• AUTO Business Corporate / Business

Indian used-car market valued at $23 billion in FY22; expected to grow at a CAGR of 19.5% till FY27: Indian Blue Book report

• Prashant Kapadia
• September 13, 2022

Shifting consumer preferences, rising disposable incomes, organized online-offline buying options and shorter time frames between the launch of new car models among top factors that will fuel this growth 

by Prashant Kapadia/NHN

Mumbai: September , 2022 — The Indian used-car market that is valued at $23 billion in FY22 is projected to grow and expand at double the rate at a CAGR of 19.5% till FY27, according to the Indian Blue Book (IBB) car&bike report 2022 that was unveiled at a grand event at Mahindra Towers, Mumbai. The 5^th edition of the FY22 car&bike pre-owned car industry report is produced by collaboration of the Indian Bluebook and Das Welt Auto.

India’s used-vehicle industry is currently transitioning from an unorganised setup — where transactions happen via roadside garage mechanics, small brokers and between car owners — to an organised system with more players entering the market. As per the report, among the leading factors that will contribute to this growth of the used-car market in the next five years are a rising middle-class and young population; rising disposable incomes; technology driven transparency, convenience, simplicity of transactions; availability of certified cars; decrease in the average tenure of ownership for cars and two-wheelers due to larger disposable incomes; the launch of new models within shorter time frames; dealer trade-in bonuses and buyback assurances.

The growth is also expected to be driven by the emergence of organized online and phygital used car platforms amid a surge in the demand for personal mobility and because of favourable government support.

“This edition of the IBB Report is special. With the changed business landscape following the pandemic, there is a clear preference for used cars among consumers across the country. Used cars, which were once considered a compromise, are now making their way into the consideration set of consumers when they think about purchasing a car. There is no reason our industry cannot achieve double-digit growth for many years to come,” said Mr. Ashutosh Pandey, CEO & MD, Mahindra First Choice.

Key findings of Indian Blue Book report FY2021-2022 include:

— Used Car to New Car Ratio is ~1:4

— Average price of used cars is ~4.5 Lakhs

— Organized vs Unorganized vs C2C used-car share is 20% vs 45% vs 35% respectively

— Average age of used cars is ~four years

— Fragmented Supply Demand market characteristics – Supply (Metros: 65%, Non-Metros: 35%), Demand (Metros: 35%, Non-Metros: 65%)

“The India Blue Book Report provides an in-depth study about the evolving dynamics of the used-car segment that will help us understand the customer mindset, industry trends and developments. The pre-owned car market has accelerated since the pandemic. Customers are displaying considerable preference towards pre-owned cars and the gap between new cars and used car sales is reducing phenomenally.  As per the report, organized used car market share is expected to increase from 20% in FY22 to 45% in FY26. Das WeltAuto, the pre-owned car business of Volkswagen India is proud to be one of the active contributors to the significant growth within the organized segment. We are working relentlessly towards setting newer benchmarks in customer experience for our pre-owned car buyers” said Mr. Ashish Gupta, Brand Director, Volkswagen Passenger Cars India.

Indian Used Car Market Insights from the report

• By FY27, India’s used-car market is expected to touch sales of up to 8 million units.

• Indian used car market is projected to grow at double the rate, at a CAGR of 19.5% till FY27.

• Used Car to new car Ratio is expected to touch 1.9 by FY27

• The pandemic, digitalization, rapidly changing demographics and ambitions, first-time buyers, and the availability of different financing choices are among the significant growth factors

• An estimated 3.5+ million used cars were sold in India in FY22, breaking the previous year’s record. While 40 million+ cars were sold globally around the same time

• The demand in smaller towns is expected to grow at a 30% CAGR by 2026 as compared to a 10% CAGR in the top 40 cities

• According to survey results, car buyers in Non-Metros (64 percent) are more likely to acquire a used car as their first car than buyers in Metros (55 percent). Non-Metros cities account for 65 percent of used car demand and have a CAGR of 30 percent which is three times that of metros.

• The average car age has reduced by 33 per cent from six years in FY11 to four years in FY22.

• According to the survey, 15 per cent of used car buyers are women who are comfortable purchasing in a phygital mode, a sharp increase of up to 75 per cent from FY21

• 65% of the pre-owned car supply in FY22 was concentrated in metropolitan centres such as Mumbai, Delhi NCR, Bangalore, Chennai, and Hyderabad

• Car sellers, get rid of their cars after covering distance of 70,000 kms on average, with an average vehicle age of about four years in FY22 compared to 4.4 years in FY21 males

About carandbike: carandbike is a leading auto technology platform with a focus to build India’s largest hyper-local integrated platform for content and commerce. The platform has been built on path-breaking auto programming & the most credible awards for the last 15 years. In a short span of time, CNB has clearly established itself as one of the top auto portals in the country and the fastest growing one by far. The business offers technology solutions to all the stakeholders of the automotive industry at various points of buy and sell value chain. CNB is also flanked by a flagship auto show on NDTV since the last 15 years. carandbike recently raised funds from Mahindra First Choice Wheels limited, the leading player in the used car vehicle ecosystem in India.

About Mahindra First Choice Wheels: Mahindra First Choice Wheels is a dominant player in the Indian used vehicle eco system providing products and services to cater to the needs of retail and wholesale customers utilizing its “on-the ground” and “in-the-cloud” capabilities. The company has raised funding from Silicon Valley based Hedge Fund, Valiant Capital and Cox Automotive, a $17 Billion US based enterprise.

About Das WeltAuto (DWA), the pre-owned car platform by Volkswagen Passenger Cars India: Das WeltAuto is the certified pre-owned car business of Volkswagen Passenger Cars India. It’s a one stop solution that facilitates buying, selling and exchange of multi-brand pre-owned cars. It offers a comprehensive 154 check point inspection on pre-owned cars and enables customers to utilize the expertise and extensive network of 105 DWA outlets in making informed decisions. The DWA platform also conducts the necessary due diligence and certifies the vehicle along with offering warranty, service value packages, accessories options, extended warranty and maintenance program for its customers.