THE vibrant exuberance, spewed by the car craze proffered by leasing schemes, seems to have died down in drawing room discussions, but the magnitude of its devastating effects is distinctly surfacing on city arteries, making traffic plans topsy-turvy and entangling middle class in an open-ended trail of travails. But in the bargain it has also brought stunningly windfalls for assemblers. The launching of the leasing scheme by the government was driven by desire to generate employment avenues for the jobless by swirling industry wheels swifter to meet the mounting demand for cars. While intentions of sponsors cannot be contested, the introduction of innovation, seemingly successful in developed countries because of plump wage slabs, has proved to be a non-starter in Pakistan, wreaking havoc on the dwindling fiscal conditions of the middle class, a vanishing breed inhabiting the land of the pure.
The post 9/11 scenario saw surge in car sales. The surge received impetus, when banks and leasing companies were signalled to finance car buy at luring low rates of interest. Not only the documentation was reduced to the minimum. Even conventional quizzing was forsaken. Emboldened by unprecedented response from customers, who were virtually falling over each other to book cars, but unmindful of the consequential effects of the baiting mesh, the government without analyzing its implications extended ambit of the lease-financing to cover electrical gadgets and housing sector as well. The inclusion of the last item was aimed at reducing housing backlog and triggering demand for 40 plus items, needed to complete and furnish the houses.
Remittances, received from diaspora, also played its part in over-heating the car market, but its share in sales, as compared to leasing, was not that astronomical. The sector of real estate offered ample avenues to absorb their greenbacks, fetching them big returns.
While one cannot question the apparent designs of the government to expand the job market, the flip side of the largesse is quite dismal. It is rendering more harm than good to the middle class, which, when robust, is termed as the backbone of rising economy but in Pakistan it is now struggling for survival.
In an urge not to rank the last in the line of the rich and be written off as the lost one in the ongoing struggle for existence due to soaring cost of living, the poor chap of the middle class is caught in the crossfire between assemblers and the leasing companies. He is unable to decide, if he could go for the latest model, radiating effulgence on streets or to stay content with his decrepit four-wheeler that repels looks of the viewers. Ultimately, he gives in, to the urging of his siblings on the paradigm of next door neighbour, whose children swagger new find, flaunting it on slightest pretext of shopping between community market and his house. Arranging down-payment was not an engaging issue.
What was disconcerting for the patriarch was to knife off back-breaking instalments from his meagre resources to pre-empt delivery of any missive from the company, cautioning against default. Some of the families, availing leasing facility, are overheard, squeezing expenditure on the culinary items of their kitchens, to build up reserves for the instalments. Analysts estimate a big caboodle of such car owners, constituting not less than 70 per cent of the total business, done through leasing.
The surge of cars, accelerated by leasing process, has hit hard city arteries, throwing asphyxiating traffic out of gear. It has choked thoroughfares, creating gridlocks, with purposeless movements of motorists, flaunting joyrides jauntily and attracting passers-bys’ attention frequently.
Leasing is promoting VIP culture in the country. Those, moving in rickety vehicles in by-lanes and evading stares of acquantences, are spotted cruising on boulevards, drawing their attention by honking horns unnecessarily.
The exploitation of the poor customer to the hilt is beside the point. His inability to own his own funding to buy the luxurious limousine, lands him in a labyrinth of vexing situations, where, he is not only made to pay baiting rates of interest to leasing institutions, but also inflated costs of cars with self-fixed prices by car companies, tagging deliveries to payment of umpteen extra charges under the variegated rubrics.
In the first instance, prices are arbitrarily fixed by assemblers. Prices, fixed when the dollar hit Rs66, did not decrease on the drop of the greenback’s value by Rs8-9 for a couple of years, but no sooner did the dollar gain a few rupees, when the prices of cars were upped by thousands in a jiffy.
Booking of cars is not made unless full payment is made for a car promised to be delivered several months later. If, in the meanwhile, prices hike, the captive customer will be refused delivery unless he makes good the differential. Business ethics and justice warrant that either he should not be charged the differential or booking should be made on token advance only.
When the customer reaches to collect his car, he is asked by some companies to pay delivery charges. The doors of company’s premises do not open unless the poor chap sheds Rs1500.
Some companies have devised a medley of rubrics to extort extra bucks from the hapless consumers. Booking of an 800 cc car will not be made, if they refuse to pay Rs12000 as ‘’booking charges’ on the spot.
The adverts of cars by leasing and car companies in the media, being few and far between, are generous on extolling qualities but economical on quoting prices, probably leaving some lacuna for the middle men to do their killing.
Addition of home appliances in the leasing scheme was intended to boost indigenous production of goods in the country. Instead, goods made abroad, are being freely financed by fiscal institutions. The slip seems to have originated from the ambiguous instructions, issued by one of the former industry’s ministers, who allowed leasing of appliances containing parts, made in foreign countries. Stakeholders took this to be a carta blanch and started stuffing their shops and warehouses with foreign goods up to ceilings.
Housing sector is also not far behind in the rat race to accord heating to the business of real estate. The big money, drawn under the pretext of building houses on lower interest rates, was heavily invested in real estate, fetching windfalls for speculators. The intervention of the SBP was too late to retrieve the situation.
Policies of the government should be pro-middle class as well. Its strengthening would generate natural demand for goods as against artificial through leasing. It would develop its purchasing power, providing fillip to factories to work overtime to satisfy rising demand for goods. The cascading effect of this would be to augment job avenues to absorb members of lower class, alleviating poverty scourge within the country. Emergence of the middle class would make Pakistan strong. We should not kill the goose that lays the golden eggs.
Protection of the interests of the consumers along with the interests of other stakeholders is tantamount to good governance To protect indigenous industry and to ignore interests of masses specially the middle class, is not in the interest of the country.
