Last year’s edition of the Indian Blue Book provides excellent insights into India’s pre-owned car market, complemented by exhaustive data and analysis. And one of the key findings of the 2021 Indian Blue Book report is that the used car market is going to grow significantly in the coming years. In FY’20, the used car market in India was 50 per cent larger than the new car market and by FY’25, the used car market will be around 90 per cent larger than the new car market, with total used car sales forecast at a compound annual growth rate of 11 per cent. With a growth rate of 7.1 million units.
Read also: Used car sales cross 4.2 million units in FY’20: IBB survey
(The sales of used cars are going to increase manifold in the next few years)
The used car to new car ratio can be seen as a representation of the maturity of the pre-owned car industry. In India, this ratio has remained stable at 1.2x between FY2016-19. FY’20 was a turning point and pushed the ratio up to 1.5x, indicating the beginning of a new era in the pre-owned car market in India. The trend has continued through FY2011, expected to close at around 2.2x, meaning the used car market will be 2.2x the size of the new car market at the end of FY2011.
Read also: Three things affecting new car sales during COVID-19: IBB survey
(Covid-19 pandemic, organized trade, higher disposable income and lower market penetration will be the key drivers of the used car segment going forward)
The report suggests that some of the key drivers for growth during these five years will be a renewed interest in personal mobility, thanks to the COVID-19 pandemic, much less access to a market that is 30 cars per 1,000 people, increased disposable income. And a significant increase in supply in the used cars market. The estimated size of the used car market in FY’21 was around 3.9 million units, though the unprecedented COVID-19 pandemic reduced the market by 7.1 per cent as compared to FY’20. In comparison, the new car market size in FY’21 was 1.8 million units, a decline of 36 per cent as compared to sales in FY’20.
Read also: 7 benefits of buying a used car
(Indians believe that buying a used car is a better move than investing in a new car, especially during the pandemic)
Another important factor driving the increase in used car sales is the shift from unorganized to organized trade. More and more car manufacturers have now authorized the sale of used cars, including premium car manufacturers. There is better confidence, better features and more options to choose from when buying a used car from an authorized outlet. Also, buying behavior during the pandemic is a clear indicator that Indians are now considering buying a used investment to buy a new car, especially in middle-class India.