FADA Shows Concerns About Illegal Two-Wheeler Sales

The Illegal Sales by Multi-Brand Showrooms resulted in revenue losses.

The Federation of Automobile Dealers Associations (FADA) in collaboration with the Delhi and Mumbai State Transport Department. FADA has expressed concern over the illegal practice of unauthorized multi-brand outlets (MBOs) selling two-wheelers.

MBOs are multi-brand showrooms that sell vehicles of different brands under one roof. The manufacturers do not authorise these showrooms to sell their products, but they still manage to operate by selling vehicles that are either stolen, fake or refurbished. FADA has raised concerns about the safety and reliability of the vehicles sold by these unauthorized MBOs. Such outlets often sell vehicles at lower prices than authorised dealers, which is a major draw for customers. However, these vehicles may not have undergone proper safety checks and may not be covered under warranty.

Action Taken on Multi-Brand Outlets

On Tuesday, the Federation of Automobile Dealers Associations (FADA) urged strict action against unauthorized multi-brand outlets. They were selling two-wheelers illegally, due to which legitimate dealerships were losing business. Automobile dealers' body FADA has approached various authorities, including the Maharashtra government, the transport commissioners of Mumbai and Delhi, and the Society of Indian Automobile Manufacturers (SIAM), to act against these outlets.

These outlets acquire unregistered vehicles in bulk and then resell them to customers at discounted rates. But at higher prices than those offered by Original Equipment Manufacturers (OEMs) through authorized dealers. They also do not give any commitment for after-sales service, FADA said in a statement. It added that this practice affects authorised dealerships and shakes customers' confidence in the brand and dealer partners.

Income Tax Evasion

Also, these outlets are involved in GST, Income Tax evasion, issuance of fake insurance policies, and delivery of vehicles without registration, high-security number plates and helmets. Thus indulging in illegal practices and causing loss to the earnings of the company dealership.

FADA has requested SIAM to resolve the issue with the concerned OEMs to amend their sales process while ensuring that no unregistered vehicles are sold to unauthorized outlets.

Effect on Dealership

This ongoing practice led to the closure of many legitimate two-wheeler dealerships as their business was unviable. "We have taken up the issue of unauthorized MBOs in the two-wheeler industry, who are not certified as bonafide dealers and sell unregistered vehicles without any trade certificate or after-sales service," FADA President Manish Raj Singhania told the media.”

He further said that — “the dealership business contributes to the country's economic development, creates employment opportunities, and thus is very important for the economy. "Such illegal practices cause huge losses to the government and society and harm the motivation of the dealers," he added.

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