Buying a New Car? Here Is a Checklist for Customers
Post-COVID-19 and post shortage of chips, the scales are slowly returning, favouring new vehicle buyers. But this is not without a few new hazard warning signals flashing on Indian roads— especially near new automobile showrooms. 
Now that the semiconductor (chip) shortage, which largely impacted the vast number of entertainment and online services options in motor vehicles of all sorts, is almost over, maybe automobile manufacturers and their dealers will revert to doing what they were supposed to be doing in the first place- manufacturing, selling and providing after-sales services for end customers, owners and operators.
Post-Diwali information suggests that the ex-stock availability of personal vehicles, especially the ‘fully loaded’ variants of smaller cars and two-wheelers, are now freely available. Maybe not in the colour of choice. Sure, because white is like a default option for cars, therefore, easiest to buy, but off the shelf all the same.
So, what should prospective customers of new motor vehicles, internal combustion or battery, be aware of—now that the tipping point scales have tilted back in favour of the buyers?
Dealer Manufacturer Relationship: Tail Wagging the Dog  
In India, all new motor vehicle purchases are still strictly on a ‘caveat emptor’ or ‘let the buyer beware’ basis. Please be aware of this decision by the Supreme Court of Indiaand a quote therein:  
 “It is difficult to expect the appellant, a manufacturer, to be aware of the physical condition of the car, two years after its delivery to the dealer. During that period, a number of eventualities could have occurred; the dealer may have allowed people to use the car for the distance it is alleged to have covered. Also, the use of the car and prolonged idleness without proper upkeep could have resulted in the undercarriage being corrugated. All these are real possibilities.”
In other words, you, as a buyer, need to satisfy yourself with the new vehicle throughout the transaction of booking, purchase, and registration because the law expects you to do so. 
The manufacturer principal is to hand over the vehicle to the dealer principal and now it is between you, the customer or consumer and the dealer principal.
I observe that manufacturer personnel have a cosy relationship with new car dealers on a mutual back-scratch basis. As the third element here, the customer, then becomes the donor of the first choice for all the add-on profits.
Solution:  Direct sales from manufacturer to customer. Demand it.
Digital Games 
Now, a short note on the term ‘digital’ being used, mostly randomly, by the automobile industry in India, manufacturer and dealer. 
Experience shows that barring one luxury vehicle manufacturer who now claims to sell directly to customers in a pure digital play, the rest are still in an era of social media battles, motoring media junkets along the same lines as those by ‘foodies’, and scribbling notes on shreds of paper and then adding unverified signatures at the bottom. (An authorised signatory is only a director, partner, or the proprietor—anybody else needs to display a copy of the authorisation as part of the document.)
The predominant sales tactics appear to be based around taking an advance and then locking the customer in with all sorts of cancellation charges if the customer disagrees with being fleeced at every turn. A typical cancellation charge for a motor-car booking is 1% of the vehicle’s value, with additional processing charges of around Rs2,000-Rs3,000. Meanwhile, the dealer or manufacturer can unilaterally cancel the booking without assigning any reasons.
A customer is even more at the mercy of the dealer and manufacturer operating in tandem. If he or she has opted for finance through the dealer and also taken the option of an exchange offer for an older vehicle, there are substantial cancellation charges in those two transactions.
Everything is listed out there, heavily stacked against the customer in the bottom’s fine print, where it says ‘tick box to agree to terms and conditions’.
Solution:  Like RERA, a standard format between manufacturers, dealers and end customers is sorely overdue. Even better, wait to buy ex-stock. That is already happening.
Additional Charges and Banking Stories  
This one would be funny if it were not for the fact that we were getting robbed in broad daylight. Even for what the government gives us free. 
And, also that every financial transaction is now linked to the goods and services tax (GST) regime, where your liabilities as the customer are immense. You are paying vast sums as GST when you buy a new vehicle, and it is your responsibility to ensure that the money is going to the correct Central and state government. Your location where the supply of goods and services was made is the big part here that you have to ensure is correctly done by the dealer.
1) FasTag is now provided free of charge to all segments of users. You need the registration certificate, or if that is not available, you need the chassis and engine number of the nominated vehicle. Since you have already completed the basic know-your-customer (KYC), your bank is the best place to get your FasTag.
Since most people do not know that a FasTag is free, or the process to obtain a free FasTag (also available at the nearest toll booth on national highways), the dealers will levy an additional charge in the range of Rs600 to Rs800 when compiling the ‘on-road’ price to the customer. Do not pay this. It may be a small sum, but it puts the dealer and the manufacturers on notice. Some newer and better manufacturers are now providing the FasTag free of cost, along with the vehicle directly. This is how it should be.
2. Processing fees and payments at regional transport office (RTO) is another story. e-Vahan online services available tend to vary by state. But the big thing now is that personal interaction is reduced to a minimum and, in some cases, down to zero. This varies in quality with every state and RTO. 
But, slowly and steadily, things are improving for the customer. Timelines and costs are set for every transaction, financial transactions are cashless and the grievance mechanism is brilliant.
On the other hand, the dealers will try to levy an assortment of processing or facilitation fees for whatever reasons. For multiple reasons, it is much better for the customer to pay all RTO charges (road tax, cess, registration charges) directly from their own account instead of via the dealer. 
This process is simple for the road tax and other payments to the state government and transport department. The RTO generates a link to the dealer, which allows making the payment in seven days. Take this link from the dealer, check all the details yourself and pay directly online. You also have the option of going to the RTO physically and making this payment. Only cashless. 
Solution: Control the FasTag and RTO parts yourself.
3.  Accuracy in documentation: The big benefits in making the road tax and allied payments yourself are, you can check every line of the documentation headed for the RTO and thence to the National Register for Motor Vehicles (before making the payment, which is not a small amount), especially your personal particulars that appear on the registration certificate. 
In addition, should you ever need a refund, the original receipt from the RTO is in your name directly, hard copy and electronic formats and not clubbed with multiple other customers which is another grey area. You have seven days to go through every line and letter of the documents being submitted to the RTO. Even if you delay, the RTO will generate another fresh link with all the corrections BEFORE you make the payment.
This is very important because it also links all payments, all taxes, the invoice, your particulars and eventually sorts out your accountabilities for every part of this flow. 
Huge taxes have been collected from the customer, which needs to reach the governmentsUnion, state and local body- including input credits of all sorts of taxes, which come to an end with the end customer in almost all cases (barring a few small exceptions like driving schools...) and any minor flaw in this documentation can land the customer in a huge soup.
However, the dealer payment option flow to various RTOs gets very complicated—since dealers are often multi-RTO, multi-location, multi-state, multi-SGST, maybe even multi-CGST, varying CIN numbers, and single or multiple bank accounts. 
You, the consumer, on the other hand, have just one PAN number. I very recently objected to the wrong name spelling for a booking with a dealer of the biggest manufacturer in India, Maruti-Suzuki Ltd, which Maruti-Suzuki Nexa opted to cancel from their side unilaterally, and I am still waiting for my refund because somewhere down the line, my name was wrongly spelt as ‘VIREESH’ and there was no way, according to the dealer and manufacturer, to resolve this.
In addition, the dealer, in this case, wanted all the money for a new car basis a one-line proforma invoice, hand-scribbled to a ‘virtual bank account’ with a private bank. That truly spooked me, because the bank account on the original quotation was different. My chartered accountant (CA), whose firm is hugely digitised and fiduciary on top of all matters, totally banned me from making further payments under such conditions.
In another case, I cancelled a booking with another of the top three manufacturers because the dealer’s corporate identity number (CIN) number was simply not present—the dealer claimed to be an ‘unregistered partnership’! When I insisted, the dealer gave me a CIN number—which was for a similarly named but unrelated entity in another State.
Solution: Ensure dealer’s CIN Number, PAN, TAN, CGST, SGST and bank account are linked. This is something any CA will do. In addition, do a small transaction of Rs10 or Rs20 to the dealer’s bank account online and then verify the dealer’s bank account with the help of your bank or various other online resources.
4) Beware the Call Centres: The flow of ‘acceptances’ from a dealer to a customer will often, if not always, contain a line that ‘verbal commitments shall not be honoured’. Fair enough, this should, therefore, be both ways. Still, then in the very next step, even if the consumer makes a written complaint, the manufacturer and dealer will expect further interaction on the telephone.
As though that was not bad enough, what you will get next is the lowest bid-basis call centre staff, who will expect to be told the complete story repeatedly. This method is designed to irritate the consumer. Avoid the call-centres like the plague. Insist on staying in writing, browser or hard-copy. I take it one step further—most manufacturers are listed companies, so I buy a few shares and take it up there also.
Solution:  Look deeper into the customer resolution processes before paying the advance.
How much is a customer supposed to be wary of, then, when buying a new vehicle?
Very wary. It is much easier buying something second-hand as a stop-gap, with all due diligence, than being at the mercy of the manufacturer-dealer combo fine print.
For whatever reasons—manufacturers ceasing production, dealers going out of business, the tendency to make a fast buck by automobile salespersons, concentrating more on selling high-priced add-ons rather than the vehicle itself. Caveat Emptor!
 So what should the buyer of a new vehicle do?
1. Let things stabilise. The chip shortage will be over soon if it is already not over. I estimate that the tipping point has already been crossed. Before the start of December, many personal vehicles—two and four-wheelers—will be ex-stock.
2. Look at the manufacturers slowly moving into direct sales to customers. Behind the scenes, this is happening, and not just for the fleet and large buyer customers. Individuals, who demand direct sales, after-sales and warranty with dealer workshops, are getting served too.
That is when you, as a customer, can and should pick and choose not just the vehicle but also the fine print.
 As of now, with the shortage, the fine print is stacked heavily against the customer, with the manufacturer and dealer jugalbandhi reaching the final stages.
(Veeresh Malik is an activist from Delhi who continues to explore several things in life.)
2 years ago
Hi Veeresh,
Your article some time back on overcharging school fee by trusts was very insightful. How can we get in touch with you for some specific advice please?
3 years ago
Sensible advice.
But takes a lot of persistence and conviction to fight against the system of the company - dealer - partners ecosystem
3 years ago
Top class information from mr Veeresh , as usual
Replied to kpushkar comment 3 years ago
Many thanks. Please also see this - ""Amid what was described as a global chip shortage, more chips were being sent to factories than were leaving them in products, meaning “there are people definitely accumulating chips who-knows-where in the supply chain,” says Liu.""
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