India Used Car Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

India Used Car Market Size

India Used Car Market Trends & Growth Drivers

Online Retailing Is Key Trend

• The Indian used car market is witnessing a trend of online retailing. Internet access, urbanization, and the expansion of the telecom industry have all contributed to an improved flow of knowledge among customers.
• Furthermore, used car owners often use websites to advertise their goods and spread knowledge about the availability of used cars. As a result, a larger number of people are willing to purchase and sell vehicles online, making the transaction simpler and quicker, as both the parties (buyers and sellers) can complete the majority of the paperwork and negotiations online.
• Buyers are more likely to try out different models, as only after a lot of comparison via online channels, do they decide which to purchase; all this can be done without even stepping out of the house. With the used car market going online, it has become more convenient for sellers and buyers to research pricing and vehicle details online.

Growing Demand for Used Luxury Cars Is Key Driver

• India has a huge market potential for used luxury vehicles. However, their penetration in the country is low, but leading luxury car manufacturers and luxury used car dealers are expanding their operations in India, betting on the market’s potential. For instance, Big Boy Toyz Pvt Ltd. (BBT) is a dealership for pre-owned luxury, exotic, and imported cars for sale in India.
• The company offers used cars from the majority of luxury and premium OEMs, such as Mercedes-Benz, BMW, Lexus, Cadillac, Jaguar, and Land Rover.
• In addition, the average holding period for luxury cars is less than that of economy models, which increases supply of pre-owned luxury cars. Moreover, they enter the used car market through organized channels, such as OEM dealerships and online marketplaces and dealers.
• Additionally, the high depreciation of luxury cars, of around 20%–30%, make them an attractive purchase. Therefore, the increasing availability of luxury cars at competitive prices, coupled with the entry of organized players in the segment, is expected to drive the market growth.

Stringent Government Regulations Are Key Challenge

• One of the major restraints for the used car market in India is the higher emissions from older cars, along with growing environmental concerns. The reasons behind the high emissions from used cars in comparison to new ones are the degradation of the machinery in the former over time and their primitive technologies.
• Both these reasons, together, widen the gap between the emissions from used and new cars. The growing environmental concerns among public and government have led to the introduction of stringent policies that limit the age of used vehicles, thus providing a setback for the used car market. Cars older than 15 years are not allowed, according to the government regulations.
• Moreover, the BS-6 norms and the doubling of the car depreciation rate in India not only directly impact the used car market but also affect the mindset of the buyers negatively.

India Used Industry Outlook

Sector Insights

• In India, unorganized businesses dominated the market, with a share of around 70%, in 2023. The used car market has been dominated by unorganized players in India. Most transactions are made by individuals buying and selling cars themselves. Since the parties involved are individuals and not organizations, it has been hard to establish trust.
• Furthermore, Maruti Suzuki India Ltd. (Maruti True Value) and Mahindra & Mahindra Ltd. (Mahindra First Choice Wheels) were among the first OEMs to enter the used car market in India. The entry of these organized players assured people of the quality of used cars and greater reliability of these players. The key reason for the OEMs to enter this market is to encourage the sale of new vehicles by providing exciting offers in exchange of the used ones.
• Therefore, the organized sector will undergo the faster growth, of 12.4%, during the forecast period. These organizations offer free towing and other services at the dealership, to lure additional customers. These value-added services and benefits are helping the key organized players in the market increase their share and win the trust of the consumers, which is further expected to create demand in the market.
• Maruti Suzuki India Ltd. (Maruti True Value) and Mahindra & Mahindra Ltd. (Mahindra First Choice Wheels) were among the first OEMs to commercialize used cars in India. Their entry ensured the quality of used cars and greater reliability of consumers.
• The key reason for OEMs to enter this market is to encourage the sale of new vehicles, by providing exciting offers on the exchange of the used ones. Other OEMs entered the market to tap an additional revenue stream, which provides security in times of economic slowdown, as the used car market is projected to be impacted less than the new car market in the case of an economic slowdown.
• Thus, with the increasing penetration of the organized sector with certified used vehicles at competitive rates, along with financial services, warranties, and service guarantees, the used car market is projected to experience a huge boost and the organized sector is expected to grow at the higher rate during the forecast period.

Sectors covered in the report include:

• Organized (Faster-Growing Category)
• Unorganized (Larger Category)

Vehicle Type Insights

• In the Indian used car market, the large category held the largest revenue share, of around 50%, in 2023. This is due to the less price and large space available on these old vehicles.
• Further, an increase in the number of large families and people traveling in groups, such as college friends and office colleagues, is boosting the growth of this category.
• SUVs are also popular for offroad activities, such as mountain hopping and jungle safaris, and with such cars available at lower rates, old ones are witnessing increasing sales.

The following vehicle types are included in the report:

• Medium (Fastest-Growing Category)
• Small
• Large (Largest Category)

Sales Medium Insights

• By sales medium, the offline category held the larger share, of around 75%, in the market. This is mainly due to the high consumer preference for buying a used car from a known dealer. Moreover, a person cannot check the condition of a used vehicle online, which makes offline dealerships more trustworthy.
• The online category is expected to grow at the higher CAGR during 2024–2030. This can be ascribed to the fact that digitalization has reduced the need to contact the dealer at the first instance. Customers are able to quickly interact and easily access information through their personal computers and smartphones.
• Therefore, the rising internet penetration and ease of shopping and research via the online mode are expected to drive the growth of the market in this category during the forecast period.

The sales media covered in the report are:

• Offline (Larger Category)
• Online (Faster-Growing Category)

Maharashtra Is Largest Market in India

• Maharashtra held the largest share, of around 35%, in the Indian used car market in 2023. This was due to the strong depreciation value of luxury vehicles, rapidly rising young population, increasing disposable income of customers, rapid urbanization, and surging internet penetration in non-metros.
• Delhi is expected to be the fastest-growing state. This is attributed to the increasing population in Delhi, with people from rural and semi-urban pockets moving to the national capital in search of jobs. Moreover, Delhi is highly urbanized, which is adding fuel for the growth of this market.

The states analyzed for this report include:

• Maharashtra (Largest State)
• Uttar Pradesh
• Karnataka
• Tamil Nadu
• Delhi (Fastest-Growing State)

India Used Market Share

The Indian used car market is fragmented as it is still dominated by individual garages and unorganized dealerships. Being one of the fastest-growing automotive markets makes the country attractive to organized players. Companies including Cars24 Services Private Ltd., Quikr India Private Limited, and CarDekho.com are providing online platforms to compare the prices and availability of used cars at nearby locations. This makes the entire purchase process simple and quick, without any need for prior appointments or unwanted negotiations with dealers. In addition, the market is primed for online disruptors that offer value-added services, such as financing, easy and user-friendly processes, and warranties and maintenance plans.

India Used Car Industry News

• In August 2023, CarTrade Tech Ltd. acquired OLX’s India business For INR 535.54 crore.
• In February 2021, CarDekho.com planned to open stores in a larger format in select Tier-I and Tier-II cities in India.