Used car business can get a fillip via online transfer of registration

Demand for used cars has picked up recently, with more people preferring personal mobility amid the semiconductor crisis crippling new car supply. Today, used car sales are said to be 1.4 times the number of new car purchases, and the ratio is projected to grow to 1.8 by FY2026.

However, there are a number of pain points in the process of selling a used car that need to be solved first. “RC [registration certificate] transfer is a complex process,” commented Amit Kumar, CEO, OLX Autos India, talking about the interstate sale of used cars. “De-bottlenecking the market from that and turning the whole country into a single market will take out a lot of inefficiencies.” 

Easing process for interstate transfer of registration
Kumar was speaking at an Autocar India panel discussion with OLX Autos. Elaborating on the process of selling vehicles across states, he said, “For instance, if a person in Kerala wants to sell a car to someone in Guwahati, it’s a painful process where you have to get an NOC [no objection certificate] from the local Kerala RTO [regional transport office], and then register the vehicle in Guwahati. There are multiple RTOs which may not be talking to each other.”

To get around such issues, Kumar mentioned that traditional used car dealers often buy and sell cars only within a 200km periphery. “If we de-bottleneck that, I think we would be faster in making our businesses big and our dealers’ businesses bigger,” he added. And this is where online transfer of registration could be immensely useful.

Vinkesh Gulati, president, FADA (Federation of Automobile Dealers Associations), picked up on the point further. “FADA is pushing MoRTH [Ministry of Road Transport and Highways] to shift towards online transfer and if we can do that, it will be a catalyst to the growth of this industry,” he said.

This will also help move out old cars from polluted and congested cities. For instance, 15-year-old petrol vehicles and 10-year-old diesel vehicles aren’t allowed to ply on Delhi’s roads. After that time period, Delhiites have to either scrap their vehicles or sell them off in other states. The latter could be facilitated by an online transfer of registration.

How OLX manages interstate transfer
“We are responsible to our customers for their RC transfers and we take this very seriously,” said Kumar. Further detailing OLX’s procedure, he continued, “We’ve put in field teams in almost all the states where we have large throughputs. These teams interact with the RTOs and get things done because the process of transferring an RC is a physical process at the very last leg or last mile.”

A seller needs to physically fill out the transport department’s forms 29 and 30 for transferring ownership to the buyer. “So we get that done physically. Other than that, our complete process is digitised. That’s how we manage it,” explained OLX’s chief.   

BH registration a hit and miss, for now
Earlier this year, the transport ministry introduced a new Bharat series (BH-series) registration mark for vehicles that is valid pan India, essentially doing away with the need for transferring while moving to or selling your vehicle in a different state. However, not many have been able to reap the benefits.

“It won’t help a lot in used car sales because BH registration is allowed only to those customers who have [private] offices in four or five states [or are defence personnel, central/state government employees],” commented FADA’s Vinkesh Gulati. 

Moreover, unlike any other state registration, which is valid for 15 years, a BH registration has to be renewed every two years, which Gulati feels will fetch a smaller price for the respective vehicle in the used car market.

He continued, “There are only five states which have begun [issuing] BH and it hasn’t happened in big numbers. A few military people and employees of big companies, which have an all-India presence, have got this registration done. When you think about regular customers or corporates, BH is of no use to them.”

“So, let’s hope that MoRTH agrees to the online transfer of used cars. That would be a better push for the used car market.” 

Rise of online marketplaces
So what has the used car market been like? Who are the major players? Hemal N Thakkar, director of research firm CRISIL, who was also a part of the panel discussion, shed some light. “During the ‘90s, the used car market was largely unorganised, with roadside garages and workshops largely handling the trade. Then, in the 2000s, [Maruti Suzuki] True Value was set up and you had an OEM-backed organised set-up coming in. Then everyone got into this space, right from Hyundai H Promise to Toyota U Trust, Honda Pre-Owned and many others. Today, there are about 14-15 players who are already there in this space,” he said.

The landscape has further undergone a change in recent years, with internet-based platforms like OLX Autos coming in. “The online marketplace players have realised that the trust factor works phenomenally well in a market like India, and so they have come up with various ways to build on this. They’ve started giving used car buyers a six month to one year warranty, they do a certain number of tests on each vehicle, and all this builds the customers’ confidence,” he said.

Commenting on the role of online marketplaces, he added, “The pace at which the used car market will grow is humongous, and yes, online players are going to be a key parameter to definitely push this.”