Used-car market to more than double to 8.2M units by FY'26: Report
The pre-owned car market is set to more than double to 8.2 million units or $47 billion over the next five years ending FY'26 — from four million in FY'21 or $17 billion, which means that two used cars will be sold for every new car sold, according to a report.
The used-car market was 4.4 million units worth $19 billion in the pre-pandemic FY'20, according to a JM Financial report that also forecast a clear highway for the used-card market driven by the pandemic-induced demand for personal mobility and affordability because after the BS-VI implementation cost of new cars has been on an upswing.
With supply disruption preventing auto companies from rolling out new models and meet the increased demand, the demand for used cars surged over the past year and buying pre-owned cars is no more socially looked down on as safety and value for money have taken precedence. The looming economic uncertainty since the pandemic also means there is an amplified preference for affordable used cars, the report said.
The report expects by FY'26 two used-cars will be sold for every new car sold, a story that has already played out in developed economies.
While new car sales are expected to annually post a 9 percent between FY'21 and FY'26, used car sales are expected to clip at 15 percent annually during this period, to take the volume to 8.2 million and value to $47 billion, it adds.
As against this, the report sees the new car market is rise slowly from 2.7 million in FY'21 (down from 2.8 million in FY'20) or at $15.1 billion (down from $17.4 billion) to 4.2 million or $52 billion by FY'26.
On the other hand, the two-wheeler market, where the country already leads globally, is set to de-grow from 27 million in FY'21 (down from 29 million in FY'20) worth $14 billion to 24.3 million or $27 billion by FY'26 after peaking at 36 million in FY'23 and 31 million this fiscal.
Despite being the fourth-largest car market in the world, with a volume of 2.8 million in FY'21, the country has very low motorisation rates or a very low penetration level at 22 cars per 1,000 people. But this is expected to more than double to 45 by 2030.
The report also forecasts that the number of private cars in the country is expected to exceed 50 million by FY'26 with annual transactions (new and used) crossing the 12 million mark.
The report further notes a faster-moving advertising medium change to the online space, which had already reached 25 per cent in FY'21 and moving on to grab more attention and wallet share topping 37 percent in FY'25 (closer to the US level of 40 percent and the 52 percent in China), as more than 90 percent car buyers are today researching online prior to walking into a dealership.