The recent amendments to the Hire-Purchase Act 1967 (HPA) has definitely impacted car sales, said Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad.
“It is still too early to tell about the actual impact. We are collecting data from our members,” said Aishah in a phone interview yesterday.
MAA members include car marque franchise holders and auto assemblers in the country.
Aishah noted that presently, there were “teething” problems in the car retail trade.
“Based on feedback from some MAA members, there are anomalies in the car buying process. For example, some banks seem to be more stringent compared with others concerning the documentation process,” she said, adding that MAA had requested for a meeting with the Domestic Trade, Cooperatives and Consumerism Ministry to “iron out” issues.
However, contrary to claims by some car retailers, Aishah said it was not true that the Government did not consult the automotive sector’s stakeholders before implementing the amended Act.
“The Government has done its work, and received inputs from the automotive industry in the past six months. Issues have been discussed at length. Roadshows were organised in the country this year,” she said.
However, one financial institution’s hire-purchase manager contacted by StarBiz yesterday said “it was business as usual”.
The manager said steps were taken earlier to mitigate the effect on car dealers familiar to the financial institution, such as authorising them to collect vehicle booking fees and downpayments on its behalf.
“So far, our average period for hire-purchase loan approvals, ranging from one to three days from the point of submission of completed documentation, has remained unchanged,” said the manager.
To recap, stakeholders in the automotive sector contacted by StarBiz on Monday had complained of a slowdown in car sales since the amended Act took effect on June 15.
Car marque franchise holders and dealers said they were worried about the possibility of trickling cashflow, a rise in booking cancellations and longer leadtime for completion of sales resulting from the amended Act.
Perusahaan Otomobil Kedua Sdn Bhd managing director Datuk Aminar Rashid Salleh had pointed out that the company might not be able to efficiently register vehicles on time for buyers, especially during the month-end rush, due to a longer process that required detailed paperwork between the banks, Perodua and customers.
Under the amended Act, all used vehicles for sale will undergo Puspakom’s 18-point inspection to ensure their roadworthiness.
The amendments, among others, also entail the need for banks to obtain a court order before repossessing a vehicle and repossessors must be registered with the Domestic Trade, Cooperatives and Consumerism Ministry.
Another issue of contention was the 1% maximum booking fee (based on the total selling price) mandated by the amended Act, which requires car sellers to refund customers 90% of the booking fee if the deal falls through.
Unlike the past, presently car sellers or dealers cannot accept booking fees before the car buyer is served with a Second Schedule notice.
It is understood that the Second Schedule notice can only be completed and served, in practise, on the car buyer usually after the hire-purchase loan application is approved.
The remaining 9% downpayment on the car can only be paid when the hire-purchase agreement has been prepared, with details such as the car’s chassis number included.
This means the hire-purchase agreement can only be prepared after the actual car unit has been allocated to the dealership.
Also, only banks or bank-authorised car dealers are allowed to collect car booking fees and downpayments.