This year, the used car market in India grew at 20 per cent over the previous year, whereas the new car market remained flat. The growth was mainly aided by increase in income level and availability of more models among others. Rajeev Dubey, president (Group HR and After-Market) of Mahindra First Choice Wheels, the multi-brand major in the used car segment, speaks to Itishree Samal on the future of the used car market. Edited excerpts:
This year, new car sales have declined, whereas there is a sharp rise in that of the used cars. How do you see the future of used car market?
This year, where the new car market remained flat, the used car market grew 18-20 per cent. It has been observed that higher per capita income, the higher will be the ratio of the used cars. The major factors driving the growth are rising per capita income, rising aspiration level, availability of more options and increase in frequency to change cars. Now, people are selling their cars in just 2-3 years of purchase.
The used car market is mainly dominated by unorganised players? How do you see the trend changing as more and more players come into the organised used car market?
The size of the Indian pre-owned car market is estimated to be about 2.1 million vehicles per year. In India, around 60 per cent of all transactions in the used car market happen through customer to customer, 25-28 per cent through friendly neighbourhood car brokers, and the rest (around 12 per cent) is done by organised players. The organised sector is growing very fast at 18-20 per cent year-on-year with increase in awareness. We are aiming to grow more than the industry average at 40 per cent.
Given your target of achieving 40 per cent growth, what is the outlook for future?
Since Mahindra First Choice Wheels rebranded in 2008 (earlier it was known as Auto Mart India, started in 2003), the response has been extremely good. In the first year, we sold 12,000 cars and 18,000 units in 2009. Last year, it was 28,000 units and this year we expect to sell 40,000-42,000 cars, around 40 per cent growth. By 2015, we expect to sell 100,000 cars per year.
What are the strategies you have put in to achieve the target?
The growth will come from two segments: from the existing outlets where the focus would be in gaining a larger market share in the locality we operate in and by adding more outlets. Currently, we have 140 outlets across 70 cities, we plan to have 180 outlets by the end of this fiscal and 350 outlets by 2015. We will also strengthen our financial requirement segment and exchange services. We are also exploring newer markets and smaller towns, like Mohania, Vardhaman and Berhampur, etc.
What was your revenue last year?
For revenue, we see at the activity level. For eg, the number of cars we sell, multiplied by Rs 3 lakh on average. Like last year we sold 28,000 cars and the revenue we generated was Rs 840 crore.
