In the past five years, India’s used car market has seen an explosion. According to a report from RedSeer Consulting, the used car market in India is expected to grow from 31 lakh units sold in 2020-21 to over 70 lakh units by 2025-26! 

The growth is driven by several factors. Improved infrastructure for auctions (where most used cars are bought and sold), consumer awareness about how much money they can save by buying a used car in India, lower interest rates, and rising disposable incomes that allow more people to buy new cars or upgrade their current ones.

A RedSeer report on Indian Used Car Market

India’s second-hand car sales grew at a healthy rate of 20 percent during 2015-16, while new vehicle sales grew only 5 percent. Furthermore, the market has grown over 100% in just three years. It means there is an increase in demand for second-hand cars in India and this trend will continue in the coming years. The report also highlighted three factors driving this growth: 

  • Stricter emission norms
  • Higher prices of new cars
  • Increasing disposable incomes among consumers.

Used car market to touch over 70 lakh sales by 2025

India’s used-car market is the fifth largest in the world, and it’s growing at a CAGR of 15.9%. That means that by 2025, India will be importing around 70 lakh used cars.

India’s New Car Sales Are Declining Because Of A Few Reasons: 

1) People Are Becoming More Environmentally Conscious 

2) Rising Interest Rates

In 2018, the used car market’s value was $12 billion. The majority of buyers are young people who cannot afford new vehicles or personal loans. Likewise, most Indian families do not have enough space for multiple cars and prefer sharing a single vehicle between multiple members—a common practice known as “carpooling.”

What is driving used-car growth in India?

The used car market is growing in India because of many factors, including:

  • Cheaper than new cars: Because the used car market in India is still relatively new, it’s not as well-developed as others. It means that prices are lower and can even be cheaper than those of new cars.
  • More affordable than new cars: Even though used cars in India are more affordable, they still have all the benefits of owning a brand new vehicle, such as better resale value and improved fuel efficiency and safety features. But there’s also another reason why buying a used automobile can be easier on your wallet…
  • Better resale value: One thing buyers look for when purchasing a vehicle is its resale value—the amount someone else will pay for your old car when you’re ready to upgrade to something newer. When you purchase an older model from us, we ensure all our vehicles undergo thorough stringent inspections, so customers know what they’re getting into before making their purchase decision. It includes checking things such as engine compression (to ensure there aren’t any problems), brake pads/shoes (to ensure stopping power remains optimal throughout ownership duration), and tire tread depth/condition (to ensure proper handling during rainy seasons), etc.! We don’t just do these little things because they matter; rather they’re part of our commitment to ensuring that every customer who walks through our doors gets exactly what he or she expects—something no other dealership can offer! In fact, one recent customer told us how happy he was after buying his first car from us last week–he said, “Thank God I found your place.”

Why is a semiconductor shortage impacting new car sales in India?

The semiconductor shortage is impacting new car sales in India because it has led to a decline in the supply of new cars. The chips that are part of a vehicle’s safety elements such as airbags, ABS, seatbelt tensioner, and stabilization system, are made with semiconductors. Even the fancy touchscreen that we get to use in cars, the chips used in them use semiconductors.

With the global market starving of these chips, it’s becoming excessively difficult to produce more cars to meet consumer demands. 

Numerous factors are combining to push the Indian used-car market higher

Several factors are combined to push the used-car market higher while new car sales decline.

Lower pricing is helping to increase sales of used cars in India. In recent years, the depreciation of used cars has been at an all-time low, thanks to a glut of vehicles on sale in the market and a lack of consumer demand for them. As a result, buyers have been able to get more value for their money when they buy a used car in India – which has helped boost sales numbers immensely.

At the same time as this decline in depreciation has occurred, there has also been an increase in consumer spending power over recent years – meaning that more people can afford to buying a second hand car instead of having to opt for something newer but less expensive. 

Even though demand for new cars is declining overall due to economic downturns across much of India’s population base (as discussed above), there’s still plenty of money available out there for those selling pre-owned automobiles – making it possible for them not only to survive but thrive under current conditions.


We’re excited to see how the Indian used-car market continues to grow and evolve. There are many positive signs for this fascinating industry including a growing demand for electric vehicles and an emerging middle class with the disposable income to buy them. With so much momentum behind it, we expect there will be even more exciting developments in India’s used car market in the near future!