Pre-owned cars market in India to grow 2x in volume in the next five years: Olx Auto - CRISIL report

• The pre-owned cars market is expected to grow at a CAGR of 16% from FY ’22 – FY‘27.
• The market is further expected to double in size from 4.1 million units in FY22 to 8.2 million units in FY27, according to the Olx Auto and CRISIL report.
• It is also said to have achieved pre-pandemic levels in terms of volume and have grown by 9% since then.

The market for pre-owned cars is expected to outpace the market for new cars in the next five years. In fact, it is predicted to grow 2x in volume and 2.5x in value in the upcoming next five years, as per a report by Olx Auto and CRISIL.

The pre-owned cars market is expected to grow at a Compound annual growth rate (CAGR) of 16% from FY ’22 – FY‘27 while the new car market will grow at a CAGR of 10%, the report highlights.

“This year, emerging from the impact of Covid-19, the pre-owned car market is poised for further acceleration in the coming years. There is a clear preference for pre-owned cars among consumers in larger towns, fuelled by an accelerated shift to digital channels - that offer higher convenience and build consumer trust,” said Amit Kumar, CEO, OLX India.

The report further suggests that the pre-owned car market is expected to double in size from 4.1 million units in FY22 to 8.2 million units in FY27, increasing its lead by 1.7x over the new car market.

According to the report, the market also achieved pre-pandemic levels in terms of volume and has grown by 9% since then.

Return to near-normalcy, improved consumer sentiment, increase in mobility, opening of offices and a resurgence in travel are some of the major reasons behind this massive growth in the pre-owned car segment in India, according to the report.

It is clear that overall demand for cars in India is growing as the market for new cars is also expected to grow and reach 4.8-5 million cars by FY27. “In fact, the new car market will record high sales in FY23 backed by improvement in production levels, product launches coupled with continued traction for the UV segment,” the report said.

Urban markets drive the bulk of the demand for cars in India. “With 37% of the Indian population living in urban areas by 2025, we will see a sharp rise in disposable incomes and affordability for discretionary spending on personal mobility,” Kumar further added.

Maruti’s small cars dominate the pre-owned car market

According to the report, the demand for small cars is much more than big cars and Maruti maintains its dominance in the segment. However, the share of small cars in the total demand for pre-owned cars is expected to contract by 2% by FY27.

Maruti Baleno, Hyundai Elite i20, Renault KWID, Maruti Suzuki Dzire and Hyundai Grand i10 are some of the cars popular among people in this segment.

The large car or sedan pre-owned segment will see the most contraction, declining from 12% share in FY22 to 7% in FY27. This is expected to happen due to declining sales in the new car market, lack of new model launches and a shift in preference towards UVs, as per the report.

In the pre-owned segment, the UV car segment is expected to grow by 3x over the next five years, reaching a market share of 32% in the pre-owned car market.

Hyundai CRETA, Maruti Brezza, Maruti Ertiga and Mahindra XUV500 are some of the popular UV cars in India.

SEE ALSO:
This show claims to do what Shark Tank does sans the drama
India well placed to grow at a 'moderately brisk rate', inflation to ease says a Finance Ministry report