'Demo Cars' Kept By Dealers Need To Be Registered : Kerala HC [Read Judgment]

The High Court of Kerala has held that 'demo cars', which are kept by dealers to demonstrate a vehicle model to a prospective buyer, require registration under the Motor Vehicles Act.

The ruling was given by Justice Anil Narendran dismissing a petition filed by Kerala Automobile Dealers Association and Rajasree Motors(dealer of Mercedes Benz) against a directive issued by the Transport Commissioner to the Road Transport Officers to take steps to ensure that demo cars kept by the dealers were registered.

The Commissioner's order stated that dealers were selling demo cars to purchasers after using them for several years, causing loss of revnue to the state

The petitioners contended that the demo cars kept by them for 'test drive purposes' were exempted from registration under Section 39 of the Act as they have 'trade certificates' as per Rules 33 and 35 of Central Motor Vehicle Rules, 1989.

The Court however held that the benefit of 'trade certificate' was available only to vehicles which are in possession of dealer for the purposes of sale to customers and not to vehicles kept for test drive.

"A 'demo vehicle' purchased by an automobile dealer at a special cash discount or otherwise is not a vehicle intended for sale to the customer. It is a vehicle intended to be used by that dealer as 'demo vehicle' for a period of two years or three years, which cannot be treated as a vehicle bonafide in possession of that dealer in the course of his business, which can be can be driven in any public place or any other place under the authorisation of trade certificate granted under the CMV Rules. A vehicle intended for sale will be in the possession of an automobile dealer till it is sold to a cusumer. Such vehicles alone are covered by the proviso to Section 39 of the MV Act, read with Rules 35, 39, 40 and 41 ofthe CMV Rules.", observed Justice Narendran.

"A 'demo vehicle' purchased by an automobile dealer at a special cash discount or otherwise, which is not intended for sale to the customer, cannot be included in the stock list, in order to make it appear that it is a vehicle bonafide in possession of that dealer, in the course of his business, which can be driven in any public place or any other place under the authorisation of a trade certificate granted under the CMV Rules.", the Court added while dismissing the writ petition.

Click here to download judgment

Read Judgment