• The dynamics of the pre-owned car market are changing rapidly amid the COVID-19 crisis as people shun shared mobility and demand for pre-owned cars witnesses a steep surge.
  • The existing Motor Vehicle Act does not recognize the role of motor vehicle intermediaries in the transactions of used cars and offers no specific provision to regulate such intermediaries. The policies should evolve along with maturing market practices in the pre-owned car market to protect consumers and provide much-needed growth momentum to the sector.
  • The definition of Motor Vehicle Intermediaries under the Motor Vehicle Act will not only offer legal protection to the sellers of used vehicles but also help in making the pre-owned sector more organized and structured.

New Delhi, September 16, 2021: Chase India, a leading public policy research and advisory firm, and Consumer VOICE, a prominent consumer-centric voluntary organization, highlighted the need to define ‘motor vehicle intermediaries’ (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 comprehensive report released today. Titled “Unlocking True Potential of Pre-Owned Car Industry post COVID-19” the report aims to offer a roadmap for a robust and resilient policy ecosystem for the used car industry.

The booming pre-owned car industry has spawned various types of players – online and offline – who act as intermediaries in the transaction between the buyer and the seller. These transactions take place through online platforms, physical offices, garages – and are mostly unorganized.

At present, there are no regulatory provisions for these intermediaries although they are at the center of transactions for pre-owned cars and trade the car multiple times before it is eventually registered in the name of the ultimate owner. The Motor Vehicles Act, which is the current 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.

Legally defining Motor Vehicle Intermediary by inserting a temporary registration provision will bring about a positive change amongst the 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 organized, contributing towards FDI, job creation, tax generation and consumer empowerment.

Ashim Sanyal, Chief Operating Officer, Consumer VOICE said “Consumers would be the biggest beneficiaries in case Motor Vehicle Intermediaries comes under the ambit of law. This would ensure consumer empowerment as they would not be held accountable in case of misuse of their vehicles by intermediaries. Therefore, the MVI classification would provide clarity and ensure better consumer support”.

Kaushal Mahan, Group Business Director, Chase India said “Through the report, we aim to provide a comprehensive roadmap based on various international models to regulate the sector. This would enable better coordination between the centre and state governments as well as ensure the growth of the tech-enabled industry. Moreover, the formalization of the sector would attract more start-ups that could potentially be future unicorns”.

In a nutshell, the report emphasises that the Ministry of Road Transport and Highways (MoRTH) should explore the possibility of creating a working group, with representation from all relevant stakeholder groups including government, think tanks, academia, industry players and industry associations to ensure a multi-sectoral and collaborative approach. This would keep consumers in the used-car space protected, as well as unleash the growth potential of the sector.