As per the sources, the used cars market is expanding at a rate that has never been witnessed before. Pre-owned car sales have increased as a result of rising new car prices and shortened lifespans of current vehicles.
According to a recent analysis produced by OLX Autos in collaboration with CRISIL, digital channels are also essential for boosting the used automobile market. In the following five years, the market’s size is probably going to double.
Based on the sources, Amit Kumar, OLX Autos CEO claims that the market will increase 1.7X faster than the new automobile market, from 4.1 million units in FY22 to 8.2 million units in FY27. By FY27, digital channels will have increased by 4X, from 3% in FY22 to 12% overall.
Factors Behind the Buyers Towards Cars
According to Kumar, there are several variables at work that are luring buyers to the used automobile market. Following is a list of some of them:
In FY22, there were just 25 cars per 1,000 people in India, compared to 250 cars per 1,000 people in Brazil. This shows that India has a significant amount of opportunity to grow. Launches of new models will quicken replacement cycles for high-quality stock. Shorter new car life cycles brought on by rapid innovation are increasing the supply of high-quality used cars and increasing consumer acceptance of pre-owned vehicles.
In addition to pandemic-induced consumer behavior (change from shared mobility to personal/owned mobility), urbanization, increase in disposable incomes, and spending on personal mobility are also boosting sales in the used car market. favorable regulatory pressure to drive the organized used automobile segment’s growth.
India’s obsession with SUVs
According to Amit Kumar, it’s hardly surprising that the SUV market has experienced an unexpected growth trajectory this year. The segment’s market share climbed from 17% in FY17 to 22% in FY22 and is projected to reach 32% by FY27. The market for used automobiles has shifted toward the SUV sector, which has raised average prices and decreased the average age of vehicles in this segment.
Models that are most popular in each sector
According to market segments, compact automobiles continue to dominate the used car market:
- Most popular small cars: Maruti Suzuki Baleno, Renault Kwid, and Hyundai Grand i10
- Most popular sedans (beyond 4m): Honda City, Maruti Suzuki Ciaz, and Hyundai Verna
- Most popular SUVs: Hyundai Creta, Maruti Suzuki Brezza, and Maruti Suzuki Ertiga.
- Most popular luxury segment cars: Mercedes Benz E- Class, BMW X1, and Audi A4
Rising Demand and Pricing
Even in the used car market, there will be no relief from the rising demand for consumers. The average selling price of used cars has increased in the past 12 to 18 months, according to Kumar, by 5 to 10%. Disruptions in the global supply chain, however, served as gasoline for this.
According to Kumar, the cost of used cars would increase for a time before leveling off. Pricing for secondhand cars will be influenced by supply and demand. As customers are replacing their cars sooner, there is a steady growth in both the availability and demand for cars even though supply chain issues are lessening.