New Delhi, March 28 – India’s used car market has been growing steadily at a rate of 10 to 12 percent annually over the past two to three years and is now poised to surpass the new car market in sales volume by the financial year 2025-26. Industry insiders attribute this growth to rising consumer demand, which has also led to a steady increase in the average prices of used vehicles.
According to Neeraj Singh, Founder and CEO of used car platform Spinny, the value of the used car market in India is expected to reach $40 billion in FY26, with estimated sales volumes between 6.5 to 7 million units. This would outpace the new car market, which currently stands at around $43 billion and reached a historic high of 4.2 million vehicle sales in FY24. The new car segment is projected to grow marginally by one to two percent, reaching around 4.5 to 4.6 million units in FY26.
Cities like Bengaluru, Hyderabad, and Pune are seeing particularly strong growth in used car sales. Singh highlighted that the most notable surge in demand has been for vehicles in the ₹6 to ₹8 lakh price range, especially compact SUVs, which appeal to buyers due to their performance, spaciousness, pricing, and aspirational value.
This increased demand has also pushed up the average transaction price in the used car market. Singh noted that the average selling price of used cars in India currently ranges between ₹4.5 to ₹5 lakh and has risen by 10 to 15 percent over the past two to three years. Budget cars priced between ₹3 to ₹5 lakh have seen a price increase of around 10 to 12 percent, while mid-range vehicles in the ₹5 to ₹10 lakh bracket have experienced a 14 to 16 percent jump. Premium models and SUVs have registered the sharpest price hikes.
The expansion of the used car market is expected to have a positive ripple effect on allied sectors such as tyres and vehicle financing. Singh also projected a robust compound annual growth rate (CAGR) of 12 to 13 percent in the used car segment over the next seven to eight years, indicating sustained momentum in consumer preference for pre-owned vehicles across urban India.
