FADA concerned about illegal 2W sales by multi-brand showrooms

    The malpractice is resulting in revenue loss on various fronts.

    Published On May 10, 2023 07:00:00 AM

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    FADA concerned about illegal 2W sales by multi-brand showrooms
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    The Federation of Automobile Dealers Associations (FADA), in collaboration with the Delhi and Mumbai State Transport Department, has expressed concern over the illegal practice of unauthorised multi-brand outlets (MBOs) selling two-wheelers.

    1. MBOs sell vehicles without aftersales commitment
    2. FADA has urged Delhi, Mumbai transport departments to take action

    FADA has reported that these MBOs are acquiring unregistered vehicles in bulk from dealers and reselling them to customers at discounted rates, which is, in fact, higher than the prices set by manufacturers (OEMs) through authorised dealers. They also do not provide aftersales services. This has not only impacted legitimate dealerships, but has also shaken customers' confidence in the brand and dealer partners. Furthermore, as per FADA, “these MBOs indulge in evasion of GST, income tax, issue fake/undervalued insurance policies, and deliver vehicles without registration/HSRP and helmets, which results in revenue loss on various fronts.”

    FADA states that it has reached out to Eknath Shinde, Chief Minister, Government of Maharashtra, Vinod Aggarwal, President of SIAM, and the Transport Commissioners of Mumbai and Delhi, urging them to take stringent action against these MBOs and ensure that they comply with industry standards and regulations.

    The Chief Minister of Maharashtra and Transport Commissioners of Mumbai and Delhi say that they have initiated action against this illegal practice. The Delhi authorities had already issued a notice on Trade Certificate cancellation to such business units.

    Ashish Kundra, Principal Secretary cum Transport Commissioner, Transport Department of NCT Delhi, said: “A legal notice has been issued to all the involved parties and their respective trade certificates have been put under the scanner.”

    Vivek L Bhimanser, Transport Commissioner, Maharashtra commented: "All parties concerned have been given legal notices. We have cancelled the trade plate of dealers supplying vehicles to unauthorised Multi-Brand Outlets (MBOs) and have impounded vehicles stationed at such unlawful outlets. We have impounded over 6,000 vehicles and trade certificates of over 50 dealers have been suspended for a week."

    FADA has urged all two-wheeler dealerships to remain vigilant and report any instances of unauthorised purchases or sales to the appropriate authorities. FADA has also written to apex industry body SIAM to raise the issue with concerned OEMs to amend their sales process, ensuring no supply of new/unregistered vehicles to unauthorised outlets.

    Also see:

    Ola, Ather, TVS to refund nearly Rs 300 crore to customers

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