India is one of the fastest-growing markets for premium and large vehicles; therefore, it is attractive for organized used vehicle dealers. For instance, companies such as OLX Group are providing online platforms to compare the prices and availability of used cars, to make the entire purchasing process simple and quick. Therefore, the Indian used car market is projected to generate $70.8 billion revenue in 2030, advancing at a CAGR of 14.8% during the forecast period (2021–2030).
In 2020, the COVID-19 pandemic killed the consumer demand for used cars, dealer–customer communication, and the industry operations and supply chain. The effect on the industry has been so serious that many automakers are under acute financial stress, with consequences visible in other related markets too, including the used car market in India. The consumer purchase power has significantly come down as a result of the coronavirus-induced economic recession, which led to the low sale of used cars. However, the reduced wages, increasing consumer fear regarding shared public transport, and need to own a second-hand car would drive the demand for the used cars available at lower prices.
People in the country can purchase a used car via the online and offline sales media. Of these, the online category is expected to grow at the higher CAGR during the forecast period, in terms of value, on the basis of sales medium. This can be ascribed to the fact that digitalization has reduced the need to contact the dealer initially. Customers can quickly and easily access information through 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.
The market is divided into small, medium, and large cars, based on vehicle type. Among these, the large category is expected to dominate the market throughout the forecast period. This category’s dominance is driven by the increasing supply of less-driven and good-quality second-hand sports utility vehicles (SUVs), coupled with the rising purchasing power of customers in the country.
Geographically, the Indian used car market is categorized into Maharashtra, Uttar Pradesh, Karnataka, Tamil Nadu, Delhi, and Rest of India. Among these, Delhi is expected to witness the fastest growth during the forecast period due to the fact that the average ownership duration of new cars is decreasing in the state. In addition, Delhi offers old vehicles at the lowest prices. Since the used car market in the state is so large, there is fierce competition. As a result, retailers often lower the costs of old vehicles, perform minor repairs, such as denting and painting, and then resell the vehicle with a healthy profit margin.
The used car market in India is highly fragmented with the presence of a large number of unorganized players. However, as the market heads toward consolidation, top players in the country are widening their portfolio with utility and standard services, as well as expanding their operations in new cities.
For instance, in August 2020, OLX Group took the franchise route to strengthen its position in the Indian used car market. The company planned to offer customers more benefits via its presence in the online retail marketplace, while OLX Autos will add new pre-owned car dealers under its network and utilize the multi-channel approach to sell vehicles both offline and online.
Similarly, in June 2020, Fiat Chrysler Automobiles N.V. announced plans to expand its pre-owned car business and open new 65 outlets by August 2020. However, the company currently runs its pre-owned car business, SELECTEDforYOU, from 42 sales outlets.
The major players operating in the market are Cars 24 Services Pvt. Ltd., OLX Group, Big Boy Toyz Pvt. Ltd., Quikr India Private Limited, CarDekho.com, Truebil, Droom Technologies Pvt. Ltd., Maruti Suzuki India Limited, and Mahindra & Mahindra Limited.