India’s used car sector is expected to expand by 8–10% in FY 2025-26, as per a recent report by Crisil Ratings—more than double the pace of new car sales, indicating a clear shift in consumer preference toward pre-owned vehicles.
Demand Driven by Affordability and Easier Access
Crisil’s report states that more than 6 million used cars are expected to be sold this year. A major reason for this growth is the value-conscious approach of Indian consumers, who are increasingly turning to pre-owned cars due to lower prices, easier financing options, and wider availability online. The average age of used cars has dropped to about 3.7 years, reflecting quicker upgrade cycles and a growing trend of buyers replacing their vehicles more often.
Organised Dealers Expanding, But Facing Losses
Despite the rise in sales, organised players in the used car segment are still struggling with profitability. High costs for refurbishment, logistics, and customer acquisition have kept profit margins low or even negative for many companies. However, Crisil expects many of them to reach operational breakeven within the next 12 to 18 months if they manage costs effectively.
These businesses are now focusing on offering end-to-end services like vehicle inspection, repair, insurance, financing, and home delivery, which may help reduce future losses.
Room for Growth and Need for Quality Inventory
India’s used-to-new car sales ratio has improved from under 1 five years ago to 1.4 today, though it still lags behind developed countries like the US (2.5) and the UK (4.0). Factors like semiconductor shortages and delayed delivery of new cars are also pushing customers toward the used car market.
Crisil added that most companies have enough funds from past investments to support their plans, including spending up to 1,000 crore this year on building infrastructure and tech platforms. Still, the availability of high-quality used cars will be key to keeping the market stable in the coming years.
