Sales of used cars rising faster than new cars

As per a JM Financial report, by FY26, for each new car sold, two pre-owned cars will find buyers in the country. Though seemingly impressive, the sales ratio for India’s pre-owned car segment is a lowly 1.18.

Updated: Oct 30, 2021 8:05 AM
Niraj Singh Spinny

 

Since the second quarter of 2020, the increasing focus on health and hygiene issues coupled with a greater emphasis on value for money has led to a higher demand for pre-owned cars. On one hand, pandemic constraints triggered a preference towards personal mobility as public transport is increasingly being viewed with a degree of suspicion, and on the other hand limited liquidity of customers has meant that most gravitated towards the used-car market as it didn’t make a high dent in their pockets.

Earlier, the used-car market was primarily unorganised and fragmented. Today, many professional players and digital natives have entered the segment. The used-car market is giving a fillip to automobile sales, which were relatively muted during the past few years due to regulatory reforms and the pandemic. In 2019, India’s used-car market was pegged at $24.24 billion. Between 2020 and 2025, this was slated to grow at a CAGR of 15.12%. Though seemingly impressive, market analysts note that the sales ratio for India’s pre-owned car segment is a lowly 1.18 versus 2.4 for the US, 3.43 for England and 4.07 for Brazil. Nonetheless, this means the scope for growth is immense.

Another survey notes that the used-car segment staged a recovery of 99% last year after the lockdown, while sales of new cars remained comparatively lean. An interesting trend is that non-metro cities are fuelling the demand for pre-owned cars.

A JM Financial report reveals that by FY26, for each new car sold, two pre-owned cars will find buyers in the country.

Also, a report from RedSeer Management Consulting states that the country’s used-car market is poised to witness major technology-driven growth in the years ahead. The advent of start-ups deploying tech-led services ranging from doorstep pickup and delivery to post-service warranties will attract more customers. The addition of value-added services is ensuring higher margins and more footfalls for organised entities. The entire journey of ownership from search, purchase, finance and vehicle insurance has been digitalised, resulting in a seamless experience for customers.

More than anything else, such factors will provide organised players with a golden opportunity to boost their market share while offering used-car buyers a more enjoyable experience.

Author: Niraj Singh, Founder & CEO, Spinny

Disclaimer: The views and opinions expressed in this article are solely those of the original author. These views and opinions do not represent those of The Indian Express Group or its employees.

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