Despite the pandemic impacting the automobile industry, the Indian used-car market witnessed growth and was valued at $23 billion in FY22. The demand for used cars grew across tier-2 and tier-3 cities according to the Indian Blue Book report.

More than 3.5 million units were sold in FY22 while more than 40 million cars were sold globally, according to the report. 

By FY27, India’s used-car market is expected to touch 8 million units with a projected CAGR of 19.5 per cent . 

The industry also witnessed an increase in demand for used cars in non-metro cities. While 60-65 per cent demand was seenin non-metro cities, the demand was between 35 and 40 per cent in metro cities.

Vehicle supply was at 65 per cent and was concentrated in metros such as Mumbai, Delhi NCR, Bengaluru , Chennai, and Hyderabad. The supply of used cars in non-metros was at 35-40 per cent.

The demand in smaller towns is expected to grow at a CAGR of 30 per cent by 2026 compared to a 10 per cent in the top 40 cities in India. 

“The government is investing in the mass transit system in metro cities. For tier-2 and tier-3 cities, the sources of mobility are two-wheelers, buses and personal vehicles. We see growth in tier-2 and tier-3 cities happening at a significantly higher rate than tier-1 cities. Brands in tier-2 and tier-3 cities will also undergo rapid premiumisation,” said Ashutosh Pandey, CEO & MD, Mahindra First Choice. 

“Economy is being driven from tier-2 and tier-3 towns. The organised used-car market share is expected to increase from 20 per cent in FY22 to 45 per cent in FY26,” said Ashish Gupta, Brand Director, Volkswagen Passenger Cars India. 

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