used car marketis expected to grow at a CAGR of 16% from FY ’22 – FY’27.
- The market is expected to further double in size from 4.1 million units in FY22 to 8.2 million units in FY27, according to the
Olx carand CRISIL report.
- It is also said to have reached pre-pandemic levels in terms of volume and has since grown by 9%.
The market for
The used car market is expected to grow at a compound annual growth rate (CAGR) of 16% from FY ’22 – FY’27, while the new car market will grow at a CAGR of 10%, the report highlights.
“This year, due to the impact of Covid-19, the used car market is poised for further acceleration in the coming years. There is a clear preference for used cars among consumers in larger cities, fueled by an accelerating shift to digital channels – which offer greater convenience and increase consumer confidence,” said Amit Kumar, CEO of OLX India.
The report further suggests that the used car market is expected to double from 4.1 million units in FY22 to 8.2 million units in FY27, increasing its lead over the new car market by 1.7x.
According to the report, the market also reached pre-pandemic levels in terms of volume and has since grown by 9%.
The return to a near-normal situation, improved consumer confidence, an increase in mobility, the opening of offices and a revival in travel are some of the main reasons behind this huge growth in the used car segment in India, according to the report.
It is clear that the overall demand for cars in India is growing as the new car market is also expected to grow and reach 4.8-5 million cars by FY27. “In fact, the new car market will post high sales in FY23 supported by improving production levels, product launches coupled with continued traction for the UV segment,” the report said.
Urban markets provide the bulk of the demand for cars in India. “With 37% of India’s population living in urban areas by 2025, we will see a surge in disposable income and affordability for discretionary personal mobility spending,” Kumar further added.
Maruti’s small cars dominate the used car market
According to the report, small cars are much more in demand than large cars and Maruti maintains its dominance in the segment. However, the share of small cars in total used car demand is expected to decline by 2% in FY27.
Maruti Baleno, Hyundai Elite i20, Renault KWID, Maruti Suzuki Dzire and Hyundai Grand i10 are some of the cars popular among people in this segment.
The used segment of large cars or sedans will see the most contraction, from a share of 12% in FY22 to 7% in FY27. This is expected to happen due to declining sales in the new car market, lack of new model launches and a shift in preference towards UVs, according to the report.
In the second-hand segment, the UV car segment is expected to triple over the next five years and reach a market share of 32% in the used car market.
Hyundai CRETA, Maruti Brezza, Maruti Ertiga and Mahindra XUV500 are some of the popular UV cars in India.
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