Pakistan Institute of Development Economics



The Nuisance of Own Money in Automobile Purchases (Commentary)

The constant gap in demand and supply of vehicles in Pakistan gave birth to a phenomenon unique even today to the Pakistani automobile market known as the ‘own money’ for brand new vehicles. For immediate possession of an automobile that has been purchased, the buyer must pay a premium charge: own money. The question is, what is this own money, and why must one pay this to possess something one has already paid for?

In the early 2000s, when car sales in Pakistan rose sharply, aided by the banks’ introduction of car financing services, the demand and supply gap widened. The number of buyers increased rapidly, while vehicle production capacities did not significantly increase to match this rise in demand, resulting in an increased waiting period for the delivery after booking the vehicle. An opportunity to earn commission was created for those in the middle of the supply chain, i.e., the 3S dealerships.

Usman Qadir, Mohammad Shaaf Najib

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