Centre Notifies Rules To Regulate Used-Car Market, Aims To Promote Transparency


The Centre has notified new rules to promote ease of doing business and transparency in the sale and purchase of registered vehicles through dealers.

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.

According to some studies, in FY21, around 3.5 million used cars were sold in India, which is expected to hit 7 million by 2026.

In the current ecosystem, many issues were being faced during transfer of vehicle to subsequent transferee including disputes in regard to third party damage liabilities, difficulty in determination of defaulter among others.

The Ministry of Road Transport and Highways (MoRTH) has now amended the Central Motor Vehicle Rules, 1989 to build a comprehensive regulatory ecosystem for the pre-owned car market.

What are New Guidelines

  • An authorization certificate for the dealers of registered vehicles has been introduced to identify his authenticity. The certificate to be issued electronically shall be valid for a period of five years.
  • The rules outline the procedure for intimation of delivery of motor vehicle by its registered owner to an authorised dealer.
  • Once the motor vehicle is in possession of the dealer, he shall be deemed owner of such vehicle and shall be solely responsible for validity of all relevant documents of the vehicle and all incidents related to such vehicle.
  • The Dealers have been empowered to apply for renewal of registration certificate or renewal of certificate of fitness, duplicate registration certificate, No Objection Certificate, insurance, transfer of ownership of motor vehicle, in relation to vehicles in his possession.
  • The dealer shall maintain the record of inventory electronically, on VAHAN portal. He is not permitted to park or store his inventory of vehicles for sale on any public road.
  • An authorised dealer shall not use any vehicle which is in his possession in a public place for any purpose other than those mentioned in the rules.
  • The rules now require an authorised dealer to maintain an electronic vehicle trip register. The register would contain details such as registration number of the vehicle, trip purpose, driver’s name and license number, time and date of leaving and returning back to the premises.

“These rules are expected to aid in recognizing and empowering intermediaries/dealers of registered vehicles as well as provide adequate safeguards against fraudulent activities to the selling or purchasing of such vehicles,” a statement from Union Road Ministry said.