India’s used-car market to reach 10 million units by FY31: Redseer report

India’s used-car market is projected to grow to 9-10 million units (90 lakh-1 crore) in annual sales by FY2031, up from around 6 million units in FY2026, according to a new report by Redseer Strategy Consultants. The market is also expected to nearly double in value to USD 68-78 billion (approximately Rs 6.5 lakh crore-7.5 lakh crore) by FY2031.

According to the report, India is currently among the fastest-growing major used-car markets globally and is expected to become the world’s third-largest by the end of the decade, behind only the US and China.

1. Shorter ownership cycles expected to improve used-car supply
2. Organised players expected to increase market share
3. SUVs and premium models are likely to drive value growth

Faster replacement cycles and changing buyer preferences driving growth

One of the biggest drivers behind the market’s expansion is the shortening ownership cycle among Indian car buyers. Speaking to Autocar Professional, Kushal Bhatnagar, an associate partner at Redseer Strategy Consultants, said the average car replacement cycle has reduced from 7-8 years to around 5-6 years and could shrink to 4-5 years by the end of the decade. This is expected to increase the supply of newer pre-owned cars, improving buyer confidence and expanding the range of available vehicles.

The report says used cars are increasingly being viewed as a financially practical alternative rather than a compromise purchase. Buyers are using the used-car route to access higher variants, SUVs and better-equipped models at lower ownership costs, while nearly 65 percent of those opting for a used vehicle are first-time car owners.

The shift towards SUVs is also expected to increase the average selling price of pre-owned cars from around Rs 5 lakh currently to nearly Rs 6.5 lakh-6.9 lakh by FY2031. Hatchbacks, meanwhile, are expected to gradually lose share, mirroring the shift already seen in the new-car industry.

Organised players expected to gain share

Despite the market’s strong growth outlook, Redseer says trust remains one of the biggest challenges in the used-car space. Nearly 80 percent of transactions still take place through unorganised channels, and the report highlights concerns over inconsistent vehicle quality, lack of transparency regarding ownership history and weak post-sale support.

Organised players are expected to gain share by offering inspection, refurbishment, financing, warranty and documentation support through more standardised processes.

Financing and digital adoption are also expected to support growth, with used-car financing penetration rising steadily as NBFC participation, digital loan approvals and online documentation improve. According to Redseer, organised players could account for nearly 30 percent of the used-car market by FY2031.