SOCIETY: STRIKING A DEAL

November 10, 2019

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A huge car bazaar in North Karachi area draws many buyers interested in used cars | Faysal Mujeeb/White Star
A huge car bazaar in North Karachi area draws many buyers interested in used cars | Faysal Mujeeb/White Star

Salim Iqbal’s day starts with him waiting for a phone call. Every day, he hopes to get a call from either someone wishing to sell an old car or someone who will finalise a pending deal.

“I have partnered with two more agile junior agents for the last few years as working alone is now impossible,” he says. Working with others can get you more contacts; more contacts mean more deals. Also as the dealing involves large sums of money, it is safer to do business in groups.

The phone rings. After the call, Iqbal’s face relaxes. His partner agent Faisal was calling to tell him that one Mr Haroon has finally agreed to sell his Suzuki Alto 2006 model for 400,000 rupees. The deal had been pending for two days. 

It can take up to a week sometimes to get the green signal from a seller. After the deal is finalised, another agent, Yasir, handles various matters such as the transfer of vehicle and tax clearance with the help of his connection in the Excise and Taxation Department.

The used car industry is changing. Is it time for salesmen and agents to change with it?

“With three agents involved, we manage to sell around 10-15 used vehicles per month,” Iqbal claims confidently, adding that this many sales cannot be achieved by one agent because of his limited contacts. “As one spends more time in this profession, one makes more connections and gains people’s trust,” he adds.

Other than networking, successful used car agents must display a talent to manoeuvre any situation to their advantage; they may lack quality education but they are shrewd. 

But the used car business, that Iqbal has been part of for around 40 years, is changing. It is no longer all about contacts. Some fear that the art of used car salesmanship is soon going to be obsolete with websites like OLX and PakWheels gaining more popularity. Things are only made worse for used car salesmen by changing policies and the rising tide of inflation and unemployment.

A CHANGING MARKET

This has been a slow year for Iqbal, who deals with both domestically used cars and imported used cars. 

Buying and selling of imported used cars has seen a decline after strict rules and regulations on the import of used cars this year. In January, the government announced that all duties and taxes on the import of vehicles in new/used conditions should be paid out of foreign exchange arranged by Pakistani nationals or the local recipient. The remittance for the payment of duties and taxes should originate from the account of the Pakistani national sending the vehicle from abroad. 

Industry know-how and trust in agents can still trump convenience. “In many cases, the buyers take agents with them to check the used car and deal with officials of the online services,” says Iqbal.

According to car dealers, importing used cars is now impossible and the government will lose handsome customs duty collection. The rest of the damage was done by the rupee devaluation against the dollar, making used imported cars costlier.

Used car imports have declined by over 50 percent between FY18 and FY19 followed by a decline of more than 80 percent in July-August 2019 compared to the same period last year.

The cost of a three- to four-year-old imported used car such as the Toyota Vitz has gone up from 1.6 million to 1.9 million rupees, that of the Daihatsu Mira from 1.3-1.4 million rupees to 1.6 million rupees.

H.M. Shahzad, chairman of the All Pakistan Motor Dealers Association (APMDA) says the business of used imported cars is heading towards a dead end. People running used car showrooms, in rented spaces, are either struggling for survival or closing down their showrooms as they are unable to cover their expenses, he says.

These showrooms and people such as Iqbal are not only losing business because of changing policies. The market is also getting tough after the entry of online platforms that deal with used cars.

ONLINE SERVICES

The main draw of online services is convenience. Online, people can peruse the available cars, compare prices and negotiate without leaving their homes or offices. Many websites also offer a complete check-up of the car and facilitation of the documentation process to both buyers and sellers.

Zohaib Muzaffar, another car salesman, thinks these platforms can help everyone — from buyers and sellers to even dealers. He says that, for a quick response, a number of dealers sometimes also put the information of their client’s used cars online.

Naturally, however, most tech-savvy customers put their cars on sales on the website themselves to avoid the involvement of car agents, he says. But Muzaffar is not too worried about losing business to online platforms. He finds that there is a problem of reliability on the internet. “In some cases, buyers have failed to get a response from sellers who had already taken a token amount from them.” He also says that customers are often disappointed when they see the condition of the cars, which is very different from the rosy picture presented online.

People survey cars in a bazaar for used car sales in Karachi
People survey cars in a bazaar for used car sales in Karachi

Iqbal believes this is exactly why customers continue to come to salesmen like him and Muzaffar. Industry know-how and trust in agents can still trump convenience. “In many cases, the buyers take agents with them to check the used car and deal with officials of the online services,” says Iqbal. “I insist that the buyer gets the used car checked by a mechanic and denter and then finalise the deal to avoid any future problems,” says Iqbal. “We try to first ensure that the buyer’s and seller’s CNICs, along with all the documents of the car are in order and then get clearance from governmental departments.” 

Iqbal thinks that salesmen such as him will always remain relevant because there are many things that they know that the layman online would simply not understand.

The role of the CPLC and the website of Excise and Taxation for verifying vehicles’ status has made it easy to verify a vehicle’s clearance status, for both the agents and the customers. If these official sources declare a car as missing, it means trouble for the buyer/seller.

 WHAT’S THE DEAL WITH THESE CARS?

The local jargon for sizing up cars for a purchase is a bit confusing. If you hear “Gaarri mein halki si awaaz hai CPLC mein,” [A mild noise in CPLC] it does not refer to a glitch in any automobile part but in the car’s record kept at the Citizen Police Liaison Committee (CPLC). A noise at CPLC indicates that the car has either been recovered after being stolen or it is registered in a police case after being used in a robbery or other crime. Other than that, the car could also have a discrepancy in the chassis or engine number, etc.

But if an agent informs you, “Koi awaaz nahi hai CPLC mein” [there is no noise in CPLC], or “Gaarri saaf hai” [the car is clean] then you’re good to go.

Especially confounding is learning that your car is some pedigree of sorts. “Car naslee hai / Yaar nasal hai gaarri,” they tell you assuredly. It is hard to translate what ‘nasal’ means here but most likely it means fit to buy by all standards.

As buyers and sellers make a deal, they also settle old tax payment issues along with it. If a seller has not cleared taxes for years, the pending amount is deducted from the final payment, though it is up to the buyer to pay up or further delay tax payment.

The role of the CPLC and the website of Excise and Taxation for verifying vehicles’ status has made it easy to verify a vehicle’s clearance status, for both the agents and the customers. If these official sources declare a car as missing, it means trouble for the buyer/seller. However, experienced agents will easily notice such things when looking through a car’s paperwork. 

A COMMON GROUND

Many buyers rely on agents’ know-how to okay the vehicles before purchase
Many buyers rely on agents’ know-how to okay the vehicles before purchase

Raja Murad Khan, the co-founder and CEO of CarFirst, an automated platform for car dealers, recognises the kind of value men such as Iqbal and Muzzafar can bring to the sale of a used car.

CarFirst, a platform to sell off used and registered cars within Pakistan, works in a simple way. Someone looking to sell a car can call their helpline or fill a form online and schedule a car inspection. Soon after, someone from CarFirst will visit the prospective seller to inspect their car and verify the car’s documents.

But these sellers are only one half of the transaction. Khan describes car dealers and agents as “a very important part of our buyer base. We work very closely with these agents and dealers,” he says.

A keen observer of the used car sales market, Khan has noticed that the buying behaviour of dealerships, who were predominantly engaged in imported cars, has changed. They are now shifting towards domestically used cars. The decline in the number of imported cars aside, he says, “The impact of ‘no premium’ pricing on locally-assembled cars has pushed more dealers to come work with us.” CarFirst is now working on several training programmes to get more dealers to come work “and grow” with the company.

CarFirst seems to have found a way to enjoy the best of both worlds. “We also have active partnerships with OLX whereby a very large number of units sold through us end up being sold on OLX specifically,” Khan shares.

CarFirst still makes a very small percentage of the used car industry, but it is clearly on its way to becoming a bigger player. By finding a way to thrive in a changing market, the company is managing to expand at a time when others in the used car business are closing shop.

The company currently has 16 outlets in Karachi which will increase to 22 by the end of the year.

“Currently, I see the market in a correction phase more than a crisis. This is normal and the industry should come out stronger,” Khan says. “I do believe the dynamic will change towards a more consumer-friendly environment.”

The writer is a member of staff

Published in Dawn, EOS, November 10th, 2019