Comprehensive Snapshot for India Used Car Market Including Segment Analysis in Brief.
Industry: Automotive & Transportation
Delivery Timelines: Please Contact Sales
Published Date: April-2025
Format: PPT*, PDF, EXCEL
Number of Pages: 140
ID: PMRREP35243
The India used car market size is projected to rise from US$ 32.9 Bn in 2025 to US$ 90.2 Bn by 2032. It is anticipated to witness a CAGR of 15.5% during the forecast period from 2025 to 2032.
Easy availability of several types of used car finance options and rising preference of the younger demographics for individual mobility are poised to bolster used car demand in India. The surging middle-class population in the country is also seeking alternatives to new cars as these are relatively low-cost. Several local pre-owned car providers are focusing on offering transaction simplicity, convenience, and transparency to attract more customers.
Car auctions have further become a significant channel for acquiring used passenger cars in the country. The boom of online auction platforms, including eDiig and SAMIL, have enhanced the process, enabling more competitive pricing and a wide reach. Strict environmental norms such as the roll out of green tax on aging cars have also influenced the market.
Key Industry Highlights
|
Market Attribute |
Key Insights |
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India Used Car Market Size (2025E) |
US$ 32.9 Bn |
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Market Value Forecast (2032F) |
US$ 90.2 Bn |
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Projected Growth (CAGR 2025 to 2032) |
15.5% |
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Historical Market Growth (CAGR 2019 to 2024) |
13.3% |
The implementation of Bharat Stage VI (BS-6) emission norms in India has significantly influenced the cost of new vehicles. Automakers have had to invest in innovative exhaust after-treatment systems and engine technologies to comply with these strict environmental norms. It has resulted in high manufacturing costs. According to a report published by CARS24, the Average Selling Price (ASP) of new cars increased by 32% in 2024, while pre-owned cars witnessed a comparatively lower surge of 24%.
The high price gap has made second-hand cars an attractive option for consumers with tight budgets, specifically in tier-2 and tier-3 cities where cost-effectiveness is an important concern. In addition, the high cost of new cars due to BS-6 compliance has led to an increasing demand for financing options in the used car segment. CARS24 mentioned that between 2010 and 2024, used car financing penetration surged from 15% to 23%, highlighting an increasing dependence on loans to initiate purchases. This factor will also likely encourage collaborations between financial institutions and pre-owned car dealers. OLX, for example, recently joined hands with IDFC FIRST Bank to optimize the financing process for used car buyers.
Even though the pre-owned car market in India is showcasing considerable growth, a few structural barriers continue to hamper development to a certain extent. A key challenge is the cost of financing, as interest rates for pre-owned car loans tend to be relatively higher, typically about 13 to 16% as compared to 8 to 10% for new cars. This 4 to 5% gap in interest rates is anticipated to push the total cost of ownership, mainly for those with limited credit access or first-time buyers. Interstate car transfers further pose significant bureaucratic and logistical challenges. These often involve delays in documentation, road tax recalculations, and complex re-registration processes. Such issues tend to hamper cross-state purchases, specifically in online transactions.
Mismatch between demand and available inventory is another key concern in the market. Most urban buyers now prefer cars that have clocked under 40,000 kilometers and are less than five years old. This is attributed to concerns associated with fuel efficiency and maintenance, which are bolstered by scrappage policies. However, the current supply is heavily skewed toward older vehicles. OLX Auto, for example, found that in 2024, more than 60% of listed cars had odometer readings above 100,000 kilometers and had surpassed the five-year age mark. This demand and supply gap is poised to compel potential buyers to either postpone their purchase or compromise on their expectations.
A key untapped opportunity in India’s second-hand car market lies in rural and non-metro areas. Demand for personal mobility is constantly rising in these areas, backed by limited availability of public transport, improving rural incomes, and the development of road infrastructure. The supply of good-quality second-hand cars, however, remains heavily concentrated in tier-1 and metro cities, creating a geographic mismatch.
It is further creating a compelling case for organized companies to extend their logistics networks and physical presence into non-metro areas. It will likely provide easy access to after-sales support, financing options, and certified vehicles. Companies such as Spinny have already initiated pilot operations in small towns across Madhya Pradesh and Uttar Pradesh. Such strategies not only deliver a high-growth frontier for companies seeking to scale in a largely underserved market but also promise to bridge the supply-demand gap.
Based on vehicle type, the market is trifurcated into hatchbacks, sedans, and sports utility vehicles (SUVs). Among these, hatchbacks are projected to account for a share of more than 57.0% in 2025, finds Persistence Market Research. These vehicles are more affordable compared to SUVs and sedans, both based on the maintenance costs and initial purchase. This factor is envisioned to make used hatchbacks an ideal option for budget-conscious customers, mainly first-time car owners.
SUVs, on the other hand, are predicted to showcase decent growth from 2025 to 2032. These are perceived as lifestyle vehicles and status symbols across India. New SUVs, however, often fall outside the budget of several middle-income buyers. To bridge this gap, used car start-ups are now offering aspirational models, including Tata Harrier, Kia Seltos, and Hyundai Creta at costs 30 to 40% lower than their new counterparts. SUVs are also commonly equipped with sophisticated safety features such as dual airbags, Electronic Stability Control (ESC), and camera-based assistance systems. As consumers now prioritize safety, they are inclining toward pre-owned SUVs for family travel.
In terms of fuel type, the market is divided into petrol, diesel, CNG, and Electric Vehicles (EVs)/hybrids. Out of these, the petrol segment will likely dominate by holding 52.0% of India used car market share in 2025. Used petrol cars provide a budget-friendly option compared to their diesel counterparts. These have relatively lower emission levels of particulate matter and nitrogen oxides. This environmental benefit is projected to attract eco-conscious customers looking for sustainable transportation options.
Used diesel cars, on the other hand, are poised to exhibit average growth in the forecast period. Diesel engines are known to offer superior fuel efficiency. Models such as Honda Amaze and Tata Altroz, for example, provide Automotive Research Association of India (ARAI)-certified mileage figures of up to 25 km/l. This high efficiency will likely make used diesel cars an ideal option for those living in areas with restricted access to cost-effective fuel alternatives as well as for long-distance commuters. Even though used electric/hybrid vehicles are at a nascent stage in India, metro cities such as Hyderabad, Mumbai, Bengaluru, and Delhi-NCR are seeing considerable demand. The supply of used electric vehicles remains limited in most areas, backed by the relatively low ownership base of new EVs and a long ownership cycle among first-time buyers.
In North India, Haryana, Uttar Pradesh, and Delhi are estimated to remain at the forefront of growth through 2032. The region will likely generate 32.0% share in 2025. The rise of several online platforms is expected to change the way used cars were once purchased in the region. These platforms offer smooth purchasing experiences with doorstep delivery, vehicle history reports, and transparent pricing. These have also extended financing options, making used cars easily accessible to a wide population segment.
In rural parts of North India, used diesel cars are presumed to be a popular choice due to their better suitability for long distances and rough terrains as well as more mileage. Mahindra Scorpio and Toyota Innova have gained momentum in these areas, specifically among businesses and families.
States such as Gujarat and Maharashtra are assessed to outpace the others in West India through 2032. A share of 28.0% is speculated for the region in 2025. Easy availability of cost-effective financing options, rising middle class, and surging urban mobility are expected to drive demand across cities including Surat, Ahmedabad, Pune, and Mumbai. The preference for used hatchbacks and sedans is relatively high in the aforementioned cities, with models such as Hyundai i20, Honda City, and Maruti Suzuki Swift gaining traction.
Despite this upward growth trajectory, West India faces certain challenges. In some parts of Maharashtra and Rajasthan, mainly in rural and semi-urban belts, inadequate inspection protocols, delays in Registration Certificate (RC) transfers, and lack of proper documentation often deter customers. This lack of standardization along with fragmented networks of local dealers will likely create trust issues, inhibiting market penetration in tier-3 towns, including Palanpur, Bhilwara, and Jalgaon.
South India stands out for the surging adoption of online-to-offline (O2O) car buying models in cities, including Kochi, Bengaluru, Chennai, and Hyderabad. Platforms such as CarDekho, Cars24, and Spinny, for instance, recently reported that more than 65 to 70% of buyers in Hyderabad and Bengaluru now prefer online platforms before visiting a dealership. South India has been further experiencing a rapid shift toward feature-rich and premium used cars equipped with sunroofs, connected car technology, and automatic transmissions.
Droom, in its 2023 report, found that Chennai and Hyderabad showed a 40% year-over-year surge in demand for pre-owned SUVs priced above 10 lakh rupees, such as Jeep Compass, MG Hector, and Toyota Innova Crysta. The trend was pushed by rising preference for comfort and long intra-city commutes. Rural penetration in the south, however, remains comparatively better than in the west. This is mainly due to organized dealership expansions and high road density. Brands are looking to extend their presence in tier-3 towns across Tamil Nadu and Andhra Pradesh by developing new facilities in small markets, including Kottayam, Erode, and Nellore. Backed by the aforementioned factors, South India is poised to account for a share of approximately 27.0% in 2025.
India used car market is showcasing a dynamic shift, with both unorganized and organized players vying for consumer attention. Unorganized dealers are currently leading in terms of volume owing to their informal credit options and hyperlocal reach. Organized players, including OLX Autos, Spinny, and Cars24, are rapidly gaining ground by providing hassle-free car insurance and warranty, financing, and quality assurance.
Adding to the competitive mix are OEM-backed dealerships, including Mahindra First Choice and Maruti Suzuki True Value. These dealers are leveraging their nationwide service networks, certified vehicle programs, and brand trust to win over new age/millennial consumers.
The consumer-to-consumer (C2C) segment is, however, shrinking, mainly because of increasing concerns over trust and transparency. To gain a competitive advantage, these dealers are aiming to embrace differentiating strategies, including subscription models, digital retailing, and home test drives. A few value-added benefits such as loyalty programs, return policies, and extended warranties are also helping them to transform buyer experience in this rapidly evolving market.
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Report Attribute |
Details |
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Historical Data/Actuals |
2019 - 2024 |
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Forecast Period |
2025 - 2032 |
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Market Analysis Units |
Value: US$ Bn/Mn, Volume: As Applicable |
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Geographical Coverage |
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Segmental Coverage |
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Competitive Analysis |
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Report Highlights |
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Customization and Pricing |
Available upon request |
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The India used car market is projected to be valued at US$ 32.9 Bn in 2025.
Implementation of BS-6 standards and rising demand for individual mobility from younger demographics are the key market drivers.
The India used car market is poised to witness a CAGR of 15.5% from 2025 to 2032.
Focus of leading companies on extending their presence in non-metro areas and rapid development of online used car buying and selling platforms are the key market opportunities.
CARS24, Maruti True Value, and Mahindra First Choice Wheels are a few key players.
