India’s Pre-Owned Car Market Shows Robust Growth, Reaches 35.9 Million Units in FY23
- ByStartupStory | December 20, 2023
According to a report by OLX Mobility, India’s passenger vehicle count reached 35.9 million in FY23, up from 34.1 million in FY22. Notably, the pre-owned car industry continued to outpace the new car market in terms of volumes, with 4.6 million pre-owned units sold compared to 3.9 million new cars in FY23.
OLX attributed this growth to factors such as the reopening of the market, a growing preference for personal mobility, and an increase in disposable incomes. The pre-owned car market witnessed a compound annual growth rate (CAGR) of 6% during 2018-2023, outstripping the 3% CAGR observed in the new cars market during the same period.
Despite achieving a 27% volume growth in FY23 at 3.9 million units, the new car sales segment anticipates a moderated growth pace of 6-8% in FY24, according to OLX. In terms of industry value, new car sales reached Rs 4.5 trillion in FY23, up from Rs 3.5 trillion in FY22.
In contrast, the pre-owned car market’s worth in FY23 was Rs 2.1 trillion, significantly lower than the new car market’s Rs 4.5 trillion. However, the pre-owned car market is projected to grow 1.6x in volume terms, rising from 4.6 million units in FY23 to more than 8.5 million units by FY28, and 2.5x in value terms from Rs 2.1 trillion to Rs 5 trillion over the next five years.
Urban centers dominated the pre-owned car industry in FY23, claiming a substantial 70-75% market share, while Tier III and rural areas contributed the rest. However, the report highlighted a shift in demand dynamics, with Tier II cities showing growing interest, driven by a younger demographic accounting for 40-45% of the demand.
In terms of supply, organised dealers and unorganised dealers each made up 30-35% of the total market share in FY23, while digital platforms and customer-to-customer transactions represented 10-12% and 22-24%, respectively.
Looking ahead, the share of digital platforms in the pre-owned car market is projected to surge from 3-4% in FY23 to over 12% by FY28, marking a more than 4x increase. OLX emphasized the need for organised players to build consumer trust and enhance the market’s shift from unorganised to organised dealers.
The report also highlighted India’s relatively low car penetration rate at 24-26 cars per 1,000 people, trailing behind global counterparts like China and the United States. However, the report sees significant growth potential in the medium to long term, driven by factors such as disposable income.
Finally, the report pointed out a shift towards utility vehicles (UVs) in the pre-owned car market, with a projected doubling of market share from 21% in 2023 to 41% by 2028. The influx of UVs has contributed to a decrease in the average age of available cars, with demand highest for UVs in the 5-7 years age bracket at 35%, followed by 0-4 years at 26%.
OLX Mobility, formerly known as Autonote, compiled the report, drawing insights from industry data, the OLX platform database, and ground-level interactions with market participants.
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