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In charts: How second-hand car sales are picking up in India
Summary
- The sales of second-hand cars have gradually increased over the years, and are rising faster than that of new ones. Mint explores the dynamics of the used-cars market.
As India's economy expands, an interesting shift is underway in the vehicle market—consumers are increasingly moving from two-wheelers to passenger cars. But not everyone is opting for brand-new vehicles; many are fulfilling their dream of car ownership by turning to the second-hand market.
This shift is evident in sales data. The share of passenger vehicles in total vehicle sales has risen from 12.9% in 2018-19 to 17.7% in 2023-24, while two-wheelers have seen a relative decline.
The second-hand car market has emerged as a key beneficiary of this trend. Many first-time car buyers are former two-wheeler owners looking to upgrade, creating fresh momentum for the segment, said noted Deloitte India partner Rajat Mahajan.
Affordable option
While car ownership remains concentrated among India's top 10% income group, it has been rising across economic segments over the past decade. Notably, used car sales are growing faster than new car sales.
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The increasingly organized nature of the second-hand car market—with manufacturer-backed certification programmes and improved financing options—has made car ownership more accessible. According to Deloitte, 90% of used car purchases in India are priced below ₹10 lakh, with average selling prices in the ₹4.5-5 lakh range.
Miles to go
Despite the growth in car ownership, India remains in the early stages of unlocking its full market potential.
The used-to-new car ratio lags significantly behind developed markets, and overall car ownership is still lower than in several emerging economies—leaving ample room for expansion in both new and second-hand vehicle sales.
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According to Belgium-based consultancy Arthur D. Little, India’s used-car market is poised for rapid growth, projected to expand from $34 billion to $80 billion by 2028. This surge will be driven by shorter vehicle ownership cycles, improved quality of used cars, and the rise of organized players, making second-hand vehicles an increasingly attractive option.
Preference crossover
Consumer preferences are shifting not just from two-wheelers to cars but also within car body types.
In the new car market, hatchback sales are declining, largely due to the rising popularity of SUVs, which offer more space, higher ground clearance, and better visibility.
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Hatchbacks, however, continue to dominate the pre-owned market, thanks to their affordability and practicality. While resale values for hatchbacks, SUVs, and sedans remain similar after a year, hatchbacks tend to hold their value better over time. This trend highlights strong demand from buyers who prioritize budget-friendly options, particularly those who either prefer not to or cannot splurge on a new car.
