ONE-YEAR COVENANT

Press, Volume CIII, Issue 30587, 2 November 1964, Page 1

ONE-YEAR COVENANT

Early Start Expected (Parliamentary Reporter) WELLINGTON, Nov. 1. Details of the one-year resale covenant to be imposed on all new cars will be announced next week by the Minister of Customs (Mr Shelton), if the expected clearance is given by the Cabinet. The scheme has been prepared. It will be enforced by new car franchise holders and dealers under legally-binding contracts and covenants concluded with the buyers of the cars. There will be no need for special legislation or regulation.

It is expected that the scheme will take effect as soon as the covenant forms can be distributed to the firms involved, probably this month.

The covenants will forbid the resale of the car (except to the dealer from which it was originally bought) for twelve months. List prices less scaled depreciation will be allowed, and it will be binding on all owners during the first year of ownership. Mr Shelton has been trying to reach broad agreement with new car traders to prevent. trade-ins being demanded on the resale of cars less than twelve months old. Some critics of the scheme have suggested that it could merely disguise and transfer the “above-list” component of present near-new car sales by encouraging the demanding of sacrificial trade-ins on second or subsequent sales of new cars within the first twelve months.