IndianBlueBook sees used car sales in India touching 8 million units by FY2027 | The Financial Express

IndianBlueBook sees used car sales in India touching 8 million units by FY2027

The pandemic, digitalisation, rapidly changing demographics and ambitions, first-time buyers and the availability of different financing choices are among the significant growth factors for used car market thus far.

IndianBlueBook sees used car sales in India touching 8 million units by FY2027
The launch of new models within shorter time frames coupled with dealer trade-in bonuses and buyback assurances are also supporting sentiment. (Image Used For Representative Purpose)

The Indian used-car market is projected to grow and expand at double the rate at a CAGR of 19.5% till FY2026-2027 from $23 billion valued in FY2022. By FY2027, India’s used-car market is expected to touch sales of up to 8 million units and the ratio of used to new cars is expected to touch 1.9 by FY2026-2027.This is according to the IndianBlueBook (IBB) report.

The growth is expected to be driven by the emergence of organised online and phygital used car platforms amid a surge in the demand for personal mobility in the aftermath of Covid-19.

As per the report, the leading factors that will contribute to this growth of the used-car market in the next five years include a rising middle-class and young population, rising disposable incomes, technology driven transparency, convenience, simplicity of transactions, availability of certified cars and decrease in the average tenure of ownership for cars and two-wheelers due to larger disposable incomes.

The pandemic, digitalization, rapidly changing demographics and ambitions, first-time buyers and the availability of different financing choices are among the significant growth factors thus far.

The launch of new models within shorter time frames coupled with dealer trade-in bonuses and buyback assurances are also supporting sentiment.

“With the changed business landscape following the pandemic, there is a clear preference for used cars among consumers across the country. Used cars, which were once considered a compromise, are now making their way into the consideration set of consumers when they think about purchasing a car. There is no reason our industry cannot achieve double-digit growth for many years to come,” said Ashutosh Pandey, CEO & MD, Mahindra First Choice.
 

Progressive industry players offering refurbished, certified, high-quality cars with warranties, digital & AI led transformation increase convenience, trust and transparency coupled with Value for Money nature of used cars compared to new ones added to the uptick in demand.
 

According to the report, the used car to new car ratio has increased to 1.4 and the average price of used cars is 4.5 lakh and the average age ranges around 4 years. However, almost 45 percent of the market is managed by unorganised players and the orgamised segment comprises of just 20 percent. Interestingly, 35 percent of the used car market is driven by C2C sales.

The demand for used cars is much higher in non-metros at 65 percent but has about 35 percent of the supply. Meanwhile, the situation is just opposite in metro cities where supply is around 65 percent but demand is just 35 percent.

Ashish Gupta, Brand Director, Volkswagen Passenger Cars India pointed out that “The used car market has accelerated since the pandemic. As per the report, the organized used car market share is expected to increase from 20% in FY2021-2022 to 45% in FY2026-2027.”

An estimated 4.4 million used cars were sold in India in FY2021-2022, while over 80 million used cars were sold across USA, China, UK, Germany and France. The demand in smaller towns is expected to grow at a 30% CAGR by FY2026-2027 as compared to a 10% CAGR in the top 40 cities as per the IndianBlueBook (IBB) report.

The average car age has reduced by 33 percent to four years in FY 2021-2022 from six years in FY 2010-2011. According to the survey, 15 percent of used car buyers are women who are comfortable purchasing in a phygital mode, a sharp increase of up to 75% from FY 2020-2021.

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