Sun | Mar 18, 2018

Slow progress on regulations for car market overhaul

Published:Friday | February 19, 2016 | 12:00 AMTameka Gordon
Vehicles are seen approaching a toll booth in St Catherine. The Jamaican Government is attempting to give legal weight to the revised vehicle import policy crafted in 2014.

Plans to give legal weight to the two-year-old revised Motor Vehicle Import Policy (MVIP-2014) have made some headway but not enough for the Trade Board to make a call on when it will be completed.

Car dealers have been contesting the Trade Board's authority to implement aspects of the policy, saying its role conflicts with current law that gives power to the minister in charge of commerce.

Those challenges began to emerge publicly last year after the Trade Board refused to recertify some dealers found in breach of the revised policy.

The MVIP, piloted chiefly by the Trade Board in collaboration with the Ministry of Industry, Investment & Commerce, is intended to streamline the operations of auto dealers, especially the used-car sector, and leans heavily on new protections for consumers in the pre-owned market.

The revised policy was tabled as a ministry paper by Minister of Industry, Investment & Commerce Anthony Hylton and took effect in April 2014. The new ministry paper superseded other ministry papers tabled between July 1990 and July 2004, as well as ministerial order (Partial Age Limit Modification) tabled July 2011.

Regulations are being developed around key aspects of the policy, such as the warranty stipulations and the dealer disclosure provisions, and for those regulations to be gazetted, giving local consumer-protection agencies teeth in the MVIP's enforcement.

"A policy decision was also taken to have the key elements of the policy placed in regulations to be gazetted," the industry ministry said via email. "The stages prior to issuance of these regulations include consultations, issuing drafting instructions to the chief parliamentary counsel, internal review and minister approval, then gazetting."

Before the revised import policy, the sellers of second-hand cars typically extended a three-month or 5,500-kilometre warranty to purchasers, regardless of the vehicle's model year.

But MVIP-2014 sets out three categories that offer more generous terms: Class A - 12 months or 18,000 kilometres (km) for vehicles less than four years old and odometer reading below 53,000km; Class B - six months or 7,500km for vehicles more than four but less than seven years old with an odometer reading below 106,000km; and Class C - three months or 4,500km for commercial vehicles more than six but less than 11 years old and odometer reading below 178,000km.

Chairman of the Trade Board, Bentham Hussey, told the Financial Gleaner, that he could not give a clear read on the latest in the process to have the policy gazetted.

"It is not in the Trade Board's hands. I suspect it is complete, but it has to pass through the process," Hussey said, referencing the drafting of the regulations.

This was confirmed by the ministry which said: "Consultations have been done and drafting instructions issued by this ministry to the chief parliamentary counsel."

But it, too, was unwilling to commit to a timeline.

"At this stage, we cannot give a definitive timeline for the completion of the process, as it involves the participation of other stakeholder interests," the ministry said.

Legal officers at the ministry have so far refused to clarify whether the policy will eventually be introduced as a bill to the house for debate and passage into law.

In the meantime, some used car dealers are still trying to get around the extended warranty terms stipulated under MVIP-2014 by striking side deals with customers, who are offered enticements to accept a shorter coverage period.

CAC powerless

The Consumer Affairs Commission has previously said that, until the motor policy becomes law, all it can do at this stage is warn car buyers against accepting such offers and urge them to weigh the short-term gains against a long-term repair bill.

Up to last September, stakeholders were locked in a series of consultations to iron out kinks and make adjustments to the motor policy, which was introduced on the heels of the model-year discrepancy in which customers were left holding cars they could neither insure nor sell because the precise age of these vehicles could not be authenticated.

In some cases, car buyers were sold reconditioned vehicles that had previously sustained substantial damage that was not disclosed. The problems would typically surface after the run-off of the short warranty periods previously extended under the old motor import policies.

The policy sets out new conditions for warranty provision by dealers and makes provisions for the determination of the model year of vehicles by the Trade Board and the Island Traffic Authority, now the sole agencies vested with this authority.

Under MVIP-2014, dealers are now compelled to declare in writing for each vehicle imported, that they stand by the information submitted, a move which is intended to provide legal recourse to agencies and consumers who end up with inferior vehicles.

The Jamaica Used Car Dealers' Association (JUCDA) has been the most vocal opponent of MVIP-2014, saying it adds substantially to their cost of business. They particularly oppose the extended warranty; the dealer disclosure, which requires proper due diligence on the units they import; and the pre-shipment certificate now required for each vehicle before it enters the port.

Hussey said those concerns are more likely to be addressed in the future.

"We are talking about a policy which has been approved. The amendments will come after," he said.

However, the Trade Board chairman was not entirely dismissive. "Maybe we could have addenda," he said.

As part of the overhaul, dealers must now pay an independent agency for a fact report on each automobile they plan to import, which the Trade Board will use to verify fitness.

The new measure will likely tack an additional US$65 to US$150 per certificate to dealers' operating costs, according to the Trade Board.

Hussey said the Trade Board has now identified the agencies that will provide the pre-shipment certifications.

"We have looked at some providers; we have had site visits in Japan, Britain," he said, adding that the selected companies also operate in other territories from which dealers import vehicles to Jamaica.

A final sign-off of the third-party providers is still pending, the Trade Board chairman said.

Other companies are also now "putting themselves forward to provide that service to Jamaica," he added.