The India used car market is estimated to grow at a CAGR of ~15% during the forecast period 2020-2025. As per the detailed market study, the Indian used car market was valued at ~$24 billion in the year 2019.
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Contradicting the trend of the new car market that shows decline in number of car sales, India’s used car market has witnessed a growth over the years, which is driven by various factors such as high depreciation rate of luxury cars, increasing disposable income and weakness in new car sales among others. As per the Managing Director and CEO of Mahindra First Choice Wheels, the used car market has performed comparatively good during the financial year 2020, with 10% increase in terms of volume as compared to 2019.
Studying the current market scenario, COVID era has affected the daily lives and social distancing has become the new normal for the people. Post COVID era, the market operation will be highly influenced by purchasing behaviour, changing consumer sentiments and commuting preferences due to psychological overhang of social distancing which will reduce the easy acceptance of shared mobility will influence the market for the short-term. As per the OLX India, the recovery in supply of used cars is at 90% of pre-COVID levels, while demand is at 120%. While, in long-term, the used car option may gain momentum due to reduced discretionary spending.
Analysing the short-term scenario from supply side of the used car market shows that the market will be flourished with more options of cars for buyers due to increase in availability of used cars in the market. Sellers are offering their cars for sale due to job losses, work from home routines and end of moratorium period on 31st August 2020— as car loan industry is huge in India and growing at a rate of 18%-20% per annum. As per the Co-founder and CEO of Car-Dekho, the market will witness more supply of used cars after moratorium period gets over by August-end 2020. The company is also planning to invest $20 million in the used car business in FY2020 to tap the opportunity by boosting its operation. Hence, increasing car sale in India would help to narrow the supply-demand gap in the used car market. Post moratorium period will boost the supply of used cars from both commercial and private sources with a nature to surrender assets due to weak financial profiles.
Segmentation Overview of the India Used Car Market Research Study
The India Used Car Market is categorized on the basis of fuel type, vendor type and vehicle type. The organized segment under vendor type accounted to witness a highest growth rate at a CAGR of ~22% during the forecast period. The segment growth is driven by increase in online sales platform such as Droom, Cars24 and CarDekho and increased sales of used cars in metro cities.
These market segments are further categorized into various sub-segments to study the market in detail.
The Fuel Type Segment of the India Used Car Market is Sub-Segmented into:
- Petrol
- Diesel
The Vendor Type Segment of the India Used Car Market is Sub-Segmented into:
- Organized
- Unorganized
The Vehicle Type Segment of the India Used Car Market is Sub-Segmented into:
- Hatchbacks
- Sedans
- Sports Utility Vehicles
Competitive Insights of the India Used Car Market
Hyundai H Promise, Maruti True Value, Cars24, Mahindra First Choice Wheels and OLX among others are some major players included in the Indian used car market. The market players are aggressively investing and boosting their operations to contribute significantly in the marketplace. The used car market in India is consolidated, with significant players holding the largest share of the market due to increased number of pre-owned car retail outlets and their business models.
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