In a consolidation in the automobile aftermarket business, TVS Automobile Solutions (TVS ASPL), part of the $8.5 billion TVS Group, is buying out Mahindra First Choice Services (MFCSL), a pan-India chain of multi-brand car and two-wheeler service workshops, from the stable of the $19.4 billion Mahindra Group. TVS ASPL will also be acquiring the entire stake aggregating to 100% of optionally convertible redeemable preference shares in Auto Digitech (ADPL), a wholly owned subsidiary of MFCSL. While the MFCSL acquisition is for a cash consideration of Rs 21.50 crore, the ADPL buyout is for `13.50 crore and money in both the deals will go to Mahindra Holdings, the holding company of both the entities. As part of the transaction, Mahindra Holdings will acquire a minority stake of 2.76% in TVS ASPL. After the transaction, MFCS and ADPL will become the subsidiaries of TVS ASPL.
R Dinesh, director, TVS ASPL, said, “Two great brands have come together for the benefit of the overall aftermarket ecosystem. India’s $10 billion aftermarket segment is fragmented and needs strong support for relevance and growth amidst changing technology landscape in the automotive sector. We would take this opportunity to bring thousands of entrepreneurs into a digital platform wherein they can benefit from digital technologies across marketing, diagnostics, customer experience, quality parts, access to training and digital payments.”
The TVS ASPL brand myTVS has created a digital platform and ecosystem for over 2,500 garages, especially across south India. With MFCSL, the company will have an opportunity to create a pan-India digital footprint. It plans to invest and expand the network to over 10,000 garages in 18 to 24 months.
V S Parthasarathy, president, mobility services sector, Mahindra Group, said, “MFCSL has developed a large, trusted, multi-brand car service franchise and distribution network over the years. Our focus on quality and customer satisfaction has ensured that we continue to deliver superior value to our customers and channel partners. I believe that consolidation, scale and phygital solutions will drive the next phase of growth for the company as well as the industry. I am confident that a strong partner like TVS ASPL will help take our legacy further and propel the company to the next orbit.”
The Indian independent automobile aftermarket has been growing at a CAGR of 7-10% over the past five years. The market is highly fragmented with over 40,000 retailers, 100,000 garages and thousands of small distributors across the country. MFCSL has established a pan-India network of 475-plus franchise partners and over 100 distributors in over 350 towns across 25 states and two union territories. TVS ASPL, over the years, has empowered over two million customers, 20,000 retailers and 10,000 garages, along with fleet management for over 70,000 vehicles.