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 jointly published by IndianBlueBook, an auto technology platform and Das WeltAuto, the pre-owned car business of Volkswagen Passenger Cars India, 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. An estimated 4.4 million used cars were sold in India in FY2021-2022, while 80 million used cars were sold across USA, China, UK, Germany and France.
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 growth is also expected to be driven by the emergence of organized online and phygital used car platforms amid a surge in the demand for personal mobility and because of favorable government support,” it said.
“The used car market has accelerated since the pandemic. Customers are displaying a considerable preference towards used cars and the gap between new cars and used car sales is reducing phenomenally. As per the report, the organised used car market share is expected to increase from 20 per cent in FY 2021-2022 to 45 per cent in FY 2026-2027. Das WeltAuto, the used car business of Volkswagen India, is proud to be one of the active contributors to the significant growth within the organized segment,” said Ashish Gupta, Brand Director, Volkswagen Passenger Cars India.
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.
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