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Motorcycle dealerships to be fined for financing-only sales schemes

Senator Richard Gordon seeks to impose penalties on motorcycle dealers who operate on such business models.

EJ Punsalang EJ Punsalang on Feb 16, 2021
2020 Honda CBR500R

A Senate Blue Ribbon Committee geared towards resolving issues in the implementation of Republic Act No. 11235, or the controversial Doble Plaka Law, has unearthed yet another issue in the motorcycle industry: financing-only sales schemes. In this setup, dealerships refuse to accept cash payments for brand new units, with customers being forced to avail of financing packages which usually come with interest rates of at least 5% per month. 

Headed by Senator Richard Gordon, who was also the author of Republic Act No. 11235, the committee was presented video evidence of motorcycle owners whose bikes were being repossessed due to failure to make monthly payments. Gordon stressed that dealers should stop repossessing units due to customers missing out on a monthly payment. Additionally, Senator Gordon raised a concern regarding dealerships forcing customers to sign a promissory note allowing them the authority to repossess the motorcycle in the event of a missed payment, and without due process. For reference, once a motorcycle is repossessed, the owner, regardless of how much he or she has already paid, forfeits the motorcycle outright. 

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The Senator also claimed that the dealerships then use these repossessed units as demo bikes for potential customers to try out. Another concern that was brought to light is the existing practice of motorcycle dealerships keeping the original copies of the registration documents of the motorcycle until the payment has been completed. At present, the penalty slapped on motorcycle dealerships for unfair sales practices resides in the P500 to P10,000 range—an amount that can easily be recouped from the interest generated from one motorcycle sale alone. That said, Gordon seeks to impose larger fines to help address the problem. 

Present in the Senate Blue Ribbon Committee hearing were the owners and key representatives from 6 of the country’s most popular motorcycle dealerships: Du Ek Sam, DES Marketing, DES Strong Motors, Desmark Corporation, Premio Corporation, and Motortrade Nationwide Corporation.

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