Finance companies dealing in H-P loans should continue to give car dealers their commission as it is an important source of revenue for them, said Perodua Managing Director Datuk Abdul Rahman Omar. He was commenting on Bank Negara's recent directive to finance companies to stop giving commissions to car dealers.
"The amount of money a dealer can make per car is not that great and we have found that the commission from finance companies actually amounts to 40% or 50% of their revenue," he said. "As such, I am not surprised that they are very concerned about this latest development."
Datuk Abdul Rahman said that the finance companies need to realise that the 1% commission given is not merely a 'reward' because the car dealers are really their agents. As such, they would deserve something for the effort they put in to handle the paperwork.
"It is the car dealer's personnel who recommend the finance company and who also collect all the necessary documents so that the finance company can process the application," he said. "If the finance companies prefer not to give commissions for such efforts, then they will have to put their own staff in each showroom to serve customers."
Industry sources also said that besides the 1% commission, many finance companies also offer additional 'bonuses' to salesmen for bringing in loan applications. Commenting on this practice, the Perodua MD felt that it should be stopped altogether and a standardised form of commission given by the finance companies.
"The best thing would be to lower the interest rate further to give some benefit to customers and also give the car dealers a commission of, say, 0.5%," he suggested.