The Federation of Automobile Dealers Associations (FADA) has raised serious concerns over the unchecked rise of illegal multi-brand outlets (MBO) in the two-wheeler market, calling them a major disruption to authorised dealership operations and a violation of existing laws.
The dealers’ body has warned that these MBOs, which sell two-wheelers from multiple manufacturers under one roof without a valid trade certificate, are technically illegal under the Motor Vehicles Act. Yet their presence is growing rapidly, with over 1,000 such outlets now reportedly operating across the country, particularly in states like West Bengal and Maharashtra.
The modus operandi of these outlets involves sourcing vehicles from authorised dealerships and then selling them directly to customers using the credentials of the original dealer. This practice not only bypasses legal requirements but also poses regulatory and financial risks to authorised dealers, who are still bound by compliance standards and face punitive action for violations.
“In regions where MBOs dominate, authorised dealers handle just 10–15% of sales, while MBOs command up to 75%,” said Saharsh Damani, CEO of FADA. He said that the consequences are wide-ranging, from loss of government revenue to customer exploitation and legal exposure for principal dealers.
While the Motor Vehicles Act mandates a valid trade certificate for any sale or transfer of unregistered vehicles, MBOs often operate without one, exposing their partner dealers to fines of up to Rs 10,000 per vehicle, imprisonment of up to a year, or both. In cases involving principal dealers, penalties can be as high as 15 times the vehicle’s road tax, and trade certificates may be suspended.
Dealers said that some OEMs are tacitly supporting the MBO model by pressuring them to supply vehicles to these outlets. They claim that refusing to cooperate risks reprisals from manufacturers, while compliance exposes them to legal penalties. “If I refuse to sell to MBOs, someone else will, and I will lose my OEM support,” one dealer said.
FADA also pointed to consumer risks, noting that MBOs often undercut showroom prices by Rs 2,000–Rs 3,000 but recoup the margin by overcharging on finance by Rs 8,000–Rs 10,000 and offering substandard insurance, which can jeopardise vehicle warranties and registrations.
Additionally, these outlets allegedly evade taxes and contribute to potential security lapses.
Manufacturers like Hero MotoCorp, Honda Motorcycle and Scooter India, TVS Motor, Bajaj Auto, Suzuki Motorcycle India, and Yamaha did not respond to queries on the issue. Meanwhile, dealers from West Bengal have formally approached the state transport authorities, urging a crackdown on MBO.