Tech players to account for one-fifth of used car sales by FY26: report
According to Praxis Global Alliance, a consulting and management consultancy, tech players in India’s used-car market will likely account for 20-22% of the market in FY26, up from 2-3% currently. .
The market has seen the rise of a number of technology players, including Cars24, CarDekho, Spinny, CarTradeTech and Droom, which are engaged in the sale, servicing and financing of used cars.
Sources: World Bank, OICA (International Organization of Automobile Manufacturers), IBB (Indian Blue Book), DRHP (Draft Red Herring Prospectus), Praxis analysis
Even as the used car market gets organized in the future, tech players have implemented a transparent and improved price discovery mechanism for buyers and sellers. They also offer a seamless experience and better funding options through their captive arms.
“The used car segment is a limited supply market. What tech players like Cars24 and CarDekho have done is create an organized supply network, which didn’t exist before. This made price discovery easier for the seller. Five years ago, when people wanted to own a used car, they had a range of quotes – one said Rs 3 lakh and another quoted Rs 8 lakh. There was no mechanism to know the real market price. Now, with tech players listing and auction platforms, sellers have become more comfortable with the right price. The supply of good quality cars has also improved,” according to Aryaman Tandon, managing partner and co-founder of Praxis Global Alliance.
Talk to Activity area, he said: “Currently, two to three percent of used cars are sold by organized tech players such as Cars24, Spinny and CarDekho, similar to the e-commerce penetration we saw a few years ago. This number will reach 20-22% of used car sales in FY26, which is expected to reach 8 million units from 3.9 million units in FY21,” a- he added.
Trends in customer behavior, driven by shorter ownership cycles and greater convenience, will see tech players gain market share. I
The share of unorganized dealerships is expected to drop to 30-35% in FY26 from 45% in FY21, while that of the C2C (customer-to-customer) segment is expected to drop to around 25% i , compared to 33% in 2021. the same period.
The share of organized dealers will increase from 8% to 30% by FY26, with technology players accounting for 20-22% of the share and players like Mahindra First Choice accounting for the remaining share . According to a Praxis Global Alliance report, organized OEM-backed players like Maruti TrueValue are expected to account for around 10% of the market.
The used car segment also attracted significant funding of $1.3 billion from investors in CY21 compared to $168 million in CY18. Cars24 and CarDekho have raised the highest funding of approximately 55% of all investments in the used car space.
“However, the used car space is unlikely to see more than five to six technology players, including a few tail players focusing on certain segments, with the top players having a 6-7% share of here FY26,” Tandon said.
Published on
May 16, 2022
