Used car retailers on expansion spree

Last year the company sold 34,000 units, this year the co hopes to clock total of 46,000 units

The slowdown in the new car market is not having any impact on the second hand car market as used car retailers are going on an expansion spree.

Mahindra First Choice Wheels (MFCWL), multi-brand certified used car company, from the Mahindra & Mahindra group has opened its 200th outlet and is targeting an increase of 35% in sales this year.

Last year the Mumbai-based company sold 34,000 units and this year the company hopes to clock a total of 46,000 units on the back of increased retail reach, a growth of 35%. It also aims to achieve a total retail presence of 500 outlets by 2014-15.

Rajeev Dubey, President (Group HR, Corporate Services & After Market), Mahindra & Mahindra said, “We have reached 200 outlets and are well on our way to achieving the target of 500 outlets by FY15. We have grown at a compunded annual growth rate of 40% over the last five  years and even in the current year when the growth rate for new passenger vehicles is at 6%, we have grown by 30%.”

Carnation Auto, a multi-brand auto solutions provider, aims to expand its network to 200 outlets from 17 currently, with an aim to better tap into the burgeoning demand for used cars.

Though 16 outlets were opened by the company, set up by former Maruti Udyog managing director Jagdish Khattar using its own funds, it is now actively scouting for franchise partners for further expansion.

"About 90% of used cars in India are sold through the unorganised market. In addition, a large portion of the buyers buy cars from their friends and relatives. We offer vehicles with service support across the country in addition to a host of other features", said Khattar, chairman and managing director, Carnation Auto.

According to the company, with products catering to every budget demand for used cars is expected to go higher than current levels. Several first time customers are finalising premium hatchbacks or C segment sedans as their first cars instead of a entry B segment hatchback.

The used car market in India has posted a compounded annual growth rate (CAGR) of 20% in the last five years. From volumes of 3 million units sold last financial year, the market is expected to grow to 7.8 million units by 2016.

Carnation Auto presently sells 200-220 used car units every month and hopes to increase the run rate further. Khattar said the company has invested a "couple of hundred crores" into the company so far in setting up the infrastructure.