Demand for pre-owned luxury cars outpaces supply

OLX Autos, India’s leading player in the pre-owned automobile segment, has reported a sharp increase in both the supply and demand of luxury cars on its platform in the first half of the year 2022. The pre-owned car market is growing faster (15%) than the new car market (10%) in terms of CAGR, with used car volumes poised to become 1.5x more than the new car market by FY ‘26, as per a study by OLX Autos and CRISIL.

In order to arrive at the findings, OLX Autos analyzed over approx. 50,000 listings (ads on the OLX platform posted by users) of the luxury and ultra luxury car brands on its platform across more than 50 – Tier 1(Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai, Kolkata, Pune and Ahmedabad) and Tier 2 cities(Agra, Amritsar, Chandigarh, Coimbatore, Indore, Jaipur, Kochi, Kozhikode to name a few) in India. The brands that are most popular on OLX include Audi, Mercedes Benz, BMW, Porsche and Jaguar. The analysis was undertaken for the first  6 months of January – June, 2021 and 2022.

Supply Growth for Luxury Cars in Tier 2 cities, exceeds that of Tier I cities (Year on Year basis)

The supply of luxury cars across Tier 1 cities recorded a growth of 40% on OLX Autos, while Tier 2 registered a growth of 45% in H1 2022, compared to the same period of the previous year (H1 2021).

Supply Growth in Tier I cities was led by Jaguar by 86%, Porsche by 85.5%, Mercedes Benz by 40% , Audi by 38% and BMW by 34%, whereas in Tier II Cities supply growth was led by Porsche at 138% followed by Jaguar with 47%, Mercedes Benz by 46%, Audi by 44% and BMW by 38%.

BMW remains the most popular pre-owned luxury car brand in terms of demand:

In terms of overall volume across Tier 1 and Tier 2 cities, BMW continues to be in demand, and is the most popular pre-owned luxury car brand, followed by Mercedes Benz, Audi, Jaguar and Porsche.

Across Tier I and Tier II cities – demand growth was led by ultra-luxury brands on a (Year on Year basis). Demand in Tier 1 cities was led by Porsche with 21%, followed by Audi by 11%, BMW by 9% and Mercedes Benz by 5%, whereas demand in Tier 2 cities was led by Porsche at 17% followed by Audi with 11%, Jaguar by 8%, BMW by 5% and Mercedes Benz by 0.5%.

Price Increase for Pre-owned luxury cars  in Tier 1 cities outpaced the same in Tier 2 cities

The average listing price for luxury cars In Tier 1 cities also witnessed an increase in H1 of 2022 compared to H1 of 2021 with prices of Mercedes Benz going up by 25%, followed by Porsche by 13%,  BMW by 11%, Audi by 6% and Jaguar by 2.6%.

In Tier 2 Mercedes Benz saw an increase of 19%, Audi by 12%, BMW by 16%, while the average listing price of pre-owned ultra luxury cars – Jaguar & Porsche fell by 8% & 18% respectively.

In Tier I cities, absolute growth in demand continues to outstrip growth in supply by 3.8X vs 2.6X in Tier II cities, (H1-2022 in comparison to H1-2021)which has led to the rise in prices. “With discretionary spending back to pre-covid levels and an increase in disposable incomes, we are seeing a noticeable change in the aspirations of consumers to upgrade to luxury car brands. Pre-owned luxury car market has particularly benefited from this sentiment as well as from the long waiting period, and increase in prices of new vehicles. The demand on our platform suggests that owning a luxury car at a heavily discounted cost is a lucrative alternative – given the fact that demand continues to outstrip supply and interestingly Tier II cities are leading the way. We are expecting to continue to see strong growth ahead of the festive season” said, Amit Kumar, CEO, OLX Group India.