PEDA (Proton Edar Dealers Association Malaysia) has a new request for Bank Negara: remove the ceiling for hire purchase commission. PEDA wants the commission to be determined by market forces instead, so that the Proton Edar dealers could possibly earn more from each Proton car sold through hire purchase commissions. A dealer gets a hire purchase commission when a hire purchase loan for a sold car is processed and approved through the dealer.
PEDA’s arguement for this: the whole idea of the commission was to help Proton dealers in the first place. It was introduced in the 80s to compensate for low Proton car sales margins. Later, it was extended to all car dealers until 2001. “The origins of the hire purchase commission, to support the low car margin of Proton dealers, were forgotten and neglected and the Proton car margin was never revised since,” said PEDA deputy president Armin Baniaz Pahamin.
Armin also continued to stress on it’s previous request for banks to have a minimum quota of Proton loans to approve. “This will allay banks’ fears of poor KPI due to Proton customers’ profile. This is a normal practice in other developed countries such as South Korea to ensure the survival of their national car,” he said.
I am rather puzzled about one thing. How will a minimum amount of Proton loans approved allay the banks’ fears of Proton car non-performing loans? All it merely does is force the bank to approve a certain number of loans, but the banks will have to continue worrying about those loans. The only thing that will change is the banks will not be able to refuse the risky loan. Indirectly forcing the bank to worry, instead of letting the bank NOT worry by rejecting the loan.
Is there something wrong here or am I just stupid and not able to comprehend?