Report says motor vehicles Act needs amendments related to pre-owned cars

The Act doesn’t recognise the role of motor vehicle intermediaries in transactions of used cars: Chase India and Consumer Voice report.

By:September 18, 2021 7:45 AM
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The pre-owned car market has gotten a major boost due to Covid-19, as a large section of the travelling public has moved from shared mobility to personal vehicles. But as the incomes of a majority of the population were also negatively impacted due to the pandemic, the demand for more affordable pre-owned cars witnessed a much steeper surge compared to new cars.

However, the existing motor vehicles Act does not recognise the role of motor vehicle intermediaries (MVI) in transactions of used cars and doesn’t offer specific provision to regulate such intermediaries, according to Chase India, the public policy research and advocacy firm.

Chase India and Consumer Voice (a consumer-centric voluntary organisation) have highlighted the need to define ‘MVI’ and regulate the fast-growing pre-owned car industry to ensure that consumers remain protected in the space and the sector realises its growth potential, in a report released on Friday, titled ‘Unlocking True Potential of Pre-Owned Car Industry post Covid-19’.

The pre-owned car industry has online and offline players who act as intermediaries in the transaction between buyers and seller. These transactions take place through online platforms, physical offices, garages, and are mostly unorganised.

At present, there are no regulatory provisions for these intermediaries, although they are at the centre of transactions for pre-owned cars and trade a car multiple times before it is eventually registered in the name of the end-owner. “The motor vehicles Act—the law on the sale, purchase and registration of motor vehicles—has been unable to keep up with the changing dynamics in the market, particularly with respect to the role of intermediaries. The law is silent on these evolving market practices in the pre-owned car industry which puts the consumers at risk till the registration is transferred to the ultimate owner,” the report said.

It added that legally defining a MVI by inserting a temporary registration provision will bring about a positive change amongst stakeholders. “It could usher in accountability of unsold vehicles on MVI in case the vehicle gets involved in any unlawful activity. This can also be seen as a step towards making the pre-owned car industry more organised, contributing towards FDI, job creation, tax generation and consumer empowerment,” the report noted.

The report’s key suggestions include:

—The Act should be amended to include the definition of a MVI as a dealer or trader who facilitates transactions between buyers and sellers in context to sale and purchase of a pre-owned/registered motor vehicle;

—The Act should be amended to ensure that intermediaries, buyers and sellers are all required to ensure transfer of registration within a stipulated time period;

—The Act should be amended to allow for temporary registration of vehicles by intermediaries under section 43, which currently only allows owners to apply for temporary registration of vehicles;

—Driving of vehicles temporarily registered as ‘in possession of intermediaries’ should be prohibited, except for purposes enumerated in rule 41 of the Central Motor Vehicle Rules;

—The Act should recognise the expanding market of pre-owned cars, identify the actors involved, require their registration, and protect interests of consumers who purchase pre-owned vehicles.

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