MoRTH Revamps Rules For Used Car Sales In A Bid To Curb Fraudulent Dealers

MoRTH has now amended Chapter III of Central Motor Vehicle Rules, 1989 to build a comprehensive regulatory ecosystem for the pre-owned car market.
2 mins read
29-Dec-22 09:20 PM IST
MoRTH Revamps Rules For Used Car Sales In A Bid To Curb Fraudulent Dealers
Highlights
  • The new regulations will make it mandatory for used car dealers to have an authorisation certificate.
  • The dealers will be prohibited from using the vehicle other than trial runs and repair/document works.
  • The old owners will also have to register the hand over of the vehicle to the dealership on an online portal.

The Ministry of Road Transport and Highways (MoRTH) has issued a notification, finalising guidelines to regulate the second hand car market which promises to solve several issues in the used car buying and selling space. The key factor taken into consideration was resolution of issues during transfer of vehicle to subsequent transferee, disputes in regard to third party damage liabilities, difficulty in determination of defaulter, etc.

"The pre-owned car market in India has been gradually gaining ground. In recent years, the advent of online marketplaces, which are involved in buying and selling of pre-owned vehicles has further given a boost to this market," MoRTH stated.

The notification states that dealers of registered - or pre-owned - vehicles will need to get an authorisation certificate from the authorities to continue operations, the same shall be valid for a period of five years. Further, the dealer will have to display the certificate in their office, which can be applied for online via an online portal.

As for the current owners of vehicles, they will have to notify the registering authority of handing over a vehicle to a dealership for sale via an online portal. Once the process is complete, the dealer will be deemed as the owner of the vehicle, until the vehicle is sold and transferred to the new buyer. It will also be the responsibility of the dealer to keep the documents of the car valid until it is sold. 

Apart from that, the dealer will be prohibited to use the vehicle for purposes other than giving a trial to a prospective buyer, or en route to carry out repairs or document renewals, such as PUC (Pollution Under Control) Certificate. To enforce this, the government has also made it mandatory to maintain an online electronic trip meter register, wherein the dealer will have to mention the odometer reading and fill up a fresh form every time they need to drive the car on public roads. Should these measures not been carried out by a dealer, their authorisation certificate will be terminated by the registering authorities. Further, the dealerships have also been prohibited from parking their inventory of vehicles on public roads.

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