M&M to rev up expansion of multi-brand car service business

Auto major Mahindra & Mahindra is stepping up expansion of its multi-brand service outlets under its wholly-owned arm Mahindra First Choice Services, with plans to have 450 centres and a turnover of Rs 1,000 crore by 2018.

MFCS, which has earmarked a total investment of Rs 250 crore, plans to add 100 centres every year through franchise route from next year.

"Currently we have 25 company-owned and operated outlets. We have largely got the business model and spares supply chain in place. We are set for a rapid expansion," Rajeev Dubey President (Group HR, Corporate Services & After-Market) & Member of the Group Executive Board, Mahindra & Mahindra Ltd told reporters here.

Elaborating on the plans, he said by March the company will have a total of 30 company-owned and operated service centres and it will take the total to 50 by next year-end.

"Simultaneously, we will also start expansion through the franchise route. The plan is to add 100 outlets every year," Dubey said.

MFCS Chief Operating Officer YVS Vijay Kumar said the target is to have a total 450 outlets by 2018.

"We are aiming for a turnover of Rs 1,000 crore when we have those many outlets," Kumar said, adding that M&M expects to end this fiscal with a turnover of around Rs 30 crore, while it could be around Rs 100 crore by 2014-15.

On investments, Dubey said the company had earmarked Rs 250 crore for the expansion out of which Rs 100 crore has been already invested. The remaining Rs 150 crore will be invested in setting up the company owned centres.

Each franchise partner is expected to invest about Rs 1 crore per outlet.

Commenting on the potential of the multi-brand auto service business, Dubey said the total spares and service market in India is estimated to be about Rs 12,000 crore, out of which 50% is controlled by automobile companies through their service centres and rest with local workshops.

"If we compare with developed markets like Europe, where multi-brand auto service providers have 33% share, the potential in India is around Rs 4,000 crore but multi-brand service providers have a negligible share currently," he said.

MFCS today opened four workshops in the National Capital Region.