Maruti's used car business revved up in FY15

Maruti Suzuki is not only the country’s largest passenger vehicle company. If you go by volumes of pre-owned cars sold, it occupies the third slot in the passenger vehicle industry. Maruti’s pre-owned or used car business has grown to a record 358,000 units (in 2014-15).

The sheer volume of units sold, makes True Value (Maruti’s pre-owned car business) the third-largest domestic passenger vehicle seller (irrespective of new or old) after Maruti (at 1.17 million) and Hyundai Motor (at 420,000).  

The number of cars dealt by True Value increased 26 per cent in the last financial year. In the first quarter ended June, a total of 87,800 cars landed at True Value, up 12 per cent from last year. In the same quarter, Maruti sold 305,694 new vehicles while Hyundai sold 112,351 units.

R S Kalsi, executive director (sales and marketing) at Maruti Suzuki, said on an average 30 per cent of new car buyers go for an exchange. These cars go through a valuation process at a True Value outlet and the money is adjusted in the margin money that the buyer has to pay for a new car.

The used cars get refurbished and are sold through True Value outlets with a six-month warranty. The company operates a network of over 860 True Value outlets against 600 outlets about a year ago.

Kalsi said the gap between interest rate for financing a new and used car has also come down from five to six per cent a couple of years ago to about two per cent now. “Earlier financers were not sure of the value of the used vehicles. They are now confident to lend and this is helping the growth.”

Maruti is not the only one that is betting big on the business. Mahindra First Choice Wheels, backed by Mahindra & Mahindra, is also a leading player. First Choice, unlike True value, is a multi-brand used car player with a network of 500 outlets and plans to grow to 1,800 outlets by 2020. It sold 140,000 used vehicles in the last financial year and raised $15 million from Valiant Capital, a San Francisco-based equity hedge fund, to fund growth.