India Used Car Loan Market
India Used Car Loan Market Size Set to Double Crossing USD 17 Billion by 2028
Published | 13 September 2022
India used car loan market is flourishing majorly due to the rising prices for new cars, lowered GST rate for pre-owned cars, and increasing disposable income for Indians.
BlueWeave Consulting, a leading strategic consulting and market research firm, in its recent study, estimates India used car loan market size at USD 7.72 billion in 2021. And BlueWeave expects India used car loan market size to grow at a CAGR of 12.1% during the forecast period (2021–2028), reaching the value of USD 17.2 billion by 2028. In India, the second hand automobile market has been gaining traction in recent years. The ratio of used to new cars is currently approximately 1.3 in the country. The expansion of the organized and semi-organized sectors can be ascribed to the evolution of the country's used automobiles market. In addition, the reduction in the GST rate on used cars from 28% to 12–18% is driving the market. As the Indian auto industry transitions to BS-VI in April 2020, the value proposition of a used automobile is expected to improve, as new cars are expected to become more expensive due to increased technology expenditures. Major automobile manufacturers are also steadily focusing on reducing diesel car production.
India Used Car Loan Market - Technology Advancements
Unless there is a backlash against diesel automobiles, it is also expected to raise demand for compact diesel cars in the used car market (because of their higher mileage estimates). Mahindra First Choice Wheels Limited invested in CarandBike.com, a renowned Indian automobile website, in January 2020. Cars24 concluded a series D equity financing of roughly USD 100 million in October 2019 from new and existing investors. Maruti Suzuki India relaunched its True Value brand in February 2019 with a new identity and incentives. OLX has been a market leader in this area. In 2019, OLX partnered with the Frontier Group to open used automobile dealerships on the ground (Cash my Car). Cash my Car locations are now available in ten cities. OLX intended to further expand its. Over the forecast period, major players’ plan to develop offline outlets is expected to grow the market for unorganized used car sales.
Rising Demand for Pre-Owned Cars
The Indian pre-owned car market is expanding as demand for premium vehicles continues to rise. The sales of second hand premium cars have increased by 20%. The market's expected expansion can be linked to rising disposable income and an increase in the number of people who buy used cars. Used car loans are available for a variety of automobiles, including hatchbacks, SUVs, and premium sedans. They are dominating the used car loan market by giving loans up to 95% of the used car value, flexible EMI repayment options, swift loan disbursement, flexible tenure, and low paperwork.
With easier access to financing alternatives, annual maintenance contracts, and cheaper entry pricing, the India Used Car Loan industry is becoming more organized.
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India Used Car Loan Market - By Financer
Banks, NBFCs, and other financial institutions make up the India used car loan market (OEMs). Banks, followed by NBFCs, accounted for the majority of market share in FY2021. To attract more buyers and borrowers, banks are establishing new credit options, including loans for the purchase of used automobiles in the country depending on individual needs.
When compared to NBFCs and OEMs, public and private sector banks have a larger client base, offer better customer service, and more competitive rates. In recent years, however, the emergence of NBFCs in non-metro and rural areas has contributed to the growth of NBFC market share.
Impact of COVID 19 on India Used Car Loan Market
The impact of the COVID-19 pandemic on the India Used Car Loan industry was negligible. The industry is expected to rise significantly as more people prefer private transportation and more financing options become accessible in the used automobile market. Due to the pandemic, purchasers have been forced to look for alternatives to new cars, and the used car market has a lot of room for expansion in this regard. Due to the pandemic's impact on new vehicle sales and production, the used automobile market is gaining traction among purchasers.
In India, the used car financing business is very fragmented. Such a market dynamic has arisen as a result of the presence of numerous organized and unorganized businesses. Furthermore, most automakers, in addition to providing their own financing, have partnered with banks and other financial institutions to provide their consumers with a wide range of options. However, the simpler procedures for obtaining a loan from various NBFCs are projected to favor them. Some of the prominent competitors in the market include Mahindra Finance, Magma Fincorp, Shriram Finance, Bluecarz, and TSM Cars.
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- India Used Car Loan Market - By Car Type (Hatchback, SUVs, Sedan, Others); By Financier (NBFC, Bank, OEMS); By Tenure (<3 Years, 3-4 Years, 5-7 Years, >7 Years), Trend Analysis, Competitive Market Share & Forecast, 2018–2028
Publish Date: September 2022
India used car loan market is expected to expand owing to rising disposable income among Indians and growing number of people who buy pre-owned cars, higher prices for new cars, and lowered tax rates for used cars.
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