The Ex-Mart brand, owned by M&M, was supported in the backend by MFC, said Vinay Sanghi, chief executive officer of MFC.
It operated through M&M dealer outlets where customers would come to buy new Mahindra cars like its sedan Logan and sports utility vehicle (SUV) Scorpio.
Around half of new car buyers looked at trading in old cars but instead of going through the unorganised sector, Ex-Mart bought the old car from the customer.
Sanghi said the unit refurbished and re-sold cars through MFC.
M&M had 73 per cent stake in its subsidiary, MFC.
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MFC aimed to sell 100,000 cars per year by 2013 from 10,000 cars per year now.
IT recently raised Rs80 crore from a private equity firm Phi Advisors for expanding its retail network.
It had a Superstore in Mumbai to display 200 cars at a time.
It aimed to build nine such stores by end of 2008 and to 30 by 2013.
MFC would expand owned and franchise outlets across the country to 300 within the next five years as well.
To support this expansion, it planned to do more procurement. It was currently buying 250 to 300 cars through Ex-Mart and aimed to buy over 2500 cars by end 2008.
Sanghi said MFC aimed at sourcing around 15 per cent of net procurement from Ex-Mart.
The organised used car business in India was growing at 8-10 per cent per annum and was expected to touch Rs 50,000 crore in the next five years from Rs 30,000 crore now.
Currently, around 1.5 million cars changed hands in the used car market and this number could touch 2.5 million in 2013.