In 2018, the used car market in India crossed the 4 million units mark making it 1.3 times larger (in volume) than the market for new cars.
Currently, the used car market accounts for 55% of the total car transactions in India, and by 2025 this number is expected to reach 75%. Experts suggest that there is tremendous potential yet to be tapped in the used-car industry.
“Used car market trends could give rise to a new class of first-time car buyers”
Some food for thought (figures and forecasts for the used-car markets in India.)
Just a decade ago buying and selling used cars was not as easy as it is today. The process of transacting used cars was mostly unorganized and complicated. Thanks to the expanding network of organized and semi-organized used car platforms; factors like price, condition, documentation, vehicle history, etc. are no longer a puzzle that you have to unravel.
The key factors driving the growth of the used car market are:
- A downward revision of GST on used cars from 28% to 12-18%.
- Demand for personalized family transport.
- The younger population is more inclined towards car ownership.
- Growing demand (due to disposable income).
- Aspirational demand for used luxury cars.
- Increase in financing options for used cars.
- Standardized used-car dealership experience.
With the help of organized channels, the Indian used car market is expected to register a higher CAGR (Compound Annual Growth Rate). In 2019, the market was valued at $24.4 billion, and it is expected to witness an increase of 15.12% in CAGR between 2020 to 2025.
Rise of the First Unicorn Start-up:
In 2020, while the new car market was experiencing an economic slowdown, CARS24 became the first Indian unicorn start-up from the automotive sector, indicating the increase in demand for used cars. CARS24 was able to benefit from the trend by leveraging data and technology to offer world-class operational efficiency and a hassle-free experience to its consumers.
A young market:
The Indian used car market is truly young as most used car buyers are millennials. In 2019, nearly 22% of the 4 million potential buyers who showed interest in platforms such as CARS24 were millennials.
Reaching Out to Tier-2 and Tier-3 Cities:
Organized platforms like CARS24 have rapidly expanded their network in Tier-2 and Tier-3 cities that usually lack an organized set-up for transacting used cars. It could give rise to a new class of first-time car buyers as used cars are more affordable.
For every new car, there are 2.2 used cars, which means when 10 new cars are sold, 22 used cars are available for sale. In the near future, the ratio can reach 1:3. The social stigma of buying used cars may see a significant decline and we may expect organized channels like CARS24 to drive the change in the Indian used-car market.