Experts say that an increase in the price of new cars is the major reason for the growing popularity of used cars in India.
When Alwin started learning to drive a car, he wanted to buy one within his budget to practice and become a skilled driver. However, as a newbie, he was worried that he might damage the new car. So, to practice without the fear of damaging a new car, he bought a used car.
Used car buyers like Alwin are contributing to the used car market in India, which is witnessing a surge, with an increasing user demand.
Reports by CARS24, an online aggregator which facilitates buying and selling of used cars, show that the sale of used cars in India is on an upward trend.
According to their report, CARS24 recorded a 100 percent jump in sales in the Jan-March quarter of 2023 as compared to 2022. Similarly, it saw an 87 percent increase in sales in the Apr-June quarter and an 88 percent increase in the Jul-Sept quarter as compared to the respective quarters of 2022.
Automobile manufacturers also say they see an increase in sales in their used car segment.
Asha, the customer care team leader at Maruti Suzuki True Value, Mysore Road, said, “We see a year-over-year (YoY) growth of 15 to 20 percent in the sales of used cars here.” She added that the market has now become more competitive, especially with the entry of aggregators like CARS24 and Car Dekho.
Sagar, team leader at Hyundai Promise, Mysore Road, said that the sale has been increasing after the pandemic. “Before Covid-19, the ratio of new cars to used cars was 1:1.1. Now it has increased to 1:1.3. We have recorded a 30 to 35 percent increase in sales after the pandemic.”
He said that the major reason for the increase in demand is the working population who prefer personal vehicles for their daily use. “The small car segment with cars ranging from Rs. 8 lakhs to Rs. 12 lakhs are the fast moving. They are usually preferred for daily use,” he added.
He also said that an increase in the price for new cars is also a reason for the growing popularity of used cars. “With the increase in price of new cars, people tend to buy used cars which offer similar features at a better price,” he said.
Market analyses also point out that the market is expected to grow in the coming years. According to a report from Mordor Intelligence, a market research firm, the Indian used car market size, estimated at $31.62 billion in 2024, is expected to reach $63.87 billion by 2029, growing at a Compound Annual Growth Rate (CAGR) of 15.10 percent.
The report mentions that a rising middle class and young population are the two key factors contributing to this growth. It also mentions that used car market is expanding due to rising demand for luxury vehicles.
Navin Kumar, operations manager at Sixth Gear Auto Hub, Hebbal, which sells used luxury cars, agreed.. He said, “There is a five to ten percent YoY growth in the sale of used luxury cars. The sale will increase in the future, it is a positive trend.” He added,“With a shift in lifestyle and earning standards, a big chunk of youngsters is also interested in buying used luxury cars.”
He added, “The increase in cost of raw materials like steel and iron is contributing to the rising prices of new cars. Also, the government is introducing new norms making it difficult to buy a new car. So, people find it convenient to buy a used car.”
Arjun K.M., an automobile expert based in Kerala, said, “Buying a car is considered an achievement in the Indian scenario. Therefore, many people find it practical to buy a used car.”
He also said that an increase in the price of new cars, its registration charges and insurance charges, make people to opt for a used car. “Buying a new car is becoming expensive these days. Apart from the price of the car, a buyer has to spend on its registration, insurance, accessories and more. So, buyers prefer to go for a used car, which is considered a hassle-free option.” He added that used cars are more sustainable, as they reduce the scrap generated.
However, he added that the Vehicle Scrapping Policy, introduced in 2021, can negatively affect the used car market. The policy will discourage people from buying a used car, as they cannot use it for a longer period of time, he said.
He said that it might actually encourage people to buy new cars as they can avail concessions to purchase new cars after scrapping the old one.
According to the policy, commercial vehicles which are more than 15 years old and passenger vehicles more than 20 years old have to undergo the fitness and emission test. Four-wheelers which pass the test can be re-registered (five years for passenger four-wheelers and two years for commercial four-wheelers) otherwise, they should be scrapped.
