Why Used Cars Startups Cars24, OLX Auto Are Unhappy With New Registration Portal

Several used cars dealers, including prominent startups like Cars24, Spinny and OLX Auto, have reportedly written to the Ministry of Road Transport and Highways (MoRTH) recently highlighting issues with the newly-launched registration portal for them.

Besides, the players also submitted other issues with some of the guidelines for the used car market which were implemented last year, Moneycontrol reported.

The new portal, launched in the second week of April, is intended for used car dealers to register their vehicles to obtain authorisation certificates.

However, a major issue is that the portal only allows individuals to register, with GST registration details being mandatory. 

A majority of these dealers fall under the category of companies and organisations, but there is no option for them to register, as per the report.

The publication, citing a senior executive, said that the portal has a form which is designed for registration for individuals. Form 16, which needs to be filled out for the grant of a trade certificate, includes fields such as names of relatives. As such, used car platforms can’t register as companies.

The executive added that more than 80% of used cars dealers would not fall under the GST threshold. 

Overall, the industry believes that regulating the used cars market is a good move for the ecosystem. However, they are concerned about some of the guidelines and have sought more clarity.

Lack Of Clarity Hurting The Used Cars Market

The guidelines were implemented in December 2022 following deliberations on the draft guidelines released in September last year. 

These guidelines were the subject of controversy last month as the Kerala State Used Vehicle Dealers & Brokers Association filed a writ petition in the Kerala High Court on April 4, highlighting several concerns around the guidelines.

There are problems around deemed ownership from one dealer to another as well, which have been repeatedly brought up by incumbents in the field. The current rules don’t provide clarity for multiple deemed owner transfers either.

The Indian used cars market works in a way that used cars go through multiple dealers before finally reaching the end customer. The lack of clarity in these rules is said to be the primary concern for used car dealers, startups or otherwise.

Used car dealers also have to individually apply for Regional Transport Office (RTO) registrations for each region. They believe this would hamper the ease of doing business and have called for a centralised registration system.

Industry body IndiaTech.Org, along with many other online platforms, have reportedly held two to three rounds of meetings with concerned government bodies to sort out the issues with the guidelines.

The used car segment has the presence of unicorns like Cars24, CarDekho and Spinny and listed startup CarTrade in India. These companies raised $2.34 Bn between 2014 and April 2023, per Inc42 data.

Though the industry has seen companies move towards leaner operations as the funding winter intensifies. Recently, Cars24 wound up operations in Indonesia and Saudi Arabia to focus on core markets such as India and Australia. The unicorn also had laid off 600 employees last year.

While almost all the used cars platforms are in the red, listed startup CarTrade posted a profit of INR 40 Cr for the financial year ended March 31, 2023.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.