FADA calls for action against illegal two-wheeler sales by unauthorised multi-brand outlets

In Maharashtra alone, the Transport Department has impounded over 6,000 vehicles and suspended trade certificates 6,000 vehicles.

2W showroom
Image for representational purpose only.

The Federation of Automobile Dealers Associations (FADA), in collaboration with the Delhi and Mumbai State Transport Department has expressed concerns over the illegal practices of unauthorised multi-brand outlets (MBOs) selling two-wheelers.

The association has reported that these MBOs are acquiring unregistered vehicles in bulk from dealers and reselling them to customers at discounted rates, higher than the prices offered by original equipment manufacturers (OEMs) through authorised dealers, without any commitment to aftersales service.

This it says has not only impacted the legitimate dealerships but has also jeopardises customers confidence in the brand and dealer partners. Furthermore, these outlets indulge in evasion of GST, and income tax, issuance of fake/ undervalued insurance policies, and delivery of vehicles without registration/ HSRP and helmets, resulting in revenue loss on various fronts.

FADA says it has reached out to Eknath Shinde, Chief Minister of Maharashtra; Vinod Aggarwal, President, SIAM and the Transport Commissioners of Mumbai and Delhi, urging them to take stringent action against these MBOs and ensure their compliance with industry standards and regulations.

In fact, as per FADA the Chief Minister of Maharashtra and Transport Commissioners of Mumbai and Delhi have already initiated action against this illegal practice. The Delhi transport department is also taking stringent action against the outlets operating such illegal trade practices. The authorities had already issued notice on Trade Certificate cancellation to such business units.

Kailash Gahlot, Transport & Environment Minister of Delhi said “Delhi govt will not tolerate any such illegal activity or corruption. We are committed to take action against any such instance”.

Ashish Kundra, Principal Secretary and Transport Commissioner, Transport Department of NCT Delhi said, “FADA has been working closely with the dealer fraternity and the government to maintain a healthy and lawful business environment in the region. A legal notice has been issued to all the involved parties, and their respective trade certificates have been put under the scanner.”

Vivek L Bhimanwar, Transport Commissioner, Maharashtra said, “The Maharashtra Transport Authority is committed to offering a legitimate business environment in the region. We appreciate FADA’s effort in working with us to eliminate the MBO threat from the state and for bringing in our attention to persistent illegal business practices in the region. All parties concerned have been given legal notice. We have cancelled the trade plate of dealers supplying vehicles to unauthorised Multi-Brand Outlets (MBO’s) and have impounded vehicles stationed at such unlawful outlets. we have impounded over 6,000 vehicles, and trade certificates of over 50 dealers have been suspended for a week as of now”.

Manish Raj Singhania, President, FADA said, “We have raised the issue of unauthorised multi-brand outlets (MBOs) in the two-wheeler industry, which are not certified as bona fide dealers and sell unregistered vehicles without any trade certificates or aftersales services. This has caused many legitimate two-wheeler dealerships to shut down, making their businesses unviable. Such activities not only tarnish the image of dealerships but also harm brand image and values.

The dealership business is dynamic and contributes consistently to the economic development of the nation, generating significant employment opportunities in the sector. Illegal practices such as this cause massive losses to the government and society and lead to significant loss of motivation among dealers, leading to greater loss of employment opportunities.”

The dealer fraternity body has urged all two-wheeler dealerships to remain vigilant and report any instances of unauthorised purchases or sales to the appropriate authorities. It has also written to SIAM requesting them to raise the issue with concerned OEMs to amend their sales process, ensuring no supply of new/unregistered vehicles to unauthorised outlets. This it says will have a great impact in eliminating the multi-brand outlet menace and building the credibility of the entire auto industry.

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First published on: 09-05-2023 at 15:19 IST