Chase India And Consumer Voice Report Urges Better Regulation in Pre-Owned Car Industry | AU Small Finance Bank
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Chase India and Consumer Voice report urges better regulation in pre-owned car industry

    Chase India, a leading public policy research firm, and Consumer Voice, a prominent consumer-centric voluntary organisation, have 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.

    Their joint report titled ‘Unlocking True Potential of Pre-Owned Car Industry post Covid-19’ highlights how the existing Motor Vehicle Act does not recognise 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. This 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 unorganised.

    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. 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.

    In an effort to protect consumer interest in the pre-owned car segment, the report lists 5 suggestions that need to be considered for implementation in the existing MV Act:

    • Recognise the role of intermediaries in the pre-owned car market.
    • Timely transfer of registration, provide for a penalty in case of non-transference of registration by the intermediary and the buyer.
    • Temporary registration of vehicles by intermediaries. The Act should also require issuance of delivery receipts by the intermediaries in favour of the sellers, which would allow the seller to approach the registering authority in case the intermediary defaults.
    • Prohibition on driving a pre-owned vehicle that is temporarily registered.
    • Recognise the distinction between transactions involving pre-owned and new vehicles.

    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 added, “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 in a way that would help keep consumers in the used-car space protected, as well as unleash the growth potential of the sector.