The Indian used car market is expected to grow and expand at double the rate at a CAGR of 19.5% through FY 2026-2027, from $23 billion valued in FY 2022. D By FY 2027, India’s used car market is expected to hit sales of up to 8 million units and the ratio of used cars to new cars is expected to reach 1.9 by FY2027. fiscal year 2026-2027, according to the IndianBlueBook (IBB) report.
Growth is expected to be driven by the emergence of organized online and phygital used car platforms amid increased demand for personal mobility in the wake of Covid-19.
According to the report, the major factors that will contribute to this used car market growth over the next five years include growing middle class and youthful population, rising disposable incomes, transparency driven technology, convenience, ease of transactions, availability of certified cars and decrease in the average length of ownership of cars and two-wheelers due to higher disposable incomes.
Pandemic, digitalization, rapidly changing demographics and ambitions, first-time buyers and the availability of different financing choices are some of the significant growth drivers so far.
The launch of new models in a shorter timeframe, coupled with dealer take-back bonuses and buy-back insurance, is also boosting sentiment.
“With the changing retail landscape as a result of the pandemic, there is a clear preference for used cars among consumers across the country. Used cars, which were once seen as a compromise, are now making their way into the mainstream of consumers’ considerations when considering a car purchase. There is no reason why our industry cannot achieve double-digit growth for many years to come,” said Ashutosh Pandey, CEO and Managing Director of Mahindra First Choice.
Progressive industry players offering refurbished, certified and high-quality cars with warranties, digital and AI-led transformation increases convenience, trust and transparency, coupled with the nature of optimization resources of used cars versus new, added to the rise in demand.
According to the report, the ratio of used cars to new cars has increased to 1.4 and the average price of used cars is 4.5 lakh and the average age is around 4 years. However, almost 45% of the market is managed by unorganized players and the organized segment represents only 20%. Interestingly, 35% of the used car market is driven by C2C sales.
Demand for used cars is much higher in non-metro at 65% but accounts for around 35% of supply. Meanwhile, the situation is quite opposite in metropolitan cities where supply is around 65% but demand is only 35%.
Ashish Gupta, Brand Manager, Volkswagen Passenger Cars India, pointed out that “the used car market has accelerated since the pandemic. According to the report, the organized market share of used cars is expected to grow from 20% in fiscal year 2021-2022 to 45% in fiscal year 2026-2027. »
An estimated 4.4 million used cars were sold in India in the financial year 2021-2022, while more than 80 million used cars were sold in the United States, China, the UK, Germany and France. Demand in smaller cities is expected to grow at a CAGR of 30% by FY 2026-2027, compared to a CAGR of 10% in the top 40 cities according to the IndianBlueBook (IBB) report.
The average age of cars decreased by 33% to four years in fiscal year 2021-2022, compared to six years in fiscal year 2010-2011. According to the survey, 15% of used car buyers are women who are comfortable buying in phygital mode, a steep increase of up to 75% from fiscal year 2020-2021.