The used car market is booming in India and is expected to jump from the current 5.1 million unit sales annually to over 10 million units annually by FY2028. Just to give you a perspective, the number of new car sales in India for FY2024 is at 4.22 million units, which is a million units behind used car sales. Now car&bike recently released the sixth edition of its Indian Blue Book for FY2023, in partnership with Das Welt Auto, the used car business of Volkswagen India.
Also Read: India’s Used Car Market Set To Touch 10.92 Million Units By FY2028
Even in 2024, India’s market penetration for cars is at a lowly 20-22 cars per 1,000 people in India, which is an extraordinarily less than a country like UK where the figure is 980 cars for every 1,000 people. Along with a massively untapped potential, the Indian used car market sales is doing very well thanks to factors like rising disposable income, a young population, shorter vehicle replacement cycles and increasing preference for personal mobility.
Another factor playing an important role is the fact that used cars sales is now slowly turning into a formal and an organised market. From a split of 80:20 percentage split in favour of unorganised markets, the organised markets gained 9 per cent, with a 71:29 split in FY2023. The split is further expected to grow to a 55:45 split by FY2028. While over two-thirds of Indian used car buyers prefer unorganised markets for purchase, more and more people are seeing the advantages of the organised sector with better experience, professional setup, easier financing, better transparency, and quality assurance.
The GST rate on used cars encourages more people from salaried class to opt for a used car purchase. For cars up to 1,500 cc, the GST rate is 12 per cent, while on cars above 1,500 cc, it is 18 per cent. In comparison, the GST on a new car purchase, for petrol and diesel, is 28 per cent. Add to it the high rate of depreciation, and one realises that buying a used car is actually a much viable option.
Also Read: Used Car Industry Report 2021-2022
To summarise, the above-mentioned factors are the key drivers that are responsible for the used car market in India growing at an exponential rate.
