New Delhi, April 30 (IANS) India's used-car market is projected to reach around $70 billion by FY31, nearly doubling from about $35 billion in FY26, because of rising affordability, shorter replacement cycles, and increasing formalisation of transactions, according to a report on Thursday. The report by Redseer Strategy Consultants said India is currently the fifth-largest used-car market globally and is expected to become the third-largest by the end of the decade, behind the US and China.Moreover, annual retail used-car sales are likely to scale up to 10 million units by FY31, supported by strong demand fundamentals and a growing base of vehicle ownership, it said.A major driver of this growth is the shortening of the car replacement cycle, which is expected to decline from 7–8 years in FY21 to around 4–5 years by FY31, particularly in metros and Tier 1 cities.

The report noted that rising incomes, premiumisation trends, and improved access to financing are expanding both demand and supply in the used-car ecosystem."India’s used-car market is undergoing a fundamental transition from an informal, price-led space to a more structured and trust-based ecosystem,” said Kushal Bhatnagar, Associate Partner at Redseer Strategy Consultants.He added that used cars are increasingly being preferred not just as an economical option but for value optimisation, quality assurance, and the convenience offered by organised platforms.The study also highlighted that around 65 per cent of used-car buyers in India are first-time car owners, underlining the segment’s growing importance in the country’s mobility landscape.Additionally, financing penetration in the used-car segment is expected to rise up to 40 per cent by FY31, improving affordability and boosting volumes, according to the report.

Despite strong growth, nearly 80 per cent of transactions remain unorganised, indicating significant headroom for organised, full-stack platforms to expand and address trust-related concerns.India’s used-to-new car ratio currently stands at around 1.4 and is projected to improve to 1.7 by FY31, though it remains below levels seen in mature markets, which signals further growth potential.

/IANS