Chennai: The used vehicle industry is now a $90 billion market up from $78 billion two years ago riding on five years of top gear growth at 12% CAGR. In volume terms, it is now one-and-a-half times bigger than the new vehicle market. While new car and SUV sales are down 18.4% in the April-June quarter, used car and SUV sales are still up 15% say top organised auto retailers like Mahindra First Choice Wheels, Droom and OLX. Result: currently used car and SUV market is 4.8 million units compared to 3 million units of new car and SUV sales. In value terms, despite the average vehicle price being 30%-40% lower than new vehicles, the overall used vehicle industry is now worth as much as new. “For FY18-19, the value of the overall automobile market (including passenger vehicles, commercial vehicles and two wheelers) is worth $180 billion and 50% of that is used vehicles. Of this, passenger vehicles comprise $60 billion while two wheelers comprise another $20 billion,” said Sandeep Aggarwal, founder CEO, Droom. Much of the used vehicle market is still unorganised, even as, the organised sector now comprises just under 25% of the market. According to a study by Frost & Sullivan, the used car market was 3.5 million units in 2016 and is expected to hit just under 6 million units by 2021. By that time, the organised sector's share will be 25% from 20% in 2016.

So strong is the demand for used cars and SUVs that despite strong growth for over 5 years, ticket sizes have not come down. “The used car pool is now big enough for people to come and exchange a used car for another used one even as used cars being exchanged for new vehicles has slowed down sharply. We expect the current growth of 15% to last for the next 12 months at least,” said Ashutosh Pandey, CEO, Mahindra First Choice Wheels.

What’s fuelling this sales spurt is the Indian love for good deals which are drying up in new car retail. “The pre-owned car industry is doing well because when there is an economic downturn, users tend to scout for deals. The trend at OLX has been similar as well, as the pre-owned cars category grew by 20% in 2018 Comparing Q1 of FY19 and Q1 FY20 there has been 16% growth in listings of overall passenger vehicles,” said Sunny Kataria VP-auto, OLX.

Like new vehicles, it’s SUVs that are ruling the used car mart as well. In new vehicles, SUV sales fell just 4.5% whereas new car sales slumped by 23%. In the used car space, said Kataria, “listings in the SUV segment grew by a whopping 48% while demand for the same grew by 24%. Launch of new SUV models such as MG Hector and Hyundai Venue with the latest tech features have also prompted users to upgrade from their existing SUV’s,” he added.

