Can used car market accelerate recovery for the Indian automotive sector?

Most of the automobile enthusiasts enjoy different cars at the same time. Families in India often buy used or pre-owned cars to learn driving first and then purchase a new vehicle. For some people pre-owned cars fit in their budget, while others do not want to invest a large portion on a new mode of transport. That is why they purchase old or used vehicles.

Buying of such vehicles largely depends on the deal they are getting, money saving, and on how they are going to use it. Overall, buying old or pre-owned vehicles is not a new thing in India. Earlier it was highly unorganised. But, the used car business has transformed into a full-fledged market over past few years and is gaining significant traction amid subdued economy.

In 2019, the used car market in India was valued at US$ 24.24 billion and is expected to grow at a CAGR of 15.12 per cent in the forecast period of 2020-2025. But, it is still behind many regions or countries globally.

Sanjeev Garg, Practice Leader—Automotive at Praxis Global Alliance, provided us some insights on the current market scenario. According to him, the used car or pre-owned car sales ratio is low in India at 1.18 compared to Brazil (4.07), England (3.43), and USA (2.40). This further highlights the potential of the used car market.

Garg says, “During FY16-20, the used car market in India grew at a robust CAGR of 6.2 per cent versus -0.2 per cent for the new car market in India. Also, the emergence of used car classifieds on online portals and the increase in the share of organised trade in the used car segment have fortified trust in minds of consumers.”

The full article was originally published on SME Futures.