According to the IndianBlueBook, the used car industry report FY23 by Das Welt Auto and car&bike, the used car industry in India which currently stands at about $32.44 billion, is expected to touch nearly $73 billion by FY28.
23 May 2024 | 3330 Views | By Prerna Lidhoo
In India, buying a pre-owned vehicle is no longer considered a 'compromise'. While traditionally an unorganised market, the used car market is gaining traction today, thanks to both offline players like Maruti True Value, Mahindra First Choice, Volkswagen's Das Welt Auto, etc. and digital-first platforms such as Cars24, Cardekho, Carwale, ...
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In India, buying a pre-owned vehicle is no longer considered a 'compromise'. While traditionally an unorganised market, the used car market is gaining traction today, thanks to both offline players like Maruti True Value, Mahindra First Choice, Volkswagen's Das Welt Auto, etc. and digital-first platforms such as Cars24, Cardekho, Carwale, Spinny, and Car&bike, among others.
According to the IndianBlueBook, the used car industry report FY23 by Das Welt Auto and car&bike, the used car industry in India which is currently at about $32.44 billion, is expected to touch nearly $73 billion by FY28.
Ashutosh Pandey, MD and CEO, Mahindra First Choice Wheels says that the used car industry is gaining traction and has grown from 5-7% in 2010 to 25-27% at present. "It is a testament not only to how the auto market has grown but also how consumer maturity has come to be. This is one of the most difficult markets to crack. But now, whenever a customer goes and identifies a car to be bought, he considers both used and new cars."
"First of all, we have to thank the OEMs because the customer is confident of the value and performance of that vehicle. It's a mainstream product and not just a compromise anymore," he said.
Pandey further noted that supply in the used car market, which is at a lag of 2-3 years is at its lowest this year. "This is because new car sales during the pandemic were low. FY26 should be good because a lot more new cars will start coming in. This market is one of the most price-sensitive ones. But now we will see it doubling in the next few years."
"In 2018, we sold 3000 pre-owned vehicles, last year the number was 30,000. In 2023, we saw a 12% growth in the used car retail sales. In fact, Taigun now figures in the best residual value of 81% after 2-3 years of usage, which is huge from a few years ago," Ashish Gupta, Brand Director, Volkswagen Passenger Cars India said.
This year, the market had 5.2 million cars, which is expected to reach almost 8 million by 2026, according to IndianBlueBook report.
"We are starting a new brand for Volkswagen-certified pre-owned cars. It marks our transition from DasWeltAuto, as we do not differentiate between our new car owners and used car owners, " Gupta said.
The report noted that the organised market in FY28 is expected to be 45%, whereas the unorganised segment is expected to be 55%. By FY23, 71% of the market was unorganised and 29% was organised. It further stated that key factors boosting demand for used cars in India include more expensive new cars, easy financing, reduced ownership period and the vehicle scrappage policy.
"Financing is a key enabler for the used car industry. Around 70-75% of new car sales are happening through the financing route which has increased in the last few years. It's a huge factor in the growth of the new car industry. That percentage is 25% for used cars today. That tells you the potential that the used car industry can reach through the financing route," Mohammed Turra, CEO - Designate, Mahindra First Choice said.
He added that there's huge headroom for growth. "It can easily grow to 35-40% in the next few years. Even car leasing companies like Quiklyz, Orix, Avis lease, etc., allow a customer to drive a new and old car at costs significantly lower than its loan since you only pay for the part you use,"Turra said.