MUMBAI: Pre-owned vehicle market in India is expected to reach 8.2 million units by FY’26 from around 4 million units in the financial year ended March 2021, driven by higher demand from smaller cities coupled with increasing new vehicle prices and customers’ changing preferences, a report said on Friday. It also said that the market size is expected to grow to USD 70.8 billion by 2030 at a Compounded Annual Growth Rate of 14.8 per cent between 2021 and 2030.
The cost of ownership for a pre-owned/used vehicle is significantly less in comparison to a new one, mainly due to high depreciation, higher taxes, RTO/ registration fee, and expensive vehicle insurance policies, Grant Thornton Bharat said in its report.
Noting that with increased new vehicle prices, pre-owned/used vehicles are expected to become a more popular choice among Indian consumers, the report said, “the pre-owned vehicle market in India is expected to reach 8.2 million units by FY26, a two-fold increase from approximate 4-million units in FY21.”
“The financial year 2021 has witnessed many transitions impacting the financial health of the new vehicle ecosystem in the short term. During the same time, the transition and change in consumer preferences has fast-tracked the pre-owned vehicle market on the path to growth,” said Saket Mehra, Partner and Auto Sector Leader, Grant Thornton Bharat.
The buyer is now more open to owning a pre-owned vehicle than ever before, he added.
According to the report, small towns are expected to fuel the demand for used vehicles as the share of non-metro cities in used vehicle sales is expected to rise to nearly 70 per cent from the current 55 per cent in the next four years.
Stating that the domestic market possesses tremendous potential for the four-wheeler passenger segment, particularly pre-owned cars, it said used vehicle market to be twice as big as new vehicle segment by FY’25, with affordability as the main factor influencing purchase decisions.
India recorded a total sale of 2.7 million new vehicles in FY’20. However, the used vehicle market growth was only marginal as against 4 million sold in FY19, on the back of short supply, it said.
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According to a recent OLX Auto-Crisil study, the country’s used car sales will nearly double its tally to 7 million units in 4 years from just under 4 million units in FY21. According to estimates, the segment should end FY22 at just under 4.4 million units.
The new facility is spread across 5,800 sq. ft. and has a capacity to display 8 cars.