Auto major Mahindra & Mahindra’s (M&M) subsidiary Mahindra First Choice Services is planning to invest around Rs 550 crore to open 600 owned and franchisee outlets across the country in the next five to seven years for multi-brand services, spare parts and used cars sales.
Speaking to reporters after launching its first service centre Mahindra First Choice in Chennai today, Rajeev Dubey, president, After Market & Corporate Services of M&M, said the company has created new verticals including Mahindra First Choice for second-hand car sales, car services, and sale of spares including non-M&M brands.
The proposed investment of around Rs 550 crore will be for setting up 300 service and another 300 used cars’ retail stores in the next five to six years across 21 cities, said Dubey.
In the current financial year, Mahindra First Choice will open 15 outlets in Mumbai, Pune, Delhi, Chennai, Bangalore, Hyderabad and Goa.
Mahindra First Choice hopes to achieve Rs 6,000 crore turnover in 5-7 years, said Dubey.
He also said the company is planning to train school drop-outs and under-privileged students to meet the company’s human resource requirement. It is estimated that the company will require over 10,000 people for the upcoming outlets in the next six years, said R Subramani, chief executive officer, Mahindra First Choice.
He added the current value of the car service industry, is estimated to be around Rs 12,000 crore and is expected to touch Rs 26,000 crore by 2015. Of this, maintenance would be around 23 per cent, minor repair services is 44 per cent, major repair 4 per cent and accident is around 27 per cent.
The car market in India is fast growing into a lucrative market for after-sales services and used car sales. Dubey said that in a market where 1.4 million new cars are sold every year, another million used cars change hands.The Rs 30,000-crore pre-owned car market is expected to reach a size of Rs 50,000 crore in the next 5 years, said Dubey.
The servicing of car is fast growing into a lucrative business that has in the recent past attracted two other major players. Carnation Auto, promoted by Maruti Suzuki’s former managing director Jagdish Khattar, is planning to invest Rs 1,000 crore in the next five years.
Similarly, Hyundai Motor India’s former president BVR Subbu, too, has floated a new venture of car servicing (for luxury cars and commercial vehicles) under the Altius Autoworld banner in collaboration with Gullivar International of Japan.
Subramani said that Mahindra First Choice will focus on the mutli-brand service segment, which is currently less than 1 per cent in the after-sales market compared to 38 per cent in Germany, 34 per cent in UK and 34 per cent in France.
