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Dec, 10 2012

PROFITS GALORE IN PRE-OWNED CAR BUSINESS

India's pre-owned car industry is set to take the limelight away from new car market by offering a wide-ranging choice to consumers and prospective franchisees looking to double their profits in the fast lane in the automobile industry.

POSSESSING a car may be everyone's dream but it may not be everyone's cup of tea to buy a new car that too in these inflationary times. Under such circumstances, going in for a used car at half the price of a new car may turn out to be a fruitful option for buyers. Other factors that may lead to the growth of pre-owned car industry is the emergence of organised players in the used-car market, the quality and good condition of old cars assured by the companies, the rising prices of cars along with increasing interest rates of loans from banks, etc. However, the driver that propelled the pre-owned car market's growth is the easy availability of used cars at low market rates. This is the obvious reason that is attracting consumers towards buying old cars from certified dealers . According to a report by CRISIL, on an average, the price of a four-year-old used-car is about 40 per cent lesser than a corresponding new car.

 

Witnessing healthy market growth
According to a recent market study and reports by research firms, the used-car market is all set to rev up profits for dealers of used cars of various brands. Coming over to the market's size, the used-cars market in India is expected to grow at 24 per cent to close to 8 million units by the financial year 2017. In the same period, the new car market is expected to grow at 17 per cent to 4.3 million units. As of today, India's pre-owned car industry is highly fragmented and it has to be rectified by the entry of organised players in the space replacing the market with organised players in the space.

 

Organising a fragmented market
Understanding the market's need and the boom that is likely to generate in pre-owned car industry, Mahindra First Choice Wheels Ltd (MFCWL), reckoned to be India`s no. 1  multi-brand certified used-car company, took the plunge to organise the market by offering quality standards on a par with the best industry standards. Also, at Mahindra First Choice tremendous attention is paid to details to ensure that each used-car meets a high level of quality. Besides buyers of used-cars, the company is also offering a business opportunity to aspiring entrepreneurs and franchisees that are looking forward to starting a business in the automobile industry.

The company lately inaugurated its authorised dealership outlet that offers an entire range of services to customers, including the purchase and sale of certified used-cars, car finance and insurance, fitment of car accessories and assistance with paperwork and documentation. For providing easy financing options for buyers, Mahindra First Choice has also tied-up with reputed banks like HDFC and Mahindra Finance, that further helps consumers to buy their dream cars.

 

Bright prospects ahead
On the business front, franchising in the pre-owned car business is reckoned to be a profitable proposition for prospective franchisees and dealers as gross margins are double the margins earned on new car sales. The industry is set to make huge revenues in the fast lane not only in metro cities but also in tier-II and III cities, attracting organised players to hop on to the bandwagon. With this, India's pre-owned car industry is anticipated to witness a massive growth in times to come.

About the author
Yatin Chadha, Vice President - Franchise Business, Mahindra FirstChoice wheels Ltd, has led the agenda of driving business from 20 to 200 outlets and has plans to grow to 500 outlets by 2015.

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