Automobile May, 28 2012

Profit driven pre owned car franchise biz

Possessing a pre owned cars has always been considered dicey. However, with the coming up of organised players, buying a pre owned car has become more organised and risk free. Read on to know more

By Neha Gohil
Feature Writer
Profit driven pre owned car franchise biz

Buying a new car is quite easy these days with easy installment finance facility offers available in the market. However, the increasing rate of interest is a cause of concern.   Another option to possess a car that we cannot miss to ignore is of buying a pre-owned car on half the price without any hassle of loan interest. With the soaring interest rates, there is a substantial decline in consumer purchasing power followed by a decline of new car sales. Therefore, consumers prefer to buy pre-owned cars.

The pre-owned market in country was largely unorganised few years back and organised players shared only 20 per cent of pre-owned car market size. As per Yatin Chaddha, VP, Mahindra FirstChoice, “The current size of the industry is approximately 2.2 million vehicles per year, that is, the same as the new car market. Owing to the booming economy and rising incomes of people, the pre-owned car industry is expected to grow exponentially.”

In India, the existing pre-owned car market is mainly dominated by the unorganised sector which includes – the roadside garage mechanics, car dealers and small brokers. They do not ensure any reliable certification and the consumers are often mislead. Now with organised players coming up, pre-owned car market has started witnessing a new zeal with consumers picking up used cars happily. These players offer car related customised services to serve the rising demands of the consumers.

Factors leading to growth

People nowadays desire to have luxurious cars but due to capital constraint they are unable to afford new cars. Therefore, the best option to fulfill their desire is to buy a pre-owned car. Taking car loan is also not advisable because of higher interest rates. Another factor that leads to pre-owned car retailing is the attention span of people. People who are fond of cars always prefer to have the recent models. Therefore buying new cars can be quite expensive for such car lovers. An appropriate and reasonable alternative is to invest in a second hand cars.

Players in the field

Companies such as Popular Car World, Mahindra First Choice, and Maruti True Value, Carnation Auto are focusing on the franchise route to spread across the country. Besides them, other car manufacturing companies such as General Motors (GM), Ford, Hyundai Motors, Porche are some other big players who have ventured into the pre-owned car industry.

Selling via franchising

Taking into consideration the growing demand for pre-owned, car players in the industry are taking up franchise route for expansion. Franchising is the best way forward to expand the market opportunity to every nook and cranny of the nation. As Yatin Chadha, VP ( Franchise Business ), Mahindra First Choice shares: “The nature of the business is such that it is entrepreneurial and requires local knowledge which needs to be coupled with the strong set of processes that are required to conduct this business on a day to day basis. This made franchising a very attractive choice for growing the business.” He further informs; “Since, we present a very attractive franchising model, which gives attractive ROI to the franchisee, many are more than happy to participate and become stakeholders in MFCW’s growth story, which also helps us grow our market penetration at the same time.”

Franchise requisites

To attain a franchise of pre-owned cars the area and investment varies from brand to brand. Mahindra First Choice demands an investment of Rs 10 lakh towards showroom interiors and refundable deposit along with an area of 4,000 sq. ft to 10,000 sq. ft.

Enduring growth

In India, the pre-owned car market is emerging enormously in the automobile industry. It is believed that the small cities too have a key role in disseminating the sale and purchase of used cars, not only in metros but in local regions also. As a lot of car manufacturers have stepped into this industry, the entry of organised labels in pre-owned car market has opened up new revenue channels for their certified dealers and will also attract the consumers towards their branded stores.

Related: “We are at continuous expansion through dealership” Vaibhav Saraf

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