Consumers to buy more used cars than new ones by FY26: Report

The used-car market is growing at a fast clip and is set to hit 8.2 million units or $47 billion by FY26, according to a report. In the pre-pandemic times in FY20, the second-hand car market stood at 4.4 million units, valued at $19 billion.

Preference for personal mobility

Induced by the Covid-19, the demand for personal mobility has gone up, according to the report by JM Financial. The report further added that the affordability offered by BS-VI will add to the demand for used cars.

The global impact of Covid-19 and the subsequent lockdown measures led to a widespread disruption in the automobile sector. Supply chains were interrupted and waiting time for delivery grew longer, prompting prospective new car buyers to opt for used cars.

Also, buying a second-hand car was no longer looked down upon as value for money started getting greater preference. The report said that with economic uncertainty looming over the heads, the preference for affordable used cars has been further amplified.

Slower growth for new car sales

JM Financial has predicted that in the next five years around two used cars will be sold for every new car that hits the road. This is something that has been happening in certain economies. While the sales of new cars are expected to grow by 9% between FY21 and FY26, sales of used cars are expected to grow by 15% in the same period. The new car market is expected to grow slowly from 2.7 million ($15.1 billion) units in FY22 to $4.2 million units ($52 billion).

Two-wheeler market

The report forecasts that the two-wheeler market will shrink to 24.3 million units, or $27 billion, in FY26 after touching peak levels of 36 million units in FY23 and 31 million units in FY22. The market is estimated at 27 million units, or $14 billion, as of FY21. It said that with annual transactions of both used and new cars crossing the 12-million mark, the total number of private cars in India could exceed 50 million by FY26.