THE PRE-OWNED PASSENGER car market could be twice the size of the new PV market by FY26, according to analysts and multiple reports covering the sector. For perspective: In FY15, the pre-owned PV market was at about 22 lakh units, whereas the new PV market was about 26 lakh units. According to the OLX-Crisil Auto Study 2021, the pre-owned market is expected to touch 70 lakh units by FY26.“The preowned market has been outpacing the new car market, and is expected to clock a healthy growth rate of 15% in FY22 … prospects continue to be bright on the longer horizon, with a 12- 14% CAGR expected over the next few years, taking the size of the market to more than 70 lakh units by FY26, up from 38 lakh in FY21,” the report noted.
“In contrast, the new car market is expected to grow at a tepid 10% CAGR (which was about 27 lakh units in FY21),” the report added. “The pandemic, digitalisation, changing demographics and aspirations, first-time buyers, and easy availability of financing options are driving sustained growth in the pre-owned segment,” an auto analyst told FE. The June 2021 ‘Indian Pre-owned Car Market’ study by Frost & Sullivan, commissioned by Volkswagen India, noted that the used car market size would touch 82 lakh units per year by FY25.
A study by Indian Blue Book — the pre-owned vehicle valuation website —has noted that, by FY25, the used car market will be 90% larger than the new car market, with used car sales forecast at 71 lakh units.
The OLX report added that digital pre-owned car platforms are gaining traction due to their wider reach, accessibility, and ability to provide a variety of options, as compared to the traditional offline pre-owned market. “The share of organised players, including digital platforms, to total industry sales is expected to grow to 30% by FY26, up from around 20% in FY21. Also, the share of vehicle sales through the digital classifieds segment is expected to increase from 15% in FY21 to 25% by FY26,” Amit Kumar, CEO, OLX Autos India, told FE. “Apart from the digital push, the market has received a boost from first-time buyers who now account for nearly half of all pre- owned cars sold in India.
According to the report, the share of first-time buyers expanded by 8-10% during FY21 in the backdrop of the pandemic, due to restricted availability of public transport and increased need for personal mobility. Increasing urbanisation and nuclearisation of households are expected to provide further impetus to the need for personal mobility.
The Indian used car market is highly fragmented. The various selling options are customer-to-customer, unorganised/independent used-car dealers, semi-organized used-car players, and organised (True Value, Mahindra First Choice, H Promise, etc, and online plus offline players such as OLX, Cars24 and Spinny). The Covid- 19 pandemic, according to Kumar, has provided a major push to the used-car market. “Prior to the pandemic, with the emergence of ride-sharing platforms such as Ola and Uber, many customers had deferred purchasing a personal vehicle, especially in bigger cities. But the pandemic brought the interest back on the need for owning a personal vehicle, and this trend is unlikely to abate in the near term,” Kumar said.
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