The used car market in India has seen tremendous growth over the past few years. In 2019, it was valued at USD 24.24 billion, and it is expected to grow leaps and bounds in the years to come.
Considering the demand for used cars in the country, it is estimated that this sector will progress at a Compounded Annual Growth Rate (CAGR) of approximately 15.12% until 2025. Here are some of the reasons for the growth in the used car market:
- Revision of the Goods and Services Tax (GST)
Earlier, the GST rate on used cars was 28%. However, later the government revised it to 12% -18% depending on the engine capacity. Additionally, the development of the organized pre-owned car segment and the ease of buying used cars through digital portals have contributed immensely to their sales. The trend started reaching new heights, and it is expected to increase further in 2021.
- Coronavirus (COVID-19) pandemic
Due to the widespread of the COVID-19 pandemic, public transportation modes, like buses, trains, metros, and monorails came to a halt. Currently, only buses are operational in full swing. Traveling in crowded buses increases the risk of getting infected by COVID-19. Now people have become cautious about their safety and well-being. Thus, they are looking forward to buying pre-owned cars through used car loans so that they can travel to work without any stress.
- BS-VI era
From April 2020, the automotive industry in India has introduced BS-VI engines. The introduction of new technology has increased the rates of brand-new cars. Therefore, many people are getting inclined towards buying pre-owned cars with the help of used car finance.
- Reduced production of diesel cars
Top car manufacturers have planned to stop producing diesel cars and focus only on manufacturing petrol cars. It is a crucial reason for the surge in the used car sector. So, it is predicted that the sales of compact diesel cars in the pre-owned vehicle industry will increase significantly in the future.
The financial hardships faced by people due to COVID-19 have compelled them to save money wherever possible. Today, it has become necessary for people to own a car. Therefore, they are seriously changing their perspective and are considering buying a used car. If you belong to this category, ensure to find a reliable lender. For instance, Mahindra Finance offers affordable used car loan interest rates. You can visit its website to check the used car loan eligibility criteria and apply for funding immediately.