The sale and purchase of old cars is not new. Though an unorganised industry, it has remained popular as well as picked up pace over time. With car majors like Mahindra FirstChoice getting into the pre-owned car segment that has a strong network of 157 f
PRE-OWNED car industry is not just about selling, purchasing, and exchange of used cars; it's also about a profitable business potential. So, whether you are an existing dealer selling new cars or one, who is planning to get into the automobile industry, there is nothing better than investing in a pre-owned car franchise.
With the brand value and scale of the Mahindra Group, the brand initiated its journey with the aim of becoming the de-facto leader in the category. Mahindra FirstChoice Wheels Ltd is promoted by the Mahindra Group, a leader in the Indian Automobile industry and one of the most respected business houses in the country. It is India's largest multi-brand certified used-car company, and aims to offer a wide choice in all brands of certified used cars to consumers backed by transparent and hassle-free dealings. Since its inception, Mahindra FirstChoice has been a pioneer in professionally organising the used-car retail industry in India.
Mahindra's franchise drive to success
As the used-car market in India is almost the same size as the new-car market, the brand expects a much higher pace of growth in the coming years. Like others, franchising has been fruitful for Mahindra FirstChoice too, as the brand has been franchising since 2008. Presently, it has a 157-strong franchisee network across the country in 105 cities ranging from A-category cities like Mumbai and Delhi, to C-category towns like Abohar, Mohania, and Baramati.
Mahindra FirstChoice also has company-owned-company-operated (COCO) stores in select cities across the country through which it gets valuable insights, which are then implemented at its franchisee outlets. For the brand, the largest market in the country is Delhi-NCR and in line with this market reality, it has 25 dealers till date and is fast expanding. According to Yatin Chadha, President, Operations & Network, Mahindra FirstChoice: “We feel the franchise concept is very beneficial. The used-car retailing business is growing at a healthy rate. Consumers increasingly prefer buying a used car, that too from organised retailers. Our franchising model enables entrepreneurs enter this fast-growing and lucrative business.”
Associate for a speedy biz voyage
To partner with the brand, a potential franchisee has to work according to the company's guidelines. The company has its pre-defined norms for a franchisee, especially in terms of area and investment. These norms depend on the type of town a franchisee wants to open his store in class A or class B or class C town.
To have quality and services on a par across all its franchise outlets, Mahindra FirstChoice provides complete expertise and support on professionalising the business to its franchisees. It includes brand and advertisement support, training on buying and selling of used cars, warranty, tie-up for roadside assistance, assistance in recruiting and training of staff, assistance in certification of vehicles, and tie-up for car finance and insurance.
To operate a successful franchise outlet, the company anticipates a franchisee to invest a working capital, to have a showroom space, parking space for vehicles on sale, and manpower. The space can be his own or on lease. The company ensures that all needs of a particular franchisee are met in a way tailored to his requirements.
Support for a smooth drive
Training and support are the backbone of every successful franchise business. Similarly, Mahindra FirstChoice provides complete expertise and support for building a business on professional lines. The brand makes sure that personnel from Mahindra FirstChoice continually work with the franchisee to improve turnover and profitability of the business.
Process Support: The company has well-defined processes for all aspects of the used-car industry-- be it procurement, refurbishment or sales. Through its field workforce comprising area managers and zonal managers, it offers valuable process support to its franchisees. The brand also provides support to come up with buying and selling price index. In addition, it also provides certification support wherein company's engineers certify the car after passing it through a 118-point check.
Marketing Support: Marketing support is essential to achieve success in any kind of business. Mahindra provides support at two levels: branding and sales leads. For branding, the company works with various top-notch agencies to come up with branding elements and ensure consistency in the application of the Mahindra First Choice Wheels (MFCW) brand at all customer touch-points. It routes sales leads through its website and professionally-managed call centre based in New Delhi. In addition, the local print media is leveraged to the maximum to bring in leads to the dealerships based in a particular area.
Training: MFCW has a robust training programme for sales and procurement workforce based at the dealer's end, which is conducted by a highly professional training agency. In addition, it has GNOSIS, a well-equipped, state-of-the-art technical training centre in Pune. Sustained training and development activities ensure lower attrition of the staff and effective fulfillment of the brand promise. The company also gives inputs for branding and layout of the storefront in line with its aim of giving the best experience to the customer when he arrives at the store to buy or sell a car. Besides, even at the post-sale stage, the company has proper systems to capture customer's level of satisfaction with the car and general feedback.
On an expansion spree
With a thick network of franchisees pan-India, the brand mulls expansion in A and B class cities. No other multi-brand in pre-owned car segment comes close to this reach. In the last financial year, the brand grew its volumes by 25 per cent in franchise business. When asked about pre-owned car industry's future, Yatin Chadha says: “We see a lot of scope for rapid growth in the pre-owned car market five years down the line. The new car market, which is growing very fast, will enable this growth. Customers today need a trusted, brand-agnostic retailer in the used car space, and Mahindra FirstChoice is the only company uniquely placed to cater to those demands.”
It is now acknowledged beyond doubt that used cars are an essential component for the growth of the Indian automobile market. The company believes that in every mature car market, used cars outsell new cars by a factor of over 2 to 3 times. In more advanced economies, low priced used cars, rather than small cars, are the first choice of families.
PROFITS IN FAST LANE
The foray of Mahindra FirstChoice has given a new avatar to the Indian pre-owned car market. In a candid conversation with TFW, brand’s Vice-President, Operations & Network, Yatin Chadha, talks about the reasons behind its success.
What benefits does a franchisee enjoy after taking the franchise?
Apart from a healthy return on investment, the franchisee gets to align with a leading brand like Mahindra FirstChoice. This improves his standing in society.
How is the marketing strategy planned for a particular region?
We have a pan-India marketing strategy as well as strategies for each region. Each dealership store has a catchment area (defined by certain metrics and parameters uniquely suited to our business) for which we conduct used car melas, promotions, etc., to attract prospective customers. In addition, we also carry out region-specific digital-marketing initiatives, which utilise the power of the Internet to drive in traffic for our dealers.
What is the USP of your brand?
To offer a wide choice of Certified Used Cars backed by transparent dealings.
Kindly cite examples of a few of your franchisees' entrepreneurial journey?
Automotives India, Vasant Kunj, Delhi, started with one outlet and now has three outlets in NCR. Noida Car Point, Noida, started with one outlet and now has two outlets in Noida. Another example is that of Susee auto-mobiles, Madurai, which started with one outlet and now has two outlets.
Do you have any multi-unit franchisees? What kind of extra benefits do you offer them?
Currently, we have 14 franchisees with multiple outlets. We offer the first right of refusal for expansion in next catchment area to our current franchisees.
What kind of royalty do you charge from your franchisees?
It's a fixed royalty model. These norms depend on the type of town class A or class B or class C town.
Core product certified used car
The core product of Mahindra FirstChoice is the Certified Used Car. A Certified Used Car at Mahindra FirstChoice undergoes 118 quality checks, which cover all aspects of a car's functioning. Tremendous care is exercised while buying a used car. Before purchasing the car, a trained engineer thoroughly checks the car. Also, the papers of the car are checked extensively. After purchase, the car is refurbished to a check-list. The objective behind the care and diligence exercised is to give the consumer a car that is in good condition, and hence, reliable. Today, certified pre-owned cars from Mahindra FirstChoice are retailed in more than 80 cities across India.
FRANCHISE FACTS
Annual turnover of the company:
Rs 130 Crore
Company operational since: 2006
Year of starting franchising: 2008
Number of cities present in: 105
Number of franchised units: 157
Number of company-owned units: 5
Percentage of total business from franchisees: 88%
Total Investment: Varies for A/B/Cities
Area Required: Varies for A/B/Cities
Return on Investment: 30% and above
Expected break-even time: 6 to 9 months
Number of franchisees owning more than one unit: 14
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