Govt Introduces New Regulations for Used Car and Bike Market: All You Need to Know

In the absence of strict regulatory mechanism and framework for the pre-owned car market in India, buyers have been facing multiple issues during the purchase of used cars. Considering the challenges within this ecosystem, the Ministry of Road Transport and Highways (MoRTH) has released a notification stating the finalised guidelines to regulate the second-hand car and bike market in the country. This development comes three months after the ministry issued a draft notification for public comments.

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In a statement about the notification published in the Gazette of India, the MoRTH stated that people were facing issues such as “the transfer of a vehicle to the subsequent transferee such as disputes regarding third-party damage liabilities, difficulty in determination of defaulter, etc.,” in the current ecosystem.

In response, the ministry has amended Chapter III of Central Motor Vehicle Rules, 1989. The amendment aims to build “a comprehensive regulatory ecosystem” for the sell and purchase of used cars.

The new rules make it mandatory for all dealers of registered vehicles to get an authorisation certificate to identify a dealer’s authenticity. The certificate will be valid for five years. The procedure for intimation of vehicle delivery between the registered owner and the dealer has been spelt out in detail, and the powers and responsibilities of a registered vehicle’s dealer have been clarified.

The amendment has also made provisions for dealers to apply for renewal of the registration certificate/renewal of the certificate of fitness, transfer of ownership, duplicate registration certificate, and NOC, thus allowing them to act as the de facto owners of the vehicle. At the same time, authorised dealers of registered vehicles have been mandated to maintain an electronic trip register containing details of the trip undertaken in terms of trip purpose, driver, time, and mileage.

The new rules also require intermediaries to inform authorities about each registered vehicle that will be taken up for resale. A part of the onus of disclosure and compliance will also be on the vehicle’s original owner. The new rules will come into effect from April 2023.

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