Sri Lanka Used Car Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

Sri Lanka Used Car Market Analysis

The Sri Lanka Used Car Market size is estimated at USD 202.13 million in 2024, and is expected to reach USD 294.26 million by 2029, growing at a CAGR of 7.80% during the forecast period (2024-2029).

Consumers' growing preference towards availing private transportation mediums owing to the increase in household disposable income, the emergence of online auto platforms, and increasing new vehicle prices serve as the major determinants for the growth of the used car market in Sri Lanka, followed by a period of stagnation between 2020 and 2022 due to the economic crisis in the country. As of June 2023, the household disposable income in Sri Lanka stood at USD 55.10 billion, witnessing a Y-o-Y growth of 0.6% compared to 2021.

With the increasing financial stability, consumers prefer private transportation mediums to enhance their convenience for personal mobility. However, the spike in new vehicle prices deters some of these customers from purchasing brand-new vehicles, subsequently leading to the surging demand for used cars in Sri Lanka. 

For instance, the majority of the cars sold in 2022 were priced above LKR 50 Lakhs (USD 15,628) in the Sri Lankan market. Further, Ikman, an online car platform in Sri Lanka, reported that 44% of both new and used car listings on their website were priced above USD 15,628 in 2022, showcasing a massive price surge persisting due to the economic crisis in the country. 

Consumers growing concerns about high inflation, which dropped to 6.3% in August 2023, a single-digit figure for the first time in two years, owing to the economic and political crisis in Sri Lanka, also acted as a catalyst for the falling demand for new cars in Sri Lanka since 2020.

Sri Lanka's lack of efficient public transportation infrastructure fuels the need for private mobility options among consumers, thereby positively impacting the demand for used cars in the market. However, due to the socio-economic crisis in the country, the Sri Lankan used as well as the new car market recorded a stagnation between 2020 and 2022. This has led to the creation of pent-up demand among consumers. Therefore, with the gradual recovery of the economy and falling used car prices, there will exist a massive demand for used vehicles in the coming years.

One of the major challenges faced by the used car market is the increasing used car prices across Sri Lanka since 2020, owing to the rising inflation due to the economic crisis and the government's ban on the imports of new and used vehicles to keep a check on the outflow of foreign currency. With the looming crisis in the country, consumers witnessed a massive surge in non-essential commodity prices, such as used cars, due to the unavailability of new cars in the market owing to the import ban, and high inflation persistent in the economy. 

However, with the gradual improvement in the political condition of the country, the used car prices were witnessed to be falling since the beginning of 2023. It was estimated that in January 2023, the average price of a 2015 Alto model stood at INR 27 lakhs (USD 32,648), compared to the same month in 2022, portraying a drop of 20.6%. Similarly, the average price of a 2018 Vitz model stood at INR 60 lakhs (USD 72,551) in January 2023, compared to INR 80 lakhs (USD 96,735) in January 2022. Even though the Sri Lankan market is witnessing a drop in used car prices, it has not been able to achieve the price rate pre-2020, which is negatively impacting the demand for used cars.

The government's aggressive strategy to promote the electrification of vehicle fleet to promote the reduction in carbon emissions will aid the demand for used cars across Sri Lanka during the forecast period. Consumers who are willing to purchase cheaper alternatives to new-energy vehicles are increasingly adopting the purchase of used vehicles for convenience in mobility. For instance, in August 2023, the Sri Lankan Ministry of Finance announced its strategy to allow the importation of electric vehicles (EVs) in the country from September 2023. 

Further, the Sri Lankan Ministry of Transport announced the formulation of a strategic plan for the importation and gradual usage of EVs in the transportation ecosystem in Sri Lanka. Even with the aggressive stance of the Sri Lankan government to promote the adoption of EVs, the higher cost of electric vehicles adds to the financial burden of the consumer attributed to its excessive battery cost, thereby, in turn, making consumers opt for used cars in the coming years.

Sri Lanka Used Car Market Trends

Rising Adoption of Digital Technologies Will Foster the Growth of the Target Market

Sri Lanka Used Car Industry Segmentation

A used car/pre-owned vehicle, or a secondhand car, is a vehicle that previously had one or more retail owners. A certified pre-owned (CPO) vehicle, on the other hand, is a pre-owned vehicle that has been extensively inspected (pre-purchase inspection) and expertly reconditioned. The used car market consists of a wide range of companies involved in the purchasing and selling of pre-owned vehicles through online or offline sales channels.

The Sri Lanka used car market is segmented by vehicle type, vendor type, fuel type, and sales channel. By vehicle type, the market is segmented into hatchbacks, sedans, and sports utility vehicles (SUVs)/multi-purpose vehicles (MPVs). By vendor type, the market is segmented into organized and unorganized. By fuel type, the market is segmented into petrol, diesel, electric, and other fuel types (liquefied petroleum gas, compressed natural gas, etc.). By sales channel, the market is segmented into online and offline. 

The report offers market size and forecast value (USD) for all the above segments.