India's used-car market to become world’s number 3 by FY31: Redseer report

India’s used-car market is heading into a sharp growth phase and could become the world’s third largest by the end of this decade, according to Redseer’s latest report. The consulting firm said the market, which covers retail passenger vehicle transactions, is expected to nearly double in value to about USD 70 billion by FY31 from around USD 35 billion in FY26.

Redseer said India is already the fifth-largest used-car market globally, but its growth pace sets it apart from more mature markets. The report sees India climbing to third place, behind only the US and China, as demand expands across income groups and cities.

Shorter ownership cycles

One of the biggest changes is the falling replacement cycle. The report said the average car ownership period has dropped from 7–8 years in FY21 to an expected 4–5 years by FY31. Metros and Tier 1 cities are leading this shift, helped by technology updates, regulatory changes and changing buyer preferences. That should increase supply in the resale market.

More buyers, higher prices

The study expects annual retail used-car sales to rise to 9–10 million units by FY31. It also said average selling prices may climb to ₹6.5–6.9 lakh, supported by premiumisation and better inventory quality. Redseer estimates that about 280 million households could be financially capable of buying a used car by FY31.

Room for organised players

Despite the market’s size, around 80 per cent of transactions still happen in unorganised channels. Redseer said that leaves a wide opening for full-stack platforms like Spinny that offer sourcing, inspection, refurbishment, pricing, sales, financing and ownership transfer under one roof. The report projected that such players could reach 5–6 per cent market share and about USD 4 billion in GMV by FY31, with around 15 per cent share in metro markets.

Trust remains the key issue

Kushal Bhatnagar, Associate Partner, Redseer Strategy Consultants, said: “India’s used-car market is undergoing a fundamental transition from an informal, price-led space to a far more structured and trust-oriented mobility ecosystem". He added that used cars are increasingly being chosen for value, quality and convenience, rather than only as a cheaper alternative.

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