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Nov 5, 2007 Motor traders being pressed to pay up CPF on commissions By Christopher Tan THE Central Provident Fund Board has widened its efforts to get motor firms to pay up CPF contributions on commissions earned by their salesmen. The board told The Straits Times that it has written to about 40 major motor distributors - or just about the entire new car industry - to ask them to check their past records to see if they have missed out on paying contributions on third-party commissions. The move follows a probe into two car agents started in August after the board received complaints from salesmen on the matter. The complaints pertained to commissions that salesmen earn on car loans. Most dealerships sell cars packaged with a loan from a bank or finance house, with the salesmen earning a 1 per cent to 3 per cent cut of the loan amount. Many car companies leave it off the books and allow the salesmen to be paid directly by the finance institutions. As such, they do not pay CPF for these commissions. But it is no longer just car loan commissions that are being scrutinised. The CPF Board's audit covers commissions earned from other third-party services such as used car trade-ins, rust proofing, insurance and so on. The board met the Motor Traders Association (MTA) early last week to explain the matter. CPF Board spokesman Hazel Tan said: 'They understand the issue and are working with us to communicate with their members.' MTA members met last Friday over the matter, which has caused a flurry in the market. One member said: 'CPF's interpretation is too broad. Let us take the example of insurance. In the first year, there is no problem, but if the customer changes insurer the next year, how do we track?' He said the MTA will seek another meeting with the CPF to nail down the definition. 'Moving forward, it is not a problem to comply with CPF's stand, but to make backdated payments is not so easy,' he said. 'The financial implication is huge.' Banks and finance houses have given at least $35 billion worth of car loans since 1999, so the car industry may have to cough up more than $100 million in CPF dues, including penalties. And that is just for car loan commissions. While motor traders said the issue of back payments is still a big unknown, it is clear the industry will have to change the way it conducts business. Mr Glenn Tan, chief executive of Subaru agent MotorImage, said the company did not pay CPF on finance commissions in the past, but will do so now. Mr Cheah Kim Teck, chief executive of multi-brand agent Jardine Cycle & Carriage's motor operations, said: 'We might have to ask all the finance companies to pay commissions through us.' Like other motor traders, both CEOs said they are still looking at past records to see if they are liable for any back payments. The CPF Board's Ms Tan said motor traders are not disputing the need to pay CPF on third-party commissions, and some had already started 'self-rectification'. 'Employers have been given up to middle of this month to complete the self-rectification,' she said. Singapore Manual and Mercantile Workers' Union assistant secretary-general Wong Chip Mun said he is 'happy that the CPF Board is looking at this issue'. The Straits Times learnt the CPF Board is auditing other industries on this matter as well. Other businesses with similar practices include the real estate and the financial services sectors.

Car salesmen: It's impossible to survive New car sales down by between 30-50%, say sales execs. An 18-man team has shrunk to just 5. -TNP Tue, May 25, 2010 The New Paper By Pearly Tan ON GOOD months last year, Mr Rahmat Mohamad Isa could sell up to 10 new cars a month. With an average $500 in commission for each car sold, the sales manager could take home just under $6,000, basic pay included. But today, those good old days are over, said the veteran car dealer. He said this is the worst slump he has seen in his 16 years in the car industry. Mr Rahmat, 60, managed to sell only two cars last month. He said the situation has been dismal for the past few months, but could not provide exact sales figures. He took home only about $1,500 last month. On average, he earns $3,000 a month. He expects this month to be even worse - he has not sold any car yet. He lamented: "Our basic pay is only about $500 and if we don't sell any cars, it's almost impossible to survive. "Some of my friends who used to sell about 30 cars a month have not sold a single car in two to three months. That's how bad the industry is." Mr Rahmat is not alone. Ten other car sales executives The New Paper spoke to at showrooms along Alexandra Road, Ubi and Turf Club Automobile Emporium said sales of new cars have fallen by between 30 and 50 per cent from last year. The New Paper contacted at least five car distributors here, including Kah Motor, Borneo Motors and Komoco Motors. But all declined to reveal their sales figures. New vehicle sales could possibly sink below 55,000 cars this year - less than half the average 117,000 sold each year in the last decade, reported The Straits Times earlier this month. Certificate of Entitlement (COE) prices hit a 10-year high last month - about $49,000 for open category - due largely to a reduction of COE quotas which came into effect that month. The result? New cars have become more expensive. For Mr Rahmat, his 18-member sales team at Car City, a parallel importer, has shrunk to just five people. The company sells Japanese, Korean and continental cars. There was a time when he was glad just to catch a 15-minute breather between attending to customers. Now,walk-in customers are fewand far between. Said Mr Rahmat: "Our showroom used to be so packed, even the sales director would have to help attend to customers. "Now, he can stay in his room because there are just so few customers. Many colleagues knew they just couldn't survive in this industry any more and decided to change jobs." Some have set up their own businesses while others have moved to the real estate industry hoping to earn more, he said. Mr Rahmat now spends his day chit-chatting with his colleagues while waiting for the occasional customer to show up. He considers himself lucky as his two grown children help to support the family. "I have some savings and my children are working, so it's not so bad. But some of my colleagues have even fallen into debt because they earn too little," he said. Few customers When The New Paper visited the Turf Club Automobile Emporium onTuesday, there were few customers. Some dealers said the situation is the same on weekends. Said Mr Rahmat, who was casually dressed with his shirt tucked out and unbuttoned at the top: "We used to wear ties and tuck our shirts in. But now, there's no point dressing up. There aren't any customers to serve." Over at Alexandra, the situation at some of the spanking new showrooms was the same - few customers, many sales executives. Car salesmen The New Paper spoke to said they typically earn a basic salary, but rely on sales commission for the bulk of their income. A sales executive, who wanted to be known only as Ms Lim, said: "If I'm lucky, I can sell one car a month now. But I have colleagues who have not sold a single one in a few months. "Customers now think thrice, even four times before buying a car, whereas before they used to make quicker decisions and doless homework." The number of new cars registered fell by 29,000 - from about 97,000 in 2008 to just 68,000 last year, according to the Land Transport Authority's (LTA) website. The used car market, on the other hand, has grown. In the first three months of this year, 25,754 vehicles changed hands, up from 19,704 in the same period last year, according to a Straits Times report last month. Mr Damien Lim, 34, an IT manager, was one of those who chose to buy a second-hand car over a new one. "I got my Honda Stream within two weeks and I avoided the disappointment of not getting a COE, especially when prices were going through the roof," he said. Mr Lim paid $65,000 for his three-year-old car. A new one costs about $90,000 including COE. Professor Paul Barter, an urban transport analyst, said it's unlikely COE prices will return to as low as they were before. He said: "With the supply of COE down and the demand of cars remaining constant, prices naturally rise. "And if the economy continues to do well, the high COE prices look set to stay for awhile. Or at least until people become discouraged at the high COE prices and switch to

I'm sure everyone of us have come across one or another sometimes. I just kenna one salesman who like me to make a final decision in a few days ! I understand these people have monthly quotas to hit but buying a car is a big decision. One simply cannot make a hasty decision and regret it later. How do you guys deal with it ?