The used cars market in India was the fifth-largest in the world as of CY2019, said Redseer. China with 21.4 million unit sales was the market leader, followed by the US which sold 17.5 million used cars. India sold 2.8 million units during this period.

NEW DELHI: The transition to Bharat Stage VI emission standards from BS-IV and lower GST rates, coupled with the fact that dealers are now using vehicular data to create new revenue streams and offering long-term maintenance packages, have been luring more and more people to buy used cars, according to a new Redseer report.

The market for used cars in India is expected to expand at a compound annual growth rate (CAGR) of 11% by FY26, with annual estimated sales of 8.3 million units, up from 4.4 million in FY20, as per the Redseer report published on 27 December.

Though the pandemic is one of the key catalysts for this shift in buyer preference, Redseer has also attributed the growth to new-found profit centres. For instance, millennials are switching cars faster than ever and are turning to used cars. According to industry estimates, millennials account for 80% of buyers in this segment.

The used cars market in India was the fifth-largest in the world as of CY2019, said Redseer. China with 21.4 million unit sales was the market leader, followed by the US which sold 17.5 million used cars. India sold 2.8 million units during this period. The report did not provide an estimate of India’s position in the global used car landscape by FY26.

That said, despite the expected growth, the used car market in India faces several inherent issues such as fragmentation and unorganised dealership models.

According to Redseer, India has 30,000 used car dealers and 45% of them are commission agents and brokers many of who do not even have office space to display cars or run operations. Stiff price-led competition from unorganised brokers also affects productivity and business of unorganised dealers.

This fragmentation is even higher in non-metros. Redseer found that 75% of used car dealerships in metros are institutionally driven compared with 47% in non-metros.

Redseer analysts have said dealers that can address these issues by leveraging technology, intelligence and high-quality data.

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