Used Luxury Car Market Growing 15% CAGR Despite Price Rise
India’s used car market is growing by 15%, while the new car market is growing by 10%, in terms of CAGR, with used car volumes expected to become 1.5 times larger than the car market. new cars by FY26, according to a recent study. by OLX Autos and CRISIL shows. Even within the overall used car market, luxury cars saw a surge in demand and supply in the first half of 2022.
OLX Autos said BMW remains the most popular used luxury car brand in terms of demand in Tier 1 and 2 cities, followed by Mercedes Benz, Audi, Jaguar and Porsche.
“With discretionary spending returning to pre-covid levels and an increase in disposable income, we are seeing a noticeable shift in consumer aspirations to switch to luxury car brands. The used luxury car market has particularly benefited this sentiment as well as the long waiting period and rising prices for new vehicles,” said Amit Kumar, CEO of OLX Group India.
The study indicates that in Tier I and Tier 2 cities, demand growth was led by ultra-luxury brands year-over-year. “In Tier I cities, absolute demand growth continues to outpace supply growth by 3.8X vs. 2.6X in Tier 2 cities (H1-2022 vs. H1-2021) Used luxury cars are cheaper to buy in Tier 2 cities than in Tier 1 cities,” the study states.
Even the growth of luxury car supply in Tier 2 cities has exceeded that of Tier I cities. Luxury car supply in Tier 1 cities saw 40% growth on OLX Autos, while Tier 2 recorded 45% growth in the first half of 2022, compared to the same period of the previous year (first half of 2021).
“The demand on our platform suggests that owning a luxury car at a heavily discounted cost is a lucrative alternative – given that demand continues to outstrip supply and, interestingly, Tier 2 cities are leading the way. We expect to continue to see strong growth ahead of the holiday season,” Kumar said.