FY26 outlook sluggish for used cars – Car News

India’s used car market may grow just 8–9% in FY26, down from earlier CAGRs of 10–12%, amid slow new car sales and supply constraints. Rising ASPs, shorter ownership cycles, and organised platforms like Spinny and CARS24 continue to support demand. Long-term outlook remains strong.

India’s second-hand car market is expected to slow down in FY26 with industry executives projecting single- digit growth of 8-9%, lower than the 10-12% compound annual growth rate (CAGR) reported in the last few years. The possible loss of momentum is being attributed to the sluggish sales of new cars; supply constraints could affect the pre-owned market, they point out.

Vineet Tripathi, chief business officer at Rupyy, a digital lending platform from the CarDekho Group, observed that if customers stop upgrading to new cars, supply constraints will eventually catch up. The market for pre-owned cars was estimated at around 5.5 million units in FY25 and the numbers are expected to hit 6 million units this year.

Hanish Yadav, senior vice president & business head at Spinny, notes that although a slowdown in new car sales could pose some supply-side constraints, these are likely to be mitigated by shorter vehicle ownership cycles and a rising trend in car upgrades.

One of the biggest drivers of the used car market is the rising cost of new vehicles which has made them less accessible to a large segment of the middle class. The average selling price (ASP) of passenger vehicles (PVs) in India has steadily increased due to stricter regulatory norms and the rising costs of raw materials. Industry data shows that ASP increased from ₹7.65 lakh in 2018–19 to ₹11.5 lakh in 2023–24, a jump of over 50%.

In the last couple of years, sales have been skewed towards more expensive cars with sales of smaller cars staying subdued. Demand for SUVs in particular, has pushed up the average sales price. “With the average price of a car having risen sharply, many consumers are migrating to the used car market for better value,” Gajendra Jangid, co-founder of CARS24, told FE.

At the same time, ownership cycles have become shorter. A decade ago, cars were changed typically every 6–8 years, but that has now fallen to 4–5 years. Additionally, car upgrades are on the rise and more than a fifth of buyers upgraded their vehicles in 2024, up from 12% in 2023, according to Yadav.

The emergence of organised players like Spinny and CARS24 has brought in transparency to the used car market, further propelling its growth. Moreover, some platforms also offer buyers financing options. The convenience of being able to look for cars online has made buying a used car easier, especially for first-time car buyers.  To sustain this growth, it is important to ensure transparency in vehicle quality, warranty programmes and access to affordable financing, particularly for first-time buyers, Yadav said. In the long-run the market is expected to reach sales expected to increase from 4.6 million in CY23 to 10.8 million in CY30 CAGR of 13%, said Jangid.

According to the Gears of Growth Industry report, the used-to-new car ratio—which measures how many used cars are sold for every new car, is steadily increasing. In FY23, this ratio stood at 1.3:1, meaning that for every new car sold, approximately 1.3 used cars were sold. This figure is expected to rise to 1.7:1 by 2030, indicating that the used car market is growing faster than the new car segment.

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This article was first uploaded on June nine, twenty twenty-five, at twenty-five minutes past eleven in the night.

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