Gears of Growth: The Growing Indian Used Car Market

India’s used car market is booming and changing how people view car ownership. The acceptance of pre-owned cars is growing rapidly, offering new opportunities for buyers and sellers alike. Let’s explore the trends and future scope of the Indian used car market as per CARS24 and Team BHP’s latest category report, Gears of Growth. Download the full Gears of Growth Report here.

The Rise of Pre-Owned Cars in India

India’s used car market has seen a dramatic rise in recent years. In 2024, the number of used cars sold surpassed new car sales, with projections showing that used car sales will outpace new car sales by 1.7:1 by 2030, as per internal data from CARS24, enhancing the sales of used cars over new ones by 70%.

This shift highlights the growing preference for affordable, reliable vehicles. Sales of used cars are expected to reach 10.8 million by 2030, growing at a rate of 13% annually, almost twice as that of new cars.

Reasons Driving the Preference for Used Cars

There are many reasons why people are turning to used cars, as per CARS24’s Gears of Growth report.

• First-time buyers (56%) make up a large portion of the market, owing to a rise in disposable income, the need for mobility, and the availability of financing options, which were not available for used cars earlier
• Milestones like marriage or starting a family (17%) is the most popular reason driving the decision to buy a car
• Job promotions and the need for a personal vehicle (12%) also play a role
• The need for an additional car (15%) highlights the rise of multi-car households
• The preference for smaller cars in urban areas (12%) is increasing

How Do People Research Used Cars?

Our data shows that most used car buyers have started to leverage digital platforms for research, a noticeable shift from offline sources like used car dealerships and newspaper classifieds. Social media (56%) and YouTube (53%) are the most popular sources, followed by online reviews (50%). and recommendations from friends and family (42%). This shift indicates the growing influence of digital tools and online platforms in the decision-making process.

Top States for Used Car Sales

Haryana benefits from proximity to Delhi and good road networks, while Uttar Pradesh’s expanding infrastructure makes car ownership more appealing. Delhi’s high registration costs, strict environmental norms, and heavy traffic make used cars more appealing, and are often bought as secondary cars. Maharashtra’s high GDP per capita, and essential car ownership in cities like Mumbai and Pune fuel the demand for economical used vehicles, States like Telangana, and Karnataka are also recording increased demand for used cars due to rise in disposable incomes and the need for affordable, compact, and fuel efficient vehicles.

Most Popular Used Cars in India

The demand for compact models remains strong, with many buyers preferring these for their practicality and affordability. The Maruti Suzuki Swift is the most sought for vehicle in the used car market across India. Other popular models include the Hyundai i10, Honda City, Swift Dzire, and Wagon R. In metro cities, the Swift and i10 dominate, with the Honda City and Wagon R chasing close behind. Non-metro cities saw the highest demand for the Swift, followed by the Swift Dzire. Other particularly popular models were the i10 and Alto . 

Hatchbacks Reign Supreme in Holding Value

The report suggests that hatchbacks retain the best resale value among all car types. These cars depreciate slower than other body types, making them a smart investment for long-term owners. Compact hatchbacks like the Santro, Tiago NRG, and Wagon R show the best resale value over a long term in this segment. Owners are able to recover nearly half the car’s original on road value while selling after an ownership period of 5 to 7 years.

SUVs hold their value well for the first three years, but depreciate faster than other body types post this period.

Car Brands Leading the Market

CARS24 internal data shows that Maruti Suzuki dominates both the used and new car markets holding a commanding 36% share in the former, and 40% in the latter. Hyundai follows with 21.9% and 14% respectively, while Honda, Tata Motors, and Mahindra make up smaller portions of the used car market. However, Honda misses a spot in the top 5 selling brands in the new car market. Toyota, while holding a 6% share of the new car market, lacks any significant presence in the used car market. Maruti Suzuki’s dominance is reflected in both the used and new car markets.

The Shift in Car Preferences: SUVs vs Sedans and Hatchbacks

In recent years, hatchbacks have seen a slight drop in market share, while demand for SUVs and sedans has risen. Hatchbacks, which once dominated the market, now account for about 53% of sales, down from 57% in 2022, while SUVs have seen a sharp rise in popularity, jumping from 12.6% in 2022 to 16.7% in 2024.

Breaking Down the Cost Factor of Pre-Loved Cars

The average selling price (ASP) of used cars has been steadily rising. Between 2021 and 2024, the ASP grew by 25.8%, driven by demand for feature-rich and premium vehicles. This indicates that buyers are willing to pay more for used cars with better performance, safety tech, and features. The increasing ASP of new cars has widened the gap, making used cars a more affordable option for many buyers.

Used Cars in Metro vs Non-Metro Cities

The ASP for used cars has been rising steadily across metros and non metro cities. While the average selling price in non metros used to be higher in 2021, the trend has reversed over the past 3 years, driven by the growing preference for durable, feature-rich vehicles that cater to both urban and rural needs.

The Average Ownership Span of Used Cars

Most first-owner cars are sold after seven years of ownership, while the second and third owners tend to keep the car for shorter periods. This highlights a trend of quicker car turnover as buyers seek newer models more frequently.

Fuel Type Preferences

Petrol cars remain the most popular in the used car market with 52% share in 2022, and their popularity has only grown, with over 56% in 2024 of buyers opting for them. Diesel cars are still in demand, particularly for long-distance driving, but their market share has dropped from 40.7% (2022) to 36.5% (2024). CNG cars have also gained popularity due to their cost efficiency and environmental benefits, and push from OEMs.

Electric vehicles (EVs) are beginning to make their mark in the market. With government incentives and improved infrastructure, the adoption of EVs has increased fivefold between 2022 and 2024, from 0.08% to 0.43%, though they still make up a small portion of the market.

Car Colors: What’s Trending?

Silver remains the most popular color choice for used cars, chosen by more than 30% of buyers. White and red follow closely behind, as buyers value these colors for their elegance, ease of maintenance, and bold appearance.

The Growth of Automatic Cars

The demand for automatic cars is on the rise, clearly indicating a growing preference towards ease of driving. From 2022 to 2024, the share of automatic cars in the used car market grew from 11.8% to 14.66%. The increasing traffic congestion in urban areas and the improved affordability of automatic cars are driving this trend.

Popular Features Buyers Want

Car buyers are increasingly valuing luxury, comfort, and feature-rich vehicles. Features like sunroofs/moonroofs (20%), infotainment systems (17%), and AC vents (17%) are highly sought after. Alloy wheels (13%) are also popular, as they offer both style and performance.

The Importance of Safety Features

Safety is a key priority for used car buyers. Features like airbags and NCAP ratings are becoming increasingly important. Nearly 39% of buyers filter their choices based on safety features, reflecting the growing awareness and concern for road safety.

Financing Trends in the Used Car Market

Financing is on the rise in both the used and new car markets. The percentage of used cars purchased through loans has grown steadily, reaching 23% in 2024, up from 15% in 2022, driven by easier access to financing and rising car prices. Meanwhile, the new car market has also seen a sharp increase in financed purchases, climbing from 60.4% in 2010 to 84.2% in 2024. These trends reflect a growing reliance on financing across the automotive sector.

The Future of India’s Used Car Market

CARS24 and Team BHP’s Gears of Growth report depicts that India’s used car market is set to continue growing, driven by changing consumer preferences, advanced features, and the increasing availability of affordable financing options. As more buyers turn to used cars, the market will evolve, offering more options for every type of driver. The future looks bright for India’s used car industry, with a road full of possibilities for both buyers and sellers.