India’s second-hand car market: Poised to cross 6 million gross sales; over twice as fast as new cars

India’s used car market is on monitor to cross 6 million items in gross sales this fiscal, fuelled by value-conscious consumers, rising digital adoption and improved entry to finance, in accordance to a report by Crisil Ratings.The surge has pushed the used-to-new car gross sales ratio to 1.4, up from under 1 5 years in the past, with volumes rising at greater than twice the tempo of new car gross sales.After a modest 5% progress between fiscals 2017 and 2024, used car volumes rose by a strong 8% final 12 months, and Crisil expects progress to contact up to 10% this fiscal.The market worth of those automobiles is pegged at round Rs 4 lakh crore, practically matching that of new car gross sales.While organised gamers within the sector proceed to incur excessive working prices, primarily due to refurbishment, logistics and financing, the section is in growth mode and but to flip worthwhile. But Crisil expects sturdy income progress to drive breakeven on the working degree this fiscal or the subsequent. In the meantime, the credit score well being of firms will rely closely on well timed fund-raising and ample liquidity to assist growth.Anuj Sethi, Senior Director, Crisil Ratings, mentioned, “The improvement in the used-to-new car sales ratio to 1.4x from under 1.0x five years ago signals a structural shift, driven by rising consumer confidence and digital adoption. The supply too remains strong with average age of used cars steadily dropping and is expected to reach around 3.7 years, reflecting quicker upgrade cycles and growing preference for utility vehicles, mirroring new car trends.“The report famous that India nonetheless lags behind mature markets, the place the used-to-new car ratio stands greater, 2.5 instances within the US, 4.0 within the UK, 2.6 in Germany and three.0 in France, suggesting there’s ample room for progress.Used car gross sales additionally held agency throughout the pandemic and world semiconductor shortages that hit new car manufacturing. With contemporary delays now attributable to uncommon earth magnet shortages, consumers are turning to pre-owned automobiles for sooner availability.The post-pandemic rise in new car gross sales has additionally expanded the vary of accessible used automobiles, a boon for first-time consumers. In addition, lender-platform tie-ups and AI-led underwriting have eased entry to automobile finance, additional supporting the shift.While the sector has grown quickly, profitability stays a problem for organised gamers.Poonam Upadhyay, Director, Crisil Ratings, mentioned, “High cost of customer acquisition, logistics and refurbishment continues to weigh on the operating margin, which remains thin or negative for many players. However, the shift towards integrated service offerings including inspection, refurbishment, financing, insurance, and doorstep delivery, along with tighter cost control, should help narrow the losses down gradually. If the current momentum on cost agility sustains, most players are likely to achieve an operating breakeven over the next 12-18 months.”According to Crisil, most gamers have sufficient money reserves from earlier fundraising rounds to meet operational and capital expenditure of Rs 800–1,000 crore this fiscal, with a deal with increasing inspection hubs and strengthening tech infrastructure.Since fiscal 2019, organised gamers have raised greater than Rs 14,000 crore by fairness. But prior to now two years, the emphasis has shifted in the direction of enhancing profitability and operational effectivity, main to extra selective fundraising.Bank credit score stays constrained due to ongoing money burn, however Crisil expects a pickup, particularly for inventory-led companies with tangible collateral.Looking forward, the report mentioned the used car market is probably going to stay structurally secure, however availability of high quality stock shall be a key issue to watch.