India Used Car Market - Segmented by Vehicle, Vendor, and Fuel - Growth, Trends, and Forecast (2018 - 2023)
The market for used car in India is expected to reach a market size of USD 75 billion by 2023, recording a CAGR of 15.2% during the forecast period. The India used car market has grown at a tremendous pace since the beginning of the 20th century. The main reason for the same has been the emergence of organized players in the market, as these players have taken care of the trust deficit and the plaguing India used car market since ages. Even a decade back, almost all sales in the India used car market took place in the unorganized sector. Sellers would palm off substandard products to buyers, which made a large number of prefer to buy cars in the circle of family, friends, and acquaintances. The used car market in India accounts for nearly 3.4 million vehicles per year. But only a minority of used car sales originate from businesses to consumers and are processed by organized dealers, around 400,000 unit per annum or about 13%.
Current Market Scenario
According to the estimates in India, for every new car purchased, one used car is sold. In other parts of the world, like Europe, the number of wished-for new car buyers is increasing, whereas the number of intended used car buyers is falling. In India, however, there is a reverse trend, which can be attributed to the rising cost of fuel and increasing disposable income. Though the general economic slowdown has hit the sales rate of new cars, the used car market has seen an uptrend, which clearly indicates that the sales rate of used cars will continue moving forward. There are various reasons for the evolution and growth of the used car market in India, which include enhanced quality, better maintenance because of latest technological services, and less usage because many urban families having more than one car, due to which the second car is less driven and well maintained. During 2005-2007, the used car market was dominated by unorganized players, and C2C with more than 95% of the market share. The number of organized players was just 4% in 2005 - 2007, the share increased around 15% in 2010-2012. In future, the role of these organized players is likely to increase substantially.
The lack of financing or expensive financing options for used cars is the major drawback in the market space. While the finance for new cars is easy to get, used car finance attracts a higher rate of interest and is not given so easily. However, the rise of the organized sector has taken care of that aspect. Major players, like Toyota, Maruti Suzuki, dealing in the used car sector, have tie ups with financial agencies that give out loans for used cars. Leasing option is a concept, which has not taken off in India, and is offered by very limited outlets. But this financing option has massive growth potential in the market, as the burden on the consumer comes drastically down. Due to taxation, Indian cars are one of the most expensive in the world, which influence the consumers to go in for used cars. With the prices of diesel cars increased further in the latest budget declaration, diesel cars are becoming increasingly expensive, which means their sales in the used car market will get a boost.
Small SUVs have registered a tremendous growth rate over the recent years, which is expected to record the highest sales growth in the used car market till 2023. Organized space is likely to gain a large market share in the next 5 years, and control more than 3/10th of the market by 2023.
Key Developments in the Market