Used cars in India grew by 8-10% in 2025-26, more than double the number of new cars
Credit rating agency Crisil Rating said in a report that it is expected that sales of used cars in India will exceed the fiscal range of 6 million vehicles, which is driven by value awareness demand, digital adoption increases and better access to funded sales.
This has increased the new ratio of use in car sales to 1.45 years ago, with the volume more than tripled.
Credit Ratings said that after a 5% volume increase between fiscal 2017-24, vehicle sales increased by 8% and last fiscal year and are expected to grow by 10% this fiscal year.
The market value of these used cars is estimated to be around Rs 4 billion, almost matching new car sales.
Organized players in the sector have been in the expansion mode for the industry to incur high operating costs for renovations, logistics and financing, resulting in continued cash losses.
However, strong revenue growth is expected to drive its success at this and next fiscal operating profit levels. Until then, participants’ credit profiles will largely depend on timely fundraising and sufficient liquidity to support growth.
Anuj Sethi, senior director of Crisil Ratings, said: “The sales ratio of new cars used increased from 1.0 to 1.4 times five years ago, indicating that the growth in supply is driven by the increased consumer confidence and digital adoption. The supply is also strong. As the average age of used cars gradually declines, it is expected to decline steadily, and it is expected to escalate around and rapidly, reflecting a higher speed and growing, and growing at an increasing rate and growing rate.
The report further added that there is a lot of room for growth as India uses new cars sales ratios still lag behind the United States (2.5 times), the United Kingdom (4.0 times), Germany (2.6 times) and France (3.0 times).
Even during the pandemic and semiconductor shortages, the segment remained stable as extended shortage of rare earth magnets delayed delivery of new cars, and new car production is expected to remain resilient, prompting buyers to choose pre-owned cars and gain faster access.
Additionally, first-time buyers have more used models to choose from, supported by healthy new car sales during the pandemic. Most importantly, through AI-powered lender platform partnerships and underwriting, opportunities for access to vehicle financing could be improved, which could support this shift.
Strong growth has led to the expansion of organized players in the used car sector, although profitability remains a challenge.
“The high costs of customer acquisition, logistics and renovation continue to remain thin or negative in operating margins, but for many players, thin or negative in many players. However, the shift to integrated service delivery, including integrated services, renovation, financing, financing, insurance, door and door delivery, and current losses may gradually reduce the scope of operation. Breakeven was made over the next 12-18 months.”
The report notes that most players have sufficient cash reserves to meet their operating expenses and Rs 8,000-1 crore capital expenditures from earlier rounds, which is financially focused on expanding inspection centers and strengthening technical infrastructure.
Organized participants have collectively raised over Rs 1.4 crore in fundraising through stocks since fiscal 2019, although in the past two finance members, they have been shifting their focus to improving margins and efficiency and being selective in fundraising.
According to the report, bank credit remains subject to ongoing cash burn, especially for players with tangible mortgages with inventory leaders.
Crisis Ratings says that going forward, the used car market is expected to remain structurally stable, but the availability of quality inventory will remain viewed.
