Used car market likely to reach $40 billion in FY26

At a time when new car sales are expected to hit the brakes, the used car market is expected to reach approximately $40 billion in FY26, with sales of 5 to 6 million units, Niraj Singh, Founder and CEO at Spinny, tells Business Today in an interaction. 

This growth is buoyed by rising new car prices and the demand for value mobility, which is luring customers to pre-owned cars.

“The used car market is experiencing rapid growth, with the market expected to grow at a healthy 12-13% CAGR over the next 7-8 years. Rising new car prices and the demand for value mobility are driving buyers toward pre-owned cars. Consumers increasingly prioritize affordability and practicality, especially in the entry-level and mid-segments, positioning used cars for sustained momentum,” says Singh. 

Notably, the passenger vehicle industry is expecting to grow by a dismal 1-3% in FY26. In FY25, the passenger vehicle industry grew by 2% at 4.3 million units.

 “The Indian used car market has been growing at 10-12% over the last 2-3 years and is projected to reach ~$40bn in FY26, with 5-6 million units expected to be sold in the upcoming financial year. Growth momentum is likely to continue, with the market expanding at a 12-13% CAGR over the next 7-8 years, driven by rising demand and improving financing options,” says Singh. 

In the past few months, several original equipment manufacturers have hiked prices by up to 4%. “Car prices across brands and segments are witnessing a hike of up to 3%, making used vehicles a more attractive option for buyers across segments. The average ownership period for new car buyers has decreased from 6–8 years a decade ago to 4–5 years now, and an increase in car upgrades (rising from 12% in 2023 to 22% in 2024) is boosting the supply of used cars, providing more affordable and high-quality options in the market,” says Singh. 

According to Singh, in 2024, 22% of buyers upgraded their cars, up from 12% in 2023, reflecting growing trust in platforms like Spinny. Hatchbacks remain the top choice, highlighting the demand for compact, value-driven vehicles.

Amongst segments, affordable hatchbacks remain the top-selling used car, while compact SUVs has seen rising demand in the last year, says Singh. This comes at a time, when the small car segment has witnessed de-growth in the past few months.