Mahindra First Choice Wheels, a leader among the organised used-car players, is planning to have close to 1,300 dealerships by the end of the current financial year, as it expects demand for pre-owned four-wheelers to rise once the lockdown is lifted.
The Mahindra group firm has been getting higher enquiries during the lockdown months but could not deliver due to supply constraints that has singed new car sales. Higher demand can be attributed to the increasing adoption of private transport due to fear of viral infection from strangers while commuting in public transport.
Being bullish on the used-car business, the company opened as many as 34 dealerships mostly in small towns across 12 states on Wednesday, taking the number of its dealerships to around 950 now.
"We are optimistic about our demand as we have been getting higher enquiries during the lockdown but could not deliver due to supply constraints. That we opened 34 dealerships on a single day today (Wednesday) -- a first in this industry -- shows how optimistic we are about the business after the normalcy returns which I expect to begin from August,” Ashutosh Pandey, the chief executive and managing director told PTI on Wednesday.
Pandey added that the company is expected to close the financial year 2020-21 with around 1,300 dealerships mostly in less-coronavirus impacted small towns. "With the addition of 34 dealerships, we are the largest organised player in terms of footprint with 950 dealers now."
According to him, who was the founder CEO of the Tata Group''s omnichannel Tata CLiQ, the used-car market closed 2019-20 with 4.2 million units against OEM (original equipment manufacturers) sales of 2.7 million. But, only around 20 per cent of this market is with organised players that has gross merchandise value (GMV) of around Rs 76,000 crore at an average unit price of Rs 1.8 lakh.
The four organised players -- Mahindra First Choice, Cardeko, Cars24 and Cartrade -- along with Maruti True Value, collectively control more or less equally the 18-20 per cent of the organised market, said Pandey.
He expects the used-car market to have better future given the pandemic and also the highly unorganised nature of this market.
Mahindra First Choice, which has reported operating profit since the past two years, will be investing more over the next three-four years post which it will look at net income, he said refusing to disclose how much will be the new investment or how much has already been invested.
The company, which last year bought out rival online platform Car&Bikes, gets 50-55 per cent sales lead from online, while over 80 per cent searches begin online.
On the impact of the pandemic on the industry in particular and auto industry in general, Pandey said demand is growing but supply is an issue as neither OEM sales nor direct sales or exchanges are happening and he is worried that the same will linger into the next two-three months.
As the lockdown is being lifted, he said June was sales clawing back to 70 per cent of the pre-lockdown days, which used to be 14,000-15,000 units a month.
"With around 11,000 units, in June we reached almost 70 per cent of our February numbers,” he said, and expects the industry to close FY21 with 4.5-4.7 million units despite losing the first three months of the year.
The used-car industry has been clipping it 10-12 per cent but this fiscal growth may slip to 6-7 per cent, he added.
It employs around 800 directly and 3,000 freelance inspectors, apart from dealerships employing over 2,500.
Tags
Business