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Buying a car? Wait till May!

By Veeresh Malik
April 13, 2006 09:28 IST
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Readers are wondering when the benefits of the reduction in excise duties on cars will trickle down to end-users. It's a valid question, since as of now, with the removal of various discounts and increasing interest rates, monthly instalments remain much the same as they were before the cut in excise duty. There was also a backlog of delayed purchases just before the Budget. Now corporate buyers and fleet operators will complete their acquisitions in order to claim depreciation.

Individual buyers, however, should wait till May 2006 and try not to take a car loan -- especially if the money can be raised at a lower cost from sources like employers or own savings. Some reasons for this are:

  • Interest rates and associated costs for private car loans from banks and intermediaries are rising. In addition, the fine print in loan agreements seems to leave space for a subsequent increase in interest rates.
  • The benefits of a registration certificate without any hypothecation clause cannot be adequately stressed. With higher locational mobility for salaried people being the order of the day, changing addresses on RCs for hypothecated vehicles is one task you don't want in addition to everything else.
  • There is some re-thinking by one car manufacturer on the concept of giving discounts to finance companies. Why not pass this benefit to the end-user if loyalty across different price points is sought as a prime focus? Something like the way airlines have seen customers move to direct purchases of tickets, bypassing the agents.
  • Breaking fixed deposits, cashing in on equity and mutual funds or taking soft, unsecured loans or advances from employers -- this is the time and space in history to do all this, and more, if possible.

But most of all, corporate and fleet buyers will vacate the customer space in April, and stocks with manufacturers and dealers are expected to be very high then. In addition, General Motors may soon launch its small car, while Hyundai and Maruti are coming into the market with new capacities. Also, rural buyers are lapping up the mini-pickup diesel Tata Ace at the cost of other petrol-driven small cars. And we still haven't seen the latest surprise small-car from Tata Motors.

Shape of things to come: I was sitting next to a worried Dr K. Kumar -- he heads engineering at Maruti reading up frantically on Toyota strategies on a Pune-Delhi flight on 14 March 2006!

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Amazing discovery, thanks to the Right to Information Act, 2005, an application on which was filed by this correspondent. The National Highways Authority of India and the Ministry of Transport are not authorised to exempt anyone paying tolls or fees on highways other than vehicles of the Armed Forces.

They've been violating this rule for years and it seems this loss to the exchequer is the handiwork of officials who don't have any legal sanction. They need to be tracked down and held accountable. In reality, the Acts and Rules provide for the power to levy tolls and fees on highways, but do not provide for the power to exempt.

Will the CBI or some other agency find out how or why these exemptions are being provided on our highways? And what about the accumulated loss to the government on this score since NHAI's inception in 1999, considering that a dipstick check on a drive from Pune to Delhi and back earlier in March 2006 says almost 25 per cent of private vehicles whiz past toll booths without paying? I mean, are these highways or lootways?

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