The demand for pre-owned SUVs is witnessing a significant rise, contributing to a booming used-car market in India. This trend is evident in the experience of Prabin Kumar, a Delhi-based doctor who recently upgraded from a hatchback to a nearly new midsize SUV. He chose a 2024 edition of the Kia Seltos, just five months old and driven for only 2,000 km, which he purchased for Rs 14.25 lakh (on-road, Delhi)—approximately Rs 5.5 lakh less than its brand-new counterpart. Kumar highlights the benefits of an SUV’s high ground clearance, making it more suitable for navigating the pothole-ridden roads of Delhi and NCR.
Importance of Pre-Owned SUVs
The growing preference for pre-owned SUVs can be attributed to several factors:
- Affordability: Pre-owned SUVs are available at various price points, making them accessible to a wider audience. The price varies based on the model, age, usage, and overall condition.
- Popular Models: Some of the best-selling used SUVs include:
- Hyundai Creta: Rs 1.47 – 22.99 lakh
- Tata Nexon: Rs 2.50 – 16.50 lakh
- Mahindra XUV500: Rs 1.80 – 19.90 lakh
- Mahindra Scorpio: Rs 13,000 – 20.11 lakh
- Mahindra Thar: Rs 50,000 – 20 lakh
- Renault Duster: Starting at Rs 1.68 lakh
Interestingly, the Ford EcoSport, although discontinued for new sales since 2021, remains popular in the used market, priced between Rs 3.5 – 6.5 lakh based on condition and variant.
Market Analysis
The rising demand for SUVs is expected to fuel growth in the pre-owned car market, with estimates of 7-10% growth in the coming years. According to the latest Indian Blue Book (IBB) report by Mahindra First Choice Wheels Ltd, used-car sales increased from 4 million units in FY 2019-20 to around 5.1 million units last fiscal year, with projections to reach 5.6-6 million units by FY25. The Indian used-car industry was valued at $32.44 billion in FY23 and is anticipated to exceed $73 billion by FY28.
Mahindra First Choice, India’s largest multi-brand pre-owned car company, reports that the share of SUVs in the pre-owned market is expected to rise significantly, from 18% in FY19 to around 40-45% by fiscal year-end. CEO Ashutosh Pandey attributes this trend to several factors:
- Changing Consumer Preferences: An increase in mid-size SUV offerings and a shift in consumer behavior towards SUVs.
- Higher Disposable Income: More families are opting for weekend trips, prompting a preference for larger vehicles.
- Value for Money: The average selling price of an SUV has increased from Rs 4 lakh to Rs 5.4 lakh, reflecting their growing desirability.
Decline of Entry-Level Cars
The surge in pre-owned SUV sales is occurring alongside a noticeable decline in new entry-level car sales. The Society of Indian Automobile Manufacturers (SIAM) reported a 40% year-on-year drop in mini passenger car sales for 2023-24, with only 152,000 units sold. This contrasts sharply with 471,000 mini cars sold in India during 2018-19 before the pandemic.
The mini car segment, which includes models like the Maruti Suzuki Alto and Tata Tiago (priced around Rs 2.5-4.5 lakh), has become less attractive to aspirational young buyers. Many are shifting their focus to purchasing bold, stylish SUVs, partly due to the ease of access to attractive deals through trusted online platforms.
The Role of Autotech Companies
New-age startups in the pre-owned car market are also capitalizing on the SUV trend. For example:
- Cars24 reported an increase in SUV sales share from 10% to 20% over the past couple of years, with popular models like Brezza, Sonet, and XUV300 becoming favorites.
- Spinny observed a 20% increase in first-time SUV buyers in Q1 2024, reflecting growing interest.
Gajendra Jangid, Co-Founder & CMO of Cars24, noted that the wider variety of SUVs at different price points is making them more accessible, especially in Tier II and III cities.
Challenges Ahead
Despite the optimistic outlook, the used-car market is still largely unorganised, with consumer-to-consumer (C2C) transactions accounting for about 45% of the market. The organised segment constitutes only 20%, with the remaining 35% in C2C transactions, according to the IBB report.
Pandey from Mahindra First Choice indicates that the organised segment is growing rapidly as consumers seek refurbished, certified cars with warranties and hassle-free ownership experiences. By FY27, it is anticipated that 45% of the industry will be organised.
Conclusion
The growing demand for pre-owned SUVs is reshaping the used-car market in India, driven by changing consumer preferences, increased affordability, and the rising popularity of online car shopping. As the industry evolves, the shift away from entry-level vehicles to more premium, larger SUVs marks a significant trend that will likely continue in the coming years.
