India's Used Car Market Set for Robust Growth

According to a recent report by Crisil Ratings, India's used car market is poised for an 8-10% volume growth in FY26, with sales expected to reach nearly six million units. This growth is largely attributed to the increasing digital adoption and easier access to vehicle financing.

Shift in Consumer Preferences

The report highlights a significant shift in consumer preferences, with the used-to-new car sales ratio climbing to 1.4 over the past five years from below one earlier. This trend underscores the growing acceptance of used vehicles among Indian consumers.

Market Valuation and Challenges

Crisil estimates the used car market's value at approximately Rs 4 lakh crore. Despite strong demand, organized players face challenges such as high operating costs related to vehicle refurbishment, logistics, and financing, leading to continued cash losses across the sector.

Path to Profitability

However, Crisil anticipates a turnaround, with players likely to achieve operating breakeven in the current and next fiscal years, driven by strong revenue growth. The agency emphasizes the importance of sustained liquidity and successful fund-raising for the sector's financial health.

Resilience Amid Disruptions

The used car segment has demonstrated resilience despite disruptions like the COVID-19 pandemic and chip shortages affecting new car supply, signaling a stable and promising future for the market.