Easy Money

DECEMBER 2004 - Perhaps it wouldn’t be an exaggeration to say that commercialism is at the heart of everything we do and that in the pursuit of making money, no obstacle is hard enough to overcome. Certainly, Pakistanis show another side of their personality when they are making a fast buck.

The issue of over-priced cars, the long waiting periods, the 100% advance mandatory payments, the onslaught of the dreaded ‘ON’ - the new name for extortion and the fundamental violation of getting little value for hard earned money, is an issue that has been hanging over the country for many years now. A commission or as is the fashionable word these days, Task Force, has been at play for many months now, making many noises and promising swift action but eventually doing more or less nothing. Some say that is another Task Force with neither a task and certainly with little force. If the whole idea of appointing it in the first place was to diffuse the mounting criticism of car pricing and issues related to that, it has not succeeded and nobody is fooled by the ploy. Today, for the average buyer of a new car, the overall scene is a nightmare. Whether a buyer is intending to buy the one which is not more than a few doors, wheels and a roof cobbled together, but which now costs an arm and a leg, or those fancier snub-nosed jobs with false leather interiors and paper maiche bodies that cost a fortune and yet deliver little in terms of true satisfaction of money well spent, the story is the same.

From the moment a buyer wishes to purchase a car, there are three options. One is to book a car, that is, pay the full amount, fill out forms and wait for your turn. It may take months and it usually does and you may not have the colour of your choice at the end of that long period. The second is to simply walk into the thousands of showrooms that litter the cityscape and are now fast spreading their tentacles into every residential area, pay an obscene amount of money to the middleman, as little as Rs. 40,000 and as much as Rs. 175,00 depending on what you are desiring. The third option is simply not buy a car and the hell with everything. The sight of dozens of sparkling new cars, packed edge to edge like sardines, gets the blood pressure up in most people. They all understand that the showrooms are the front pieces of the game, that behind them are larger warehouses where far more vehicles are parked, yet they have to wait months unless they can fork out the premium. Were the cars that wonderful, perhaps people would have paid the premiums and walked on, but most Pakistanis are unhappy deep down at the quality of the vehicles that we are producing, therefore taking what they can get for whatever price that is asked.

It is a complex game. Some believe that the whole charade exists and flourishes because at heart we are crooked to the core. We are impatient people not willing to stand in line and wait for our turn. We cannot even stand in a queue much less wait in line for a visit to the rest room as you might see in cricket grounds in England – where in spite of consuming huge amounts of lagers, the British ‘hold’ on till it is their turn to get in and unload! We push, jostle, scuffle and only wish to get ahead. This characteristic allows the market forces to exploit the situation. Those who subscribe to this theory claim that were Pakistanis willing to wait for their car and refuse to pay extra, the despicable ‘ON’ would die, but nothing like that is going to happen. The claim that manufacturers are hand in glove with the showrooms may be partially true, but more than likely it is simply another clever investment scheme that milks the people and plays on their desire for a quick fix. A housewife in a TV programme said the other day that instead of keeping her savings in a stupid bank account which gives her zilch, she ‘invested’ in two cars and in six months had made Rs.300, 000 or more in return for an investment of say Rs. 2 million. Not bad? People like that think a car booked is good money in the kitty. Multiply that across the board and you can understand the full showrooms. The owners too are investing and are willing to wait till the next sucker arrives. A buyer who bought a car from an authorised showroom was then plastered with letters from them informing him that the car he had booked was soon going to be delivered. His replies saying he had done no such thing didn’t stop the letters. Obviously, his ID card copy was now in use for placing another booking in the pipeline.

Some people believe that if people here are willing to pay ‘biyanas’ for land – and to take the madness to its logical conclusion, even pay enormous amounts on just a file, without even knowing where the plot of land is, let alone exists, what is the fuss about when it comes to cars? Surely, the same exploitative principle is at work feeding the same avarice and the fundamental speculative nature that drives most of us through life is in full flow investing and making a killing. The easy leasing by banks, following 9/11 has turned the market upside down. All the things you wanted and never had are now within reach – easy reach and cars have suddenly become attainable. The existing production capacity is simply unable to cope with the demand that is generated from the market and all the market forces are activated. Critics of the car companies believe that the companies are rolling the advance booking money into their systems and are now happily placed running their empires with other people’s money. They are under no duress to run three shifts a day – most people believe the car manufacturers contrary to their claims, are running less shifts and not prepared to expand production facilities since the current situation gives them all the leverage and profits they need. When a popular model underwent a ‘change’ – the public having lived with the same obsolete, look-alike model year after year, the bookings poured in by the millions. The money was quickly gobbled up by the manufacturer, a happy cushion against which to loll about while the market took its toll. With a second economy, where black is very much white, there were enough people who were willing to block their extra funds without sweating too much and let the system cough up the profits. Critics also charge the manufacturers about not being serious when it comes to raising production or opening new plants. If there is such a great surge for cars, why aren’t new plants coming up?

As for the Task Force and the other bodies who were formed to ‘look into’ this business, nothing tangible has happened. There were stories rife some time back that the concerned minister was on the payroll of the manufacturers who were obliging him both with cash and free bookings, which he was selling for money or political favours. The budget and the promised ease in the car market announced by the Prime Minister has evaporated like thin mist in the market. The arrival of 22 month used cars has only resulted in bringing down the prices of the giant luxury liners, like the Cruisers since the new policy aimed at easing things for the common people has gone askew. The new fancy sports car glistening in the showrooms are not for the people of Liaqatabad or Allama Iqbal Town. For just about everyone, the situation remains as one cynic put it, hopeless but not serious.