India’s second-hand car market, valued at ₹2.1 lakh crore in FY24, is seeing a price correction, particularly for older diesel and petrol vehicles. The growing impact of End-of-Life (EOL) vehicle restrictions and government led scrappage policies drives this change. While these measures aim to improve the environment, they are also changing the economics of buying and selling used cars.
Understanding Scrappage Norms
The Vehicle Scrappage Policy was announced by the Indian government in 2021 and officially began in April 2022. It encourages people to voluntarily scrap:
- Petrol vehicles older than 15 years
- Diesel vehicles older than 10 years
This is particularly aimed at pollution-prone cities under the orders of the National Green Tribunal (NGT). In Delhi alone, over 9 lakh vehicles were deregistered from 2018 to 2023 due to these rules, according to the Delhi Transport Department.
How Prices Are Affected
As more vehicles near their regulatory lifespan, many owners are trying to sell before scrapping rules take effect. This has resulted in a surplus in the used car market.
According to OLX Auto’s 2024 Used Car Report, the average resale value of 8–12 year old diesel cars has fallen by 18–25% year on year. Buyers are more cautious about buying older vehicles with limited remaining road life, leading to a decrease in demand, especially in cities like Delhi, Mumbai, Bengaluru, and Chennai.
Buyer Advantage, Seller Struggles
For value driven consumers, this trend brings new opportunities. You can now buy a 10-year-old ‘premium’ sedan for under ₹2.5 lakh. This vehicle would have cost nearly ₹3.2 lakh just two years ago.
However, sellers, especially small and medium sized used car dealers, are seeing their inventory pile up. Many report that profit margins have dropped by up to 30%, according to data from the Federation of Automobile Dealers Associations (FADA).
Future Outlook
Conclusion
India’s new scrappage rules are not only about following environmental laws, they are changing how consumers buy cars and how the used car market operates. Buyers have a unique chance to influence prices. Sellers need to rethink how long a vehicle can really be seen as an asset. This being said, some might also view this as us being restricted in the choices we have available when it comes to buying a second hand car.
