Mahindra to expand used car business

The used car market, with an estimated size of three million units plus, is already bigger than the new car market

Multi-brand used car company Mahindra First Choice Wheels is planning to capitalise on the growth in the burgeoning domestic used car industry.

The city-based company, which opened its 300th outlet in Mulund, intends to add 200 more outlets in the next two years. It expects to sell 65,000 units by the end of this financial year, growth of 41 per cent compared with 46,000 units sold in 2012013. Riding on the 35 per cent compounded annual growth rate in the last five years, the company hopes to touch 1,00,000-unit sales mark by 2015.

Rajiv Dubey, president (group HR, corporate services and after-market), Mahindra and Mahindra, said, “Our conviction in the Mahindra First Choice business model is driven by the belief that a second-hand car buyer is not a second-class buyer. The continuous investment in products and processes has allowed us to achieve a dominant status in the multi-brand used car space.”

The used car market, estimated at more than three million units, is bigger than the new car market. It is also growing at a faster rate. The current slowdown notwithstanding, it is expected the used car market would grow to double the size of the new car market in the next five years.

According to a recent research report, India's appetite for used cars is expected to swell to 1.8 cars for every one new car sold in the market from 1.2 used cars at present. The domestic used car market thrives on sales made by friends, acquaintances, unknown personnel from the internet or by roadside dealers.

The organised segment of this industry commands a share of 18% presently while the unorganised segment has a share of 82%. However, the organised segment's share has grown from 11% reported 5-6 years ago.

The B and C segment account for 80% of the overall sales at Mahindra First Choice while the A and A+ segment account for five%. The D and E segment account for the balance of 15%.