Mahindra First Choice Wheels (MFCWL) said on Monday it would launch a new set of showrooms called “Edition” to sell multi-brand used luxury cars, including Mercedes Benz, BMW and Audi.
MFCWL is the used car arm of the Mahindra Group.
According to data provided by OLX, the demand for pre-owned vehicles is estimated to be growing at 15% annually.
Ashutosh Pandey, chief executive officer, MFCWL, said the market was not very high but in terms of value, each used luxury car sells for Rs 25-30 lakh.
The total market is pegged at around `9,000 crore. “With the footprint of luxury vehicles being small, we are looking to expand the reach by offering solutions and connecting the supply chain,” Pandey said.
Further specifying the business model adopted by Mahindra First Choice Wheels, Pandey stated, “We are building an ecosystem where we will be having strong partnership with other brand dealerships where we procure the vehicles, retail it through our network as well as in the broader market. That is a big growth area for us.”
Mahindra First Choice Wheels sold roughly 2,40,000 units in FY18 with 20,000 vehicles a month, and through its new Edition outlets, it is aiming to sell 10-12 vehicles per outlet in a month.
“We are piloting the project with five to six showrooms in Mumbai first, and as the business will stabilise, we will scale it up to Tier-II and Tier-III cities after two quarters,” said Rajeev Dubey, group president (HR & Corporate Services) and CEO (after market sector), Mahindra Group.
Despite the unorganised nature of the market, according to Pandey, the used car market is growing at 15% CAGR where the organised channel represents 15% market share while semi-organised channel accounts for 36% with car-to-car transaction occupying one-third of the market at 30%, and the rest of it as unorganised market at 17%.
“From purely emotional decision people used to take while buying a car, people are now migrating towards more rational decision making. We expect the sales of used cars to double in the next four to five years, from the current 3.3 million units per annum to 7.4 million units out of which a third would be the organised market,” Pandey added.