India Used Car Market - Growth, Trends, COVID-19 Impact, and Forecast (2022 - 2027)

The Used Car Market in India is Segmented by Vehicle Type (Hatchbacks, Sedans, and Sports Utility Vehicles), Vendor Type (Organized and Unorganized), and Fuel Type (Petrol and Diesel). The report offers the market sizes and forecast in value (USD billion) for all the above segments.

Market Snapshot

Used Car Market in India Size
Study Period: 2018-2027
Base Year: 2021
CAGR: 15.1 %
Used Car Market in India Companies

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Market Overview

The Indian used car market was valued at USD 32.14 billion in 2021, and it is expected to reach USD 74.70 billion in 2027, registering a CAGR of 15.1% during the forecast period (2022-2027).

The COVID-19 pandemic had a minimal impact on the industry. With the increased number of people preferring individual mobility and more finance options available in the used car market, the market is set to grow considerably.

Reduced cash inflow due to the pandemic has forced buyers to look for alternatives other than new cars, and the used car industry has high growth potential in these terms. As the sales and production of new vehicles have been hindered due to the pandemic, the used car market is gaining traction among buyers.

However, the used car market evolved in the country with the growth of the organized and semi-organized sales sectors. The pre-owned car market recorded sales of 4.4 million units in FY2020 compared to only 2.8 million units of new passenger vehicles in the same year.

The standardized dealership experience, high price experience, and high financing cost for used cars may hinder the growth of the used car market. With the new BS-VI emission standards implemented by the Government of India, the technological cost of cars to meet the standards will be undertaken by consumers. The companies’ focus on reducing the production of diesel cars is also expected to increase the demand for compact diesel cars in the price and mileage-sensitive Indian market.

Scope of the Report

The Indian used car market report covers the latest trends, COVID-19 impact, and technological developments. The scope of the report covers segmentation by vehicle type, vendor type, and fuel type. By vehicle type, the market is segmented into hatchbacks, sedans, and sports utility vehicles.

By vendor type, the market is segmented into organized and unorganized. By fuel type, the market is segmented into petrol and diesel. For each segment, market sizing and forecast have been done by value (USD billion).

By Vehicle Type
Hatchbacks
Sedans
Sports Utility Vehicles (SUV)
By Vendor Type
Organized
Unorganized
By Fuel Type
Petrol
Diesel

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Key Market Trends

Unorganized Channel is Expected to Hold Prominent Share in the Market

The used car industry in India is at its nascent stage. The unorganized sector dominates the market, where the scope for consumer protection is on the lower side. The unorganized sales channel is classified into semi-organized, unorganized, and customer-2-customer. The semi-organized dealers operate from a physical store, such as a garage or a mechanical shop. On the other hand, unorganized sales take place through brokers or commissions.

Unorganized dealers gain buyers’ confidence by eliminating subjective bias about sellers (including particular vehicle brands and models) while easing the overall transaction. However, unorganized/independent dealers usually have a limited inventory, comprising uncertified cars that sometimes do not have a warranty. While the local independent dealers may have a higher inventory, the ease of RC (registration certificate) transfer and reliability of these vehicles remain a concern.

OLX has been a leader within this segment. In 2019, OLX tied up with the Frontier Group to launch offline stores for used cars (Cash my Car). Currently, the Cash my Car stores are available across 10 cities. By 2021, OLX had planned to expand its footprint to 40 cities and 150 stores. Thus, the players aiming at opening offline stores are expected to boost the market for the unorganized sales of used cars over the forecast period.

Used Car Market in India Growth

Growing Demand for Luxury Used Cars to Play Key Role in the Market

The Indian pre-owned car market is growing due to a steady increase in the demand for luxury cars. The sales of used luxury cars observed a 20% growth.

Until a few years ago, it was not easy to purchase a luxury car due to its high cost. However, this trend is gradually changing as consumers can now buy pre-owned luxury vehicles. The market is becoming more organized with easy access to financing options, annual maintenance contracts, and lower entry prices. Also, the average age of used luxury vehicles coming into the market is between 2 and 3 years compared to 5-6 years for a mid-size or small-scale vehicle, making them a better option in some cases.

As per auto dealers, the demand for pre-owned luxury cars has been rising at ~35-40% on a Y-o-Y basis, as owners of luxury cars usually sell off their vehicles after a year or two and upgrade to better models.

Initially, the market for pre-owned luxury vehicles attracted traction only in metro cities. However, local dealers and online players have expanded the market. Currently, interested customers spanning tier-1 and tier-2 cities can also enquire and purchase these vehicles. According to Big Boy Toyz, more than 33% of buying inquiries for used luxury vehicles come from sectors other than the home city.

Factors such as the growing consumer preference for luxury cars and the country’s youth inclination toward the top brands operating in the market are expected to drive the demand for used cars in India during the forecast period.

Used Car Market in India Value

Competitive Landscape

The market for used cars in India is consolidated, with significant players holding the largest market share due to their business models and increased number of pre-owned car retail outlets. The major players include OLX, Mahindra First Choice Wheels, CARS24, Maruti True Value, and Hyundai H Promise. These players are adopting various growth strategies to stabilize their position in the market. For instance,

  • In January 2020, Mahindra First Choice Wheels Limited invested in CarandBike.com, a popular automotive portal in India.
  • In October 2019, Cars24 closed an equity financing of around USD 100 million from new and existing investors in series D funding.
  • In February 2019, Maruti Suzuki India re-introduced its True Value brand with a new identity and benefits.

While OLX has a monopoly over this market, Mahindra, Maruti, and Hyundai are the major players in the organized sector. CARS24 is a major company in the semi-organized sector, with a unique C2B business model, ‘Supply First’. Car owners can sell their cars in less than two hours by driving down to the nearest branch. The company instantly transfers the amount to the owner’s bank account and takes responsibility for all the paperwork, including the RC transfer.

Recent Developments

  • In August 2021, Mahindra First Choice Wheels (MFCW) and CamCom, an AI-powered visual inspection solutions company, partnered to offer the ability to inspect cars using AI. With this partnership, Mahindra can inspect and make damage assessments for vehicles.
  • In August 2021, Mercedes-Benz India announced the introduction of a ‘direct customer to customer’ selling platform called ‘Marketplace’ to provide buyers and sellers of luxury, pre-owned cars with multiple benefits.
  • In August 2021, Audi India announced its plan to expand Audi Approved Plus showrooms from 7 to 14 by the end of 2021, which will back up pre-owned sales, along with the 40 plus workshops countrywide.
  • In July 2021, Ola expanded Mobility Play with the used car marketplace ‘OlaCars’. OlaCars will directly compete with the existing second-hand retailing platforms, such as CarDekho, CredR, OLX, Droom, and Spiny, which are currently the most funded companies in the market space.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Drivers

    2. 4.2 Market Restraints

    3. 4.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.3.1 Threat of New Entrants

      2. 4.3.2 Bargaining Power of Buyers/Consumers

      3. 4.3.3 Bargaining Power of Suppliers

      4. 4.3.4 Threat of Substitute Products

      5. 4.3.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION

    1. 5.1 By Vehicle Type

      1. 5.1.1 Hatchbacks

      2. 5.1.2 Sedans

      3. 5.1.3 Sports Utility Vehicles (SUV)

    2. 5.2 By Vendor Type

      1. 5.2.1 Organized

      2. 5.2.2 Unorganized

    3. 5.3 By Fuel Type

      1. 5.3.1 Petrol

      2. 5.3.2 Diesel

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Vendor Market Share

    2. 6.2 Company Profiles

      1. 6.2.1 CARS24

      2. 6.2.2 Maruti True Value

      3. 6.2.3 Mahindra First Choice Wheels

      4. 6.2.4 Hyundai H Promise

      5. 6.2.5 Honda Auto Terrace

      6. 6.2.6 Ford Assured

      7. 6.2.7 Toyota U Trust

      8. 6.2.8 Big Boy Toyz

      9. 6.2.9 BMW Premium Selection

      10. 6.2.10 Audi Approved Plus

      11. 6.2.11 Mercedes-Benz Certified

      12. 6.2.12 Car Trade

      13. 6.2.13 OLX

  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

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Frequently Asked Questions

The India Used Car Market market is studied from 2018 - 2027.

The India Used Car Market is growing at a CAGR of 15.1% over the next 5 years.

The India Used Car Market is valued at 32 Billion USD in 2018.

The India Used Car Market is valued at 74 Billion USD in 2027.

Cars24, Maruti True Value, Mahindra First Choice Wheels, OLX, Hyundai H Promise are the major companies operating in India Used Car Market.

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