India's Used Car Market Set to Soar: 6 Million Sales Expected This Fiscal

The Indian used car market is set for a substantial leap, with sales expected to exceed 6 million units this fiscal year. This growth is attributed to value-driven consumer behavior, increasing digital integration, and improved financial access, as detailed in a recent Crisil Rating report.

Used vehicle sales recorded an 8% growth last fiscal, significantly higher than the 5% growth seen between fiscal 2017-24, and are projected to reach up to 10% growth this fiscal. The market's estimated value stands around Rs 4 lakh crore, closely rivaling the new car sales market.

Despite high costs in refurbishment and logistics due to expansion, organized players are optimistic about reaching operational breakeven owing to robust revenue growth. Crisil's Senior Director Anuj Sethi highlights a shift in consumer confidence and shorter upgrade cycles as key drivers.

While challenges in customer acquisition and operational costs persist, there's a shift towards integrated services to enhance profitability. Strong cash reserves from prior funding are facilitating existing operations despite ongoing cash burn, with focus now on enhancing efficiency and profitability.

Bank credit remains low due to cash constraints but is expected to improve, especially for inventory-led players. The used car market is expected to stay stable, but maintaining quality inventory will be crucial to supporting long-term growth, according to Crisil Ratings.

(With inputs from agencies.)