Pre-owned vehicle market in India to reach 8.2 million units by 2026

The pre-owned vehicle market in India is expected to reach 8.2 million units by FY26 from around four million units in the financial year ended March 2021. A report attributed this to higher demand from smaller cities coupled with increasing new vehicle prices and customers’ changing preferences.

It said the market size is expected to grow to USD 70.8 billion by 2030 at a Compounded Annual Growth Rate of 14.8% between 2021 and 2030. Grant Thornton Bharat, in its report, said 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.

The report noted that increased new vehicle prices, pre-owned/used vehicles are expected to become a more popular choice among Indian consumers. “The pre-owned vehicle market in India is expected to reach 8.2 million units by FY26, a two-fold increase from approximate four million units in FY21.”

Saket Mehra, Partner and Auto Sector Leader, Grant Thornton Bharat, said 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.” He said the buyer is now more open to owning a pre-owned vehicle than ever before.

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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% from the current 55% in the next four years.

It said the domestic market possesses tremendous potential for the four-wheeler passenger segment, particularly pre-owned cars. It expects used vehicle market to be twice as big as new vehicle segment by FY25, with affordability as the main factor influencing purchase decisions.

In FY20, India recorded a total sale of 2.7 million new vehicles. But the used vehicle market growth was only marginal as against four million sold in FY19.