India’s pre-owned car market is set to surge 2.5 times in value to Rs 4.4 trillion and grow 2 times in volume to reach 8.2 million units over the next five years, according to an OLX Autos report in partnership with Crisil.
The sixth edition of the report notes that the pre-owned car market Is expected to grow at a CAGR of 16 per cent in FY ’22-‘27, outgrowing the new car market, which is expected to grow at a CAGR of 10 per cent.
While the pre-owned car market has traditionally outstripped the new car market, the former will further accelerate its lead in new cars over the next five years -- on the back of low car penetration, a shift to digital, new car launches, shrinking replacement cycles, and a favourable regulatory environment, the report said.
Amit Kumar, CEO, OLX India, said: “There is a clear preference for pre-owned cars in larger towns, fuelled by an accelerated shift to digital channels that offer higher convenience and build consumer trust.”
Urban markets drive the bulk of the demand . With 37 per cent of the Indian population expected to be living in urban areas by 2025, we will see a sharp rise in disposable incomes and affordability for discretionary spending on personal mobility, he added.
The report further said, “In FY21, Covid-19’s impact was evident in the pre-owned car market, amidst a supply shortage, as well as lockdowns. However, in FY22, the pre-owned car market achieved pre-pandemic levels in volume terms and has grown 9 per cent since. Going forward, in FY23, the industry will pick up the pace, backed by a return to near-normalcy and improved consumer sentiment, an increase in mobility with the opening of offices and a resurgence in travel, and improved new vehicle supply.