RTOs badly hit by demonetisation

Note ban hits sales and registration of new cars; states work online payments model to deal with cash crunch. Ajay Modi and T E Narasimhan report.

Regional transport offices, where transactions always used to happen in cash, are feeling the brunt of demonetisation. 

In Delhi, one of the largest car markets in India, registration of new vehicles has been severely impacted since demonetisation was announced on November 8. On certain days, the volume of new registrations declines by as much as 50 per cent of the normal volume owing to shortage in currency notes.

Even though the RTOs are accepting Rs 500 notes and other denominations of Rs 100 and Rs 2,000, the buyers do not have these currencies owing to strict withdrawal limits at banks, which are also facing a cash shortage. 

Now, the Delhi government is working to introduce electronic payment facility for payments related to road tax and registration, said informed industry executives. 

In Mumbai too, the authorities are learnt to be in the process of bringing an online payment system for registration. 

Certain states like Uttarakhand, Andhra Pradesh and Telangana have introduced electronic payment system in the past one year. 

However, most states still have a cash payment system. The on-road price that car dealers charge from buyers include insurance, road tax and registration charges. While the buyer can pay the dealer electronically, the dealer uses cash to make payments at the RTO to get the vehicle registration number for the buyer. 

 “This process will turn transparent and seamless once electronic payment is introduced. Imagine our executives carrying Rs 8 lakh in cash to the RTO for a luxury car priced at Rs 50 lakh,” said a dealer for Mercedes Benz in the national capital region. 

Car makers, along with the banks, have introduced 100 per cent on-road and ex-showroom financing for buyers on a case-to-case basis to address the cash problems related to margin money and registration. This, however, does not help since most RTOs work on cash. 

The cumulative impact of this slowdown in new car purchases and problems in registration could be seen on the dispatches companies make to dealers. The industry will announce the November dispatch data on Thursday. Unlike last November, when dispatches of passenger vehicles went up by 11.4 per cent, this November volume could disappoint. 

Although companies maintain that their production continues at a normal pace, the situation might be contrary for some players. Some of the companies claim to be undergoing maintenance.

“We have announced that the third shift will not be operational from November 28-30 for a maintenance initiative, which is important for our future product launches. After this maintenance, the shift will be resumed,” said a communication from Nissan. The plant in Chennai produces vehicles for both Nissan and its alliance partner Renault. Hyundai and Ford also maintained that there is no change in production schedule in the wake of demonetisation.