Mahindra First Choice Services, which is the largest after-market vehicle service company in India, has just acquired Carnation Auto India. One of the first moves of its kind in the burgeoning used automotive space, bringing some consolidation to an otherwise diversified segment that is estimated at 7 billion USD. Carnation Auto India, was founded by former Maruti Suzuki MD Jagdish Khattar, the man who is arguably responsible for bringing Maruti Suzuki back to a profitable stage back when it was still a Public Sector Enterprise.
At the outset, it seemed like Khattar would able to do a repeat performance with Carnation, his first entrepreneurial enterprise, with backing from big names in the market like Premji Invest and Gaja Capital. However, with time Carnation was unable to carry the momentum required in the fast-evolving used vehicle space, with very little growth over the years. Through this deal, for which the sum has remained undisclosed, Mahindra First Choice Services not only acquires branding rights, and some key assets. Additionally, the company entered into the acquisition agreement with Carnation, that will allow Mahindra full-use of their trademark ‘Carnation’, its website, software licences and workshop network. It’s also the first step toward Mahindra’s vision of a more organised used vehicle network.
Mahindra First choice is on the uptake, with plans to raise Rs 120 Crore through a private equity company, such that it can sustain its stellar 50% growth in the coming years to meet its target of Rs 500 crore turnover in the next five years. According to the company it conducts the service of 4.8 lakh cars per annum and is expected to bring that number to 6 lakh every month following this acquisition. The deal will facilitate a service network expansion of another 100 potential outlets, a step toward Mahindra’s target of 1000-1200 outlets over the next 3-4 years.