India's used car market to surpass 6M units this fiscal
What's the story
India's used car market is set to witness a major boom, with sales expected to cross six million units in the current fiscal year. The growth is being driven by value-conscious consumers, increased digital adoption, and improved access to finance. According to a report by credit rating agency Crisil Ratings, the market value of these pre-owned vehicles is around ₹4 lakh crore—almost equivalent to new car sales.
Market dynamics
Used-to-new car sales ratio jumps to 1.4
The report highlights a major change in the used-to-new car sales ratio, which has jumped to 1.4 from less than one, five years ago. This growth is more than double that of new cars and indicates a structural shift in the market. Anuj Sethi, Senior Director at Crisil Ratings, said this trend shows quicker upgrade cycles and growing preference for utility vehicles.
Resilience
Delays in new car deliveries pushing buyers toward used cars
The used car market has remained stable even amid the pandemic as well as semiconductor shortage that disrupted new car production. This is likely to continue as prolonged rare earth magnet shortages delay new car deliveries, pushing buyers toward pre-owned vehicles for quicker access. First-time buyers also have a wider selection of used car models, thanks to strong post-pandemic new car sales.
Worries
Profitability remains a challenge
The strong growth in the used car market has led to an expansion of organized players, even though profitability remains a challenge. High customer acquisition costs, logistics, and refurbishment continue to weigh on operating margins for many players. However, the report predicts that a shift toward integrated service offerings like inspection, refurbishment, financing, insurance, and doorstep delivery should help narrow losses over time.