Pre-owned luxury car market growing at 15% CAGR despite increase in prices

India’s pre-owned car market is growing at 15 per cent while the new car market is growing at 10 per cent, in terms of CAGR, with used car volumes poised to become 1.5x more than the new car market by FY26, a recent study by OLX Autos and CRISIL shows. Even within the overall used car market, the luxury cars have seen a sharp rise in both demand and supply in the first half of 2022.

OLX Autos said that BMW remains the most popular pre-owned luxury car brand in terms of demand across Tier 1 and 2 cities, followed by Mercedes Benz, Audi, Jaguar and Porsche.

“With discretionary spending back to pre-covid levels and an increase in disposable incomes, we are seeing a noticeable change in the aspirations of consumers to upgrade to luxury car brands. Pre-owned luxury car market has particularly benefited from this sentiment as well as from the long waiting period, and increase in prices of new vehicles,” Amit Kumar, CEO, OLX Group India said.

The study said that cross Tier I and Tier 2 cities, demand growth was led by ultra-luxury brands on a year-on-year basis. “In Tier I cities, absolute growth in demand continues to outstrip growth in supply by 3.8X vs 2.6X in Tier 2 cities, (H1-2022 in comparison to H1-2021). Pre-owned luxury cars are cheaper to buy in Tier 2 cities vs Tier 1 cities,” the study said.

Even the supply Growth for Luxury Cars in Tier 2 cities exceeded that of Tier I cities. The supply of luxury cars across Tier 1 cities recorded a growth of 40 per cent on OLX Autos, while Tier 2 registered a growth of 45% in H1 2022, compared to the same period of the previous year (H1 2021).

“The demand on our platform suggests that owning a luxury car at a heavily discounted cost is a lucrative alternative - given the fact that demand continues to outstrip supply and interestingly Tier 2 cities are leading the way. We are expecting to continue to see strong growth ahead of the festive season” said Kumar.