by the company/dealer to give the car to another person which you booked and are waiting for its delivery. It's like officially providing a channel for people to bribe their way up to bypass everyone waiting in line like a good citizen. Some may think of it as a luxury, but legally speaking this is bribing - a punishable offence.

    The company/dealer is REQUIRED to provide the car to customer at the earliest after a booking is made and can only delay the waiting period if it is genuinely unable to meet all its demand. They can't technically, morally or legally provide this 'luxury', which you are calling, as their only excuse to keep customers on waiting is that their supply is short. Hope you get this point, in case you are not a dealer yourself.

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