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The Budget revealed the Fiji Revenue and Customs will now publish the landed cost and selling prices of all vehicles in Fiji. Some would see this as a smart move
28 Jun 2016 10:00
Women Military Officers’ Promotion An Inspiration To Everyone
Fiji Revenue and Customs Services

The Budget revealed the Fiji Revenue and Customs will now publish the landed cost and selling prices of all vehicles in Fiji.

Some would see this as a smart move which is a win-win for all consumers.

Indeed this could create a price war as far as vehicle industry is concerned. You may wonder how?

When the landed cost of a vehicle is published alongside the selling price, consumers will be able to see the sorts of mark-ups the dealers do.

Now depending on the percentage of mark-ups, consumers can compare and decide which dealers have lower mark-ups and thus decide to buy their vehicles from the dealers with lower mark-ups.

From a dealer’s perspective, of course they would not want to have higher mark-ups shown for the very reason they will be chasing their customers away.

This does not, however, mean that low prices will just be a factor for new car dealers to sell. This gives new dynamics in marketing by new car dealers who will now strive to attract customers based on the bigger better deals which was not happening before in the Fijian market.

They will try to bring in higher spec’d vehicles to attract buyers so as to gain market share compared to current practice. This will add value for customers and those bringing a different level of customer service experience to Fiji.

Thus, it will be the consumers who benefit from this move.

Why would the Government choose to publish this? After all it will consume a lot of resources both financial and human in order to have a dedicated team to collect the data and information provided they are not influenced by dealers.

Granted it will mean more work for FRCA, but at the same time, it will ensure duty reductions or changes in duty rates rather are reflected in the prices of vehicles sold through a stimulation in customer spending.

Historically, we all know that when duty is increased, the prices are increased instantly and significantly. In fact more than the amount it should.

However, when duty is reduced, prices still remain high.

Of course it would not be correct to regulate the market by putting price control mechanisms which would still require resources to regulate and ensure compliance.

Thus, this idea of publishing the figures might still work out.

But let’s not be too confident that some car dealers might collaborate with each other and get involved in price fixing.

Price fixing isn’t a new phenomenon worldwide and has been previously practised in Fiji as well.

Therefore, it would not be a surprise to see if there are some car dealers who might go into this type of practice.

So does this mean Government will also need to spend in tightening up on this issue?

It appears so. In fact it would be better if Government does look into doing this but also invest in better regulating and ensuring customer protection. If Government can regulate this issue, it will have a rippling effect and boost economic activity across other sectors.

Whatever the case may be, a lot of consumers might end up holding back on vehicle purchases until August when the landed cost and selling cost of vehicles start to get published.

The recent increase in sales of hybrids was a result of rumours that duty would be introduced on hybrids.  Duty has been introduced but from January 1, 2017.

It’s a wait and watch game now. However, definitely exciting times ahead for the Fijian economy.

 

Feedback:  rachnal@fijisun.com.fj

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