Is the Used-Car Volume Set to Grow Faster than New Cars?

Mumbai, July 11 (NationPress) The used-car market in India is experiencing rapid growth, with projections indicating that it will surpass 6 million units this fiscal year. This surge is fueled by increasing demand from value-oriented buyers, enhanced digital integration, and improved financing options, according to a report released on Friday.

The volume of used car sales is increasing at a remarkable rate of 8–10 percent, more than double the growth rate of new car sales, as noted by data from Crisil Ratings.

This growth has resulted in a used-to-new car sales ratio of 1.4 this year, a significant rise from below 1 five years ago, reflecting a substantial change in consumer preferences.

Currently, the market valuation of used cars is approximately Rs 4 lakh crore, nearly equivalent to new car sales in the country, the report highlighted.

Anuj Sethi, Senior Director at Crisil Ratings, emphasized that the increasing used-to-new car ratio signifies a lasting shift in buyer behavior.

He further noted that the average age of used cars is decreasing, anticipated to reach around 3.7 years, indicating that consumers are opting to upgrade their vehicles more frequently, particularly with a notable preference for utility vehicles.

A key factor driving this transformation is the growing consumer confidence in purchasing used cars, attributed to digital platforms that offer enhanced transparency and convenience.

Moreover, with delays in new car deliveries caused by global shortages of components like Rare Earth magnets and semiconductors, many buyers are now turning to pre-owned vehicles for quicker accessibility.

Crisil’s evaluation of six major online used-car platforms—some of which are backed by manufacturers—reveals that these companies, collectively representing about half of the organized used-car market, are witnessing rapid expansion.

These platforms are responsible for nearly one-third of the total used car sales in India, according to the report.

The report also pointed out that there is significant potential for further growth in India’s used-car market. Another contributor to the increase in used car sales is the enhanced availability of financing options.

Numerous platforms have collaborated with lenders and are leveraging Artificial Intelligence to evaluate and underwrite loans more efficiently, facilitating the purchase of pre-owned vehicles for buyers, especially first-time car owners.

Poonam Upadhyay, Director at Crisil Ratings, remarked that while profit margins are currently under pressure due to elevated costs, the trend of providing integrated services such as inspections, doorstep delivery, insurance, and financing will aid companies in improving their profitability over time.

“With stricter cost management and sustained demand, most players in this sector are expected to achieve operational profitability soon,” Upadhyay added.