Indian used-car market that is today valued at $23 billion in FY2021-2022, is projected to grow at double the rate at a CAGR of 19.5 per cent till FY 2026-2027, a new report said.
Some of the key factors contributing to this massive growth in the next five years are a rising middle class and India’s young population. This is also fuelled by the fact that India has seen a steady growth in disposable incomes over the years. The report adds that factors like technology-driven transparency, convenience, simplicity of transactions, etc. will also lead to this projected growth. The average car age, the report says, has reduced by 33 per cent from six years in FY 2010-2011 to four years in FY 2021-2022.
“India’s used-vehicle industry is currently transitioning from an unorganized setup - where transactions happen via roadside garage mechanics, small brokers and between car owners - to an organized system with more players entering the market,” the report said.
It said that availability of certified cars, decrease in the average tenure of ownership for cars and two-wheelers due to larger disposable incomes and the launch of new models within shorter time frames are also helping the sector grow faster. India, however, is still far behind when global scenario is taken into account.
According to the report, the top five reasons why Indian consumers opt for a used vehicle are a need for mobility for personal and business growth, budget constraints and macroeconomic uncertainty, progressive industry players offering refurbished, certified, high-quality cars with warranties, digital & AI-led transformation increase convenience, trust and transparency and value for money nature of used cars compared to new cars.
The report said that by FY2026-2027, India’s used-car market is expected to touch sales of up to 8 million units and the used car to new car ratio is expected to touch 1.9 by the same period. The pandemic, digitalisation, rapidly changing demographics and ambitions, first-time buyers, and the availability of different financing choices are among the significant growth factors.
