India's $23 bn used-car market to double in 5 years

The Indian used-car market, which was valued at US $23 billion in FY22, is projected to expand at a compounded annual growth rate (CAGR) of 19.5% to double by FY27, according to the Indian Blue Book (IBB) car&bike report 2022 that was unveiled in Mumbai.

According to the report, the leading factors that will contribute to this growth of the used-car market in the next five years are a growing middle class and a young population; growing disposable incomes; technology-driven transparency, convenience and simplicity of transactions; increased availability of certified used cars; decrease in the average tenure of ownership for cars and two-wheelers due to larger disposable incomes and launches of new models within shorter time frames; dealer trade-in bonuses and buyback assurances.

"With the changed business landscape following the pandemic, there is a clear preference for used cars among consumers across the country," said Ashutosh Pandey, CEO & MD, Mahindra First Choice, India's leading pre-owned car trading firm.

"Used cars, which were once considered a compromise, are now making their way into the consideration set of consumers when they think about purchasing a car,” Pandey added. “There is no reason our industry cannot achieve double-digit growth for many years to come.”

India’s used-vehicle industry is transitioning from an unorganised setup — where transactions happen via roadside mechanics, small brokers and between car owners — to an organised system with more players entering the market.

Growth is also expected to be driven by the emergence of organized online and phygital used car platforms amid a surge in demand for personal mobility because of the pandemic and favourable government support.

Number Game:

1:4 – Ratio of Used to New Cars

Rs 4.5 Lakh – Average price of a used car

20% – Organised market play

45% -- Unorganised market play

35% -- C2C market play

4 years— Average age of used cars

Published on: Monday, September 12, 2022, 11:46 PM IST