Govt finalises rules for used car market, aims to resolve host of issues

Move to curb rise of fraudulent intermediaries, address disputes over third party damage liabilities

The ministry of road transport and highways (MoRTH) has finalised guidelines to regulate the second hand car market after the emergence of several issues, including the rise of fraudulent intermediaries exploiting regulatory loopholes. MoRTH had issued a draft notification for public comments three months ago.

“In the current ecosystem, many issues were being faced during the transfer of a vehicle to the subsequent transferee such as disputes in regard to third party damage liabilities, difficulty in determination of defaulter, etc,” the ministry said.

Under the draft rules, authorities will now make it a must for dealers of registered vehicles to get an authorisation certification from registering authorities, which will be valid for five years.

The pre-owned car market has gradually gained ground in India, especially with the advent of online marketplaces for buying and selling such vehicles, the ministry said. However, this increase in online car reselling has made consumers vulnerable to fraudulent intermediaries.

Intermediaries will now have to inform authorities about each registered vehicle that will be taken up for resale, with part-onus of disclosure and compliance also on the original owner of the vehicle.

The new transfer process will also allow intermediaries to become de-facto owners upon the completion of the compliance procedures mentioned above. “An authorised dealer of registered vehicles shall be competent to apply for renewal of registration certificate/renewal of certificate of fitness, duplicate registration certificate, NOC, transfer of ownership of motor vehicle, in relation to vehicles in his possession,” the notification said.

Moreover, the ministry has also made it mandatory to maintain an electronic vehicle trip register that would contain details of the trip undertaken, such as trip purpose, driver, time, mileage etc.

These rules are expected to aid in recognising and empowering intermediaries or dealers of registered vehicles as well as provide adequate safeguards against fraudulent activities in sale or purchase of such vehicles, MoRTH said.