The Car Industry And Consumers

All about buying car, new car, second hand car and used car... the car loan, servicing the loan, hire purchase... car repossession, car repossessor and getting back repossessed car...

The Car Industry And Consumers

Postby admin » Wed Aug 06, 2008 2:51 am

KUALA LUMPUR, Jan 11 (Bernama) -- In 2004, the volume of passenger and commercial cars sold increased by more than 20 percent to 487,605, as compared to only 405,745 in 2003, making it the highest in the history of car sales in Malaysia. For 2005, the sales is expected to touch the half million mark.

Going by the figure, selling cars is a definite money spinner. In today's living, cars are no longer a luxury but have become more of a necessity. Buying a car, however does not only burn a big hole in one's pocket but can cause anguish and stress as not all car buyers can really afford to own them.

Car loan defaulters run risk of getting "an unwelcome date" and become victims of "violent car repossessors". This is when the nightmare starts.

The Malaysian Islamic Consumers Association (PPIM) recently asked the government to register all vehicle repossessors under a single body to ensure they are more ethical towards defaulters when carrying out their work.

The association said the registration would enable the authorities to keep tabs on activities of the repossessors, to ensure that they adhere to regulations.

Domestic Trade and Consumer Affairs Minister Datuk Shafie Apdal also came out with a statement, advising financial companies to use legal avenues rather than employing violent vehicle repossessors.


The car industry or hire purchase of a product is governed by the Hire Purchase Act 1967 and Regulations. A guideline has also been drafted to protect consumers.

The Malaysian automotive industry has grown tremendously since 1967 but according to the National Consumer Complaints Centre (NCCC), the Hire Purchase Act has remained the same without much amendments thus leaving consumers with minimal protection from traders.

"Consumers are vulnerable to financial institutions and also traders. Most of the time financial institutions would not want to take responsibility for problems eventhough in line with the Hire Purchase Act as they are the actual owners of the car until the final instalment is paid by the hirer," explained Darshan Singh, the manager for Complaints and Investigation at the NCCC.

Most of the time, he said, consumers seek remedy from the traders leaving financial institutions aside when as a matter of fact it is the financial institution as owners, which would have to assist the consumers who face problems.

"The function of financial institutions does not just end with the disbursement of loan," he pointed out.


Car repossessing is not the only problem faced by consumers. There are other pressing issues confronting car buyers, at no fault of theirs.

Those who have purchased cars would agree that late delivery is one big problem which are sometimes caused by dealers and their sales agents.

Most of the time sales agents would promise a delivery date to the intended purchaser.

"Now, there is no requirement under the Hire Purchase Act that the delivery date is to be in written form. The unsuspecting purchaser would then make a payment called booking fees and goes off. Most of the times the said car is never delivered as promised.

"These sales agents would very well know that they may not be able to deliver the product but they just make promises in order to facilitate sale as most of them work on commission," said Darshan.

Some consumers, he said, even had to wait up to 18 months to get their car. "When these consumers get fed-up with the dealers they would naturally seek for a refund of the booking fees and it is always refused by the dealers citing company policy.

"This is utter nonsense. We must look at who breached the contract," Darshan said.

According to him, as most consumers would have disposed their original cars relying on the delivery promise of the agents or dealers, they would have to resort to travelling by public transport.

"There must be some provisions providing for late delivery charge so that consumers are compensated for late delivery. An example can be taken from the Housing Developer (Control & Licensing) Act 1966. This would also force dealers to be more ethical when promising delivery," he argued.

He said the problem normally occurs when the particular model is popular among consumers.

Distributors should closely monitor the acts of their agents and should not hesitate to suspend dealership if there are complaints received, he added.


Darshan also voiced concerns about consumers signing "Empty Hire Purchase Agreements." Doesn't this sound familiar. In haste or as it is normally done, car buyers would be given page after page of "empty forms" to be signed, without so much questions asked.

Normally, once a consumer had selected a particular car, it is the dealer who would make all the necessary arrangements for loan. Consumers are made to sign empty Hire Purchase documents and the documents would then be forwarded to the relevant financial institution for processing.

"Why are the consumers made to sign empty documents. In NCCC, we have so many cases where the consumers are promised, let say 7 years repayment period and a particular interest rate but when the agreement is received, it would be in contrary of what was promised.

"Where would the consumers go if he is not agreeable to such an arrangement. The consumers would have difficulties to prove otherwise as all the documents have been signed?" Darshan asked.


A new car does not guarantee buyer tip-top condition. Some even said it depends on your luck. You may get a new car with minor faults or your car may end up being kept for months in the workshop.

According to the NCCC, there are many consumers who had the misfortune of getting "faulty cars" and deprived of driving their new cars for months.

"These consumers should be compensated for the lost of usage of the said vehicle," said Darshan.

He also brought up the fact there are dealers who deliver showroom units to consumers and these units would normally have been driven for a considerable distance. "Here the consumers are not getting a new car but a used one," he said.

Half-cut assembled or joint cars is another area which Darshan described as often hotly discussed but without any action from the relevant authorities.

There are many fatal accidents which had been caused by these vehicles. "They are actually moving coffins," said Darshan.

Half-cut cars are normally cars which have been written off by insurance companies due to accidents. These cars are then auctioned off to workshops at a small sum.

"What happens is that these cars are refurbished with joint parts and put back onto the road. Second hand car dealers buy them at cheap rates and disposed them at market value. Hefty profit can be made from this trade. Consumers can never identify the joint parts as it would require an expert to do so.

"The finance companies have now introduce the requirement that all second hand vehicles go through Puspakom certification before loans are released. This, to a certain extent has managed to check the situation but the financial institution has found a way to make an additional income. Usually a hefty fee is charged for a Puspakom check," he said.


Another area that consumers need to take precaution is trade-in. In order to encourage sales, car dealers also provide for trade-in. Normally they would have a working arrangement with some second hand car dealers for this so-called facility.

According to Darshan, in most cases, the trade-in cars would be kept in the yard of the second hand car dealers while waiting for a buyer.

"Consumers would assume that their cars are already sold but they fail to understand that until their name is removed they are still the hirers of the car and would have to fulfil all obligations with the owners (the finance companies where they took the car loan from).

"They should make sure that their names are removed and if it's not done within two weeks from the handing over of the vehicle, they should lodge a police report and take control of the said vehicle," he said.

Consumers should also understand that their vehicle could be used for illegal purposes which could land them in trouble, he said.

Darshan reminded consumers who "traded-in" their vehicles to be sure that all arrangements are made in writing.

"This would give consumers better protection," he added.


On the issue of "violent car repossessors", Darshan cited some cases that had come to his attention.

* A woman and her five-year-old child were left along a deserted road at night by repossessors.

* A hirer was stopped at the roadside by repossessors who later called the financial institution to verify whether the car was on their repossession list. Once cleared he was let off but not after enduring much embarrassment as he had some guests in the car.

* Repossessors who came to a hirer's home at 2am and broke the gate of his house and towed away the car parked in his porch.

* A hirer had his car repossessed without his presence and he had a stereo system worth RM2,000 gone missing. Nobody took responsibility of the loss.

The list could go on and on.

The above are some of the examples of cases that were brought to the NCCC.

According to Darshan, "repossession of vehicle" is one severely unregulated area.

"We have the Hire Purchase (Recovery of Possession and Maintenance of Records by Owners) Regulation 1976 but how many financial institutions actually follow these rules.

"These repossessors are normally gangsters, some of them are even involved in drugs and they terrorize hirers before taking away the vehicles. After being repossessed, the vehicle is normally sent to the yard and when the hirer goes to collect it upon paying the necessary dues, most of the valuable items would be missing," he explained.

According to Darshan, it would be difficult for consumers to prove as there was no list of items provided during repossession.

He suggested that when a vehicle is repossessed, a list of items in the vehicle must be prepared in which the hirer would be able to verify upon taking back the car.

"We are not saying that repossession is wrong. It is a remedy for the financial institutions to act against defaulters. What we want is ethical methods of repossession. The authorities should act before some unwanted incidents occur," he said.

By Melati Mohd Ariff
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Joined: Thu Jan 01, 1970 12:00 am
Location: Kuala Lumpur

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