The future of the used car market in India shines with promise and possibility. With each passing year, this market continues to evolve, shaping itself to meet the diverse needs and aspirations of car buyers across the nation. Positive growth factors, including growing middle-class aspirations, urbanisation and an increase in disposable income, are driving the rise of car ownership in the country.
Read on to get further insights on the used car market in India, market trends, highlights, and projections.
Used Car Market Trend in India
The used car market in India is worth an estimated US$31.62 billion as of the end of 2023. The market is expected to grow at a steady rate of 17.60%. By the end of fiscal year 2032, the used car market is estimated to cross the US$138 billion mark.
Recently, the Indian used car market 2023 has witnessed exponential growth due to several reasons such as a shift in consumer preferences towards car ownership, rising disposable incomes and easy access to pre-owned car loans.
Although the pre-owned car industry faced various challenges in the fiscal year 2022 due to the COVID-19 pandemic, the industry remained robust in the next year. It experienced a notable growth of 14% to 16% in fiscal year 2023.
Growth Factors of the Used Car Market and Dynamics
Various factors shape the recent growth in the used car market in India. Among these, some of the key factors driving the market are as follows:
- Rise in Demand for Used Luxury Cars
Nowadays, people are looking forward to buying pre-owned luxury cars instead of buying new ones. Even first-time car buyers are purchasing used luxury cars at one-fifth price compared to cheap new cars. This has resulted in an overall increase in demand for used cars.
-
Increase in Car Financing Options
Financial institutions are now expanding their reach by introducing various types of financial services, out of which car financing is one of their major ones. Pre-Owned Car Loan has made car purchasing more affordable for people, leading to a rise in demand for used cars.
- Technological
Advancement
Financial institutions are integrating advanced technology, such as advanced mobile applications and Internet banking services. It enables customers with easy access to car financing options such as a Pre-Owned Car Loan leading to an overall growth in the used car market.
- Auto Manufacturer
Automobile manufacturers are introducing programs and networks for selling certified used cars. Moreover, customers can easily trust the quality checks and assessments conducted by the manufacturer.
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Government Policies
The government has several policies, such as GST reduction and scrappage policy, incentivising the buyers, resulting in a significant boost in the used car market.
Also Read - Is GAP Insurance Necessary for Used Cars?
Hatchbacks Reign, SUVs Gain Momentum
Recently, the sale of hatchbacks in India has witnessed a massive surge, with a market share of 65% in the used cars segment. People especially prefer hatchback models, especially if they were buying their first car after riding motorcycles.
Other than hatchbacks, SUVs (sports utility vehicles) became more popular because they are cheaper now and cost slightly more than hatchbacks. Also, the car manufacturers have broadened the SUV segments by launching several SUV categories such as compact SUVs, crossovers, luxury SUVs and sub-compact SUVs.
This means more options for buyers who want a big, spacious car with cool features without spending too much money. SUVs are a perfect choice for more people because they are affordable and offer a comfortable driving experience across different environments.
Petrol Cars Are in Higher Demand Than Diesel
The demand for petrol cars has remained higher compared to diesel cars. During the festive season in India in 2023, 87% of people preferred petrol cars over diesel ones. Shoppers prioritised practical factors like mileage, fuel efficiency and maintenance costs, which has led to them preferring petrol vehicles.
This is mainly due to several factors, such as the prices of petrol variants being comparatively cheaper than diesel variants. Also, the petrol variants require less maintenance compared to diesel variants, which makes them more cost-effective in terms of service and maintenance.
Moreover, petrol engines are more silent compared to diesel engines, which produce more torque. Hence, diesel engines are usually preferred for heavy-duty purposes, while petrol cars are perfect for luxury city rides. Also, petrol cars can stay on the road for 15 years, which is five years longer than diesel cars, making them even more attractive.
Highlights and Projections for the Used Car Market in India
The market for pre-owned cars is expected to grow 1.6 times in terms of volume. Also, it is expected that the volume of cars sold will exceed the 8.5 million units mark from FY2023 to FY2028. The market size is expected to increase significantly, from INR 2.1 trillion to INR 5 trillion within this period.
The pre-owned car market is projected to grow at a rate of 17% to 19% annually, compared to 5% to 7% for the new car market. SUVs are becoming extremely popular, and they are expected to make up a bigger part of the car market in the coming years. This trend is happening in both new and used car markets.
Also Read - Why Pre-owned Car Loan is a Smart Choice for Financial Freedom?
How to Get a Loan for a Used Car from Poonawalla Fincorp?
To apply for a Used Car Loan with Poonawalla Fincorp, follow these three simple steps:
Step 1: Click on the "Apply Now"
button.
Step 2: Enter your details, including
DOB, PAN number, property ownership details, loan amount, employment
details, etc.
Step 3: Attach the necessary
documents, and then the application will proceed further for
assessment and verification.
Upon successful verification, the loan amount will be instantly credited to your bank account.
To Conclude
The future of the used car market in India looks promising. With the market projected to grow steadily and reach new heights, it's clear that more people are recognising the value and benefits of buying pre-owned cars. Several factors, like increasing disposable incomes, changing consumer preferences, and easier access to financing options, are all contributing to this growth.
Frequently Asked Questions
1. How is the used car market segmented in
India?
The Indian used car market can be segmented by
various parameters such as sector, vehicle type and mode of sales.
By sector, it can be divided into the organised and unorganised car
market. By vehicle type, it can be segmented as small, medium, or
large vehicles, and online or offline mode in terms of the medium of sale.
2. What are the key regions in the Indian used car
market?
The key regions in the used car market include
Eastern India, Southern India, Central India, North and Western
parts of India.
3. What was the impact on the used car
market?
The COVID-19 pandemic negatively impacted the
used car market due to the stringent lockdown regulations across the
country. This largely impacted the automobile manufacturers, and the
sale of new vehicles went down as a result. The used car market was
also impacted to a great extent.
4. What are the types of vehicles available in the
used car market?
Each and every vehicle type is
available in the used car market, starting from hatchbacks,
sedans, SUVs, MUVs, coupes and convertibles.