The used car market in India is set get a further boost in the next five years, the sixth annual edition of OLX Autos report in partnership with CRISIL states. In FY22, the pre-owned car market has achieved pre-pandemic levels in volume terms and has grown 9 percent since. Growing at a CAGR of 16%, the pre-owned car market is expected to double in size from 4.1 million units in FY22 to 8.2 million units in FY27, increasing its lead by 1.7X over the new car market.
Interestingly, during this period, the new car market is also expected to witness healthy growth, and grow at a CAGR of 9-11%, reaching 48 – 50 lakh cars by FY27. In fact, the new car market will record high sales in FY23 backed by improvement in production levels, product launches coupled with continued traction for the UV segment.
What sells the most?
Market share for UVs at 49% surpassed those of both small cars (45%) and sedans (3%) combined in FY22. The UV segment has grown from 25% in FY17 to 49% in FY22. During the same period, large (from 8% to 3%) and small (65% to 45%) have de-grown in annual sales.
Share of UVs to grow a phenomenal 3X in the pre-owned car segment
In the pre-owned car segment, UVs have increased their share from 17% in FY17 to 22% in FY22. Over the next 5 years, UVs will continue to experience accelerated growth of 3X, reaching a market share of 32% in the pre-owned car market. This segmental shift towards UVs in the pre-owned car market will further help uplift the average price of a pre-owned car, leading to a 2.5X growth in the overall value of the pre-owned car market, over the next 5 years, from Rs. 1.8 trillion in FY22 to Rs. 4.1 trillion in FY27, growing at a CAGR of 19%.
The most popular UVs in the pre-owned car segment as per OLX platform data are Hyundai CRETA, Maruti Brezza, Maruti Ertiga and Mahindra XUV500.
Share of small and large cars in the pre-owned car segments and popular brands
Small cars no doubt dominate the pre-owned segment commanding 58% of all cars, with Maruti maintaining its dominance. The share of small cars will contract marginally by 2% to 56% by FY27. The most popular small cars as per OLX platform data considering the average vehicle age of 5 years in the pre-owned segment are Maruti Baleno, Hyundai Elite i20, Renault Kwid, Maruti Suzuki Dzire and Hyundai Grand i10.
The large car or sedan pre-owned segment will see the most contraction, declining from 12% share in FY22 to 7% in FY27 owing to the declining sales in the new car market, lack of new model launches and a shift in preference towards UVs. Honda City continues to be India’s favorite sedan in the pre-owned segment.
Skoda Kushaq 1.0 Litre: पहाड़ों में दौड़ेगी या नहीं? Hill climb test | TOI Auto
Factors affecting pre-owned car purchase decision
The share of cars that are in the age bracket of 0 to 7 years, would form nearly 58% of available cars in the pre-owned segment in FY27, adding tremendously to its attractiveness and preference among buyers. Thus in FY27, the number of cars in the 0-7 age bracket would be 2.2X that of FY22.
Age of vehicle and price key criteria while buying a pre-owned car
While metro buyers prefer younger vehicles, price is the primary selection criterion in tier 2/3 cities.
Preference for UV and vans is relatively higher in the East region, while within cars primarily cheaper, lower compact/ basic hatchbacks priced in the Rs 2-3 lakh range are preferred. The average age of vehicles was also higher in the East at – 6-8 years, compared to other regions.
Small car/Hatchback prices typically range between Rs 2-4 lakh, sedans around Rs 5-6 lakh and UV prices were relatively higher in the 7-9 lakh range in the preowned market.