New Delhi, Apr 30 (BNP): India’s used-car market is expected to grow significantly over the next few years, nearly doubling to around $70 billion by FY31 from about $35 billion in FY26, driven by rising affordability, faster vehicle replacement cycles, and growing formalisation of the sector, according to a new report.
The report by Redseer Strategy Consultants notes that India is currently the fifth-largest used-car market in the world and is likely to become the third-largest by the end of the decade, after the United States and China.
Annual used-car sales are projected to rise to nearly 10 million units by FY31, supported by strong demand, increasing car ownership, and improved financing options.
A key trend highlighted in the report is the shortening of vehicle replacement cycles, which is expected to fall from 7–8 years in FY21 to around 4–5 years by FY31, especially in metro cities and Tier 1 markets.
The report adds that rising incomes, growing preference for better-equipped vehicles, and easier access to loans are helping both demand and supply in the used-car ecosystem. Financing penetration is also expected to increase to around 40% by FY31, making cars more affordable for a larger population.
At present, about 80% of used-car transactions in India still take place in the unorganised sector. However, the market is gradually shifting towards organised, trust-driven platforms that offer better transparency and quality assurance.
The report also points out that around 65% of used-car buyers are first-time owners, showing how the segment is playing a key role in expanding personal mobility across the country.
India’s used-to-new car ratio currently stands at 1.4 and is expected to improve to 1.7 by FY31, though it still remains below levels seen in more mature global markets, indicating strong room for further growth.
