Organised used-car market volume set to grow 7-9% in FY27: Crisil Ratings
New Delhi, August 4
Used-car volumes are expected to grow 7-9 per cent in FY27, led by first-time buyers who account for nearly two-thirds of transactions. According to Crisil Ratings, India's organised used-car market is poised to cross 7 million units, with the used-to-new car sales ratio remaining above 1x.
Organised players currently account for around 26 per cent of used-car sales, while unorganised transactions continue to dominate overall market activity.
"Used-car volumes are expected to grow 7-9 per cent this fiscal, led by first-time buyers who account for nearly two-thirds of transactions," said Anuj Sethi, Senior Director, Crisil Ratings.
"Rising new vehicle prices and affordability considerations are supporting used car demand from buyers seeking an economical route to car ownership, while also enabling access to higher-specification vehicles at lower prices. Greater digital adoption has improved transparency, inspection standards and financing access, helping formalise a market long constrained by trust concerns," Sethi added.
Demand for pre-owned vehicles remains strong despite GST rationalisation last fiscal, which narrowed the price gap with new vehicles by only 4-6 per cent.
Crisil's analysis over a five-year ownership period indicates that used hatchbacks and sedans stay around 25 per cent cheaper than comparable new vehicles, while utility vehicles offer cost savings of around 20 per cent.
On the supply side, the average age of used cars sold stands at around four years, compared with over eight years a decade ago, supported by faster model refreshes and shorter ownership cycles.
Although the organised segment's share of used-car volumes has risen to ~26 per cent this fiscal from 20-21 per cent in fiscal 2022, India's used-to-new car sales ratio remains well below the 2.5-3.5x level seen in mature markets.
Within the organised market, asset-light marketplace platforms account for about 85 per cent of transactions, while inventory-led players make up the balance. Scale benefits and margin focus are helping asset-light players achieve profitability, with inventory-led players likely to follow.
"Organised players are increasingly balancing growth with profitability. Marketplace players turned profitable last fiscal, while inventory-led players, despite the higher costs of inventory ownership, are narrowing losses through tighter cost discipline and a greater focus on sustainable growth," said Poonam Upadhyay, Director, Crisil Ratings.
"Reflecting this divergence, inventory-led platforms raised ~Rs 3,000 crore over the past two years, whereas marketplace players required no external funding. Going forward, capital raising is expected to be driven increasingly by expansion rather than funding operating losses," Upadhyay added.
Looking ahead, the report mentioned key factors for the sector including the availability of quality inventory, residual-value volatility through the GST transition, increasing financing penetration, and the pace at which organised players achieve profitability.
— ANI
Reader Comments
This is the reality of India - most of us can't afford a new car, especially in cities where parking and maintenance are so costly. Used car market growing is actually a sign of economic pressure, not prosperity. But at least the organised players bring some reliability. Before, buying a used car was a gamble with local dealers. 😅
Interesting to see the comparison with mature markets like the US where the used-to-new ratio is 2.5-3.5x. India at just over 1x shows there's still enormous headroom for growth. The fact that organised players have gone from 20% to 26% market share in 3 years shows real structural change. Digital trust is the game-changer here.
My concern is about the inventory-led players raising Rs 3,000 crore just to survive while marketplace players are profitable. This shows the business model challenges. Having said that, as a consumer I still prefer marketplace platforms - they give me better options and prices. With GST rationalisation narrowing the price gap, I hope the savings still remain attractive. 🤔
The average age of used cars dropping from 8 to 4 years is really impressive. People are upgrading more frequently now and that's good for the ecosystem. I only wish financing was easier for women buyers - still facing extra documentation hassles in many banks. Otherwise, the organised players like Spinny and Cars24 have really transformed the experience.
Honestly, the unorganised market still dominating at 74% is worrying. Many people in smaller towns still rely on local dealers who may not give proper
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.