Young entrepreneurs, first choice to drive our business
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Jul, 29 2015

Young entrepreneurs, first choice to drive our business

525 franchisees in 276 locations of India, the count is still doubling quickly as Mahindra First Choice Wheels Limited (MFCWL) is on an aggressive expansion spree to transform the retail activity of certified used cars in India.

Being a part of US $16.5 billion multinational Mahindra Group which has more than 180,000 employees in over 100 countries across the globe, MFCWL is riding high on success with a robust team of young entrepreneurs in its system. Let's check out why MFCWL is reckoned as a first choice for new-age franchisees and dealers...

Ratio of franchisees@ MFCWL: More than 70% of franchisees are in the age group of 25 to 39 years of age.

India is on the rise. Every corner of the country is reverberating with exuberance and optimism. Every day is an opportunity. The country with the largest population of the young in the world is ambitious for success, social stature and material comfort. In India, today no dream is too big. With changing lifestyles, on an average every man in India targets to have his own house and car by the age of 28.  The latter has become easier as used car industry in India is growing by leaps and bounds. Looking at the changing demographics, the used car market is still considered larger than the new car market in India. Consumers with rising aspirations and limited spending power are the two topmost reasons which are allowing potential buyers to go for a bigger and a better used car at an affordable price than purchasing a new one.  The new-age entrepreneurs today have recognised that a second hand car buyer is not a second class buyer.

By helping consumers to buy used cars of multiple brands under one roof, Mahindra First Choice Wheels Limited (MFCWL) stands tall in the pre-owned car business since 1999.  With a strong backing of Mahindra Group, MFCWL which has been serving the after- market since 1999, made its foray in franchising  in 2008 to create a robust business ecosystem for pre-owned cars as this market is estimated to be bigger than the new cars market.

New-age entrepreneurs entering the certified car market

The automotive sector has witnessed a new trend as new-age entrepreneurs and franchisees are coming forth to join hands with reckoned player like MFCWL to achieve immense profits. In the recent past, the brand has forged partnerships with young franchisees from different background (professional expertise) to make more revenues. Looking at the changing market trends and entry of new-age entrepreneurs in business, Dr Nagendra Palle, CEO and MD, MFCWL, says: “Most used cars today come with quality certifications and are fully refurbished. A shorter holding period  on an average, a used car that enters the market is only four years old  has also aided growth in the market and ensured a steady supply of vehicles. This has attracted all stakeholders: buyers, carmakers and also financiers, who were earlier reluctant to lend against used cars.” He further added, “Similar to new cars, financiers in the used cars market will compete on the basis of interest rates, turnaround times, service quality, type of dealers to tie-up with, commission arrangements, and loan to value ratios.” Agreeing on the same, Yatin Chadha, Senior Vice President  Retail Business, MFCWL says: “In today's business world, the young entrepreneurs come with research and technology based tools to run and improve business whereas the experienced players bring along with them a vision. At Mahindra First Choice, we use the right mix from best of both worlds and offer our franchisees.”

Currently, more than 70% of franchisees at MFCWL are in the age group of 25-39 years. Enlightening about the criterion they strategically follow for selecting franchisees, Yatin Chadha informs: “We follow a stringent selection process for appointing our franchisee. The process starts with multi-level interviews, CIBIL check, market feedback and reference check. In addition, we also check for franchise's readiness to try new things, self-involvement and commitment to take the business to new heights. We also look for franchisees with customer centric approach.”

Franchising model in automotive business is well accepted as it has the potential to multiply the store count. Talking about their plans ahead, Nagendra Palle adds: “We expect to continue the current level of expansion over the next five years and reach a level of close to 1,000 physical outlets under the MFC brand. We expect a million plus prospective customers walking in at our MFC outlets to buy a car of their choice.” Besides this, the brand is also aiming to exit this year with 700 outlets with a focus on tapping  all A, B, C and D cities of India. 

Extending support to franchisees

Under their strong franchising model, MFCWL assures it franchisees to render extensive training and support to boost sales. The brand follows two modes of training, Online-Learning and development portal and Offline-Classroom and Practical training programme.

MFCWL has broadly classified its training modules in three categories:

= Behavioural: Procurement and sales behavioral training programme.

= Technical: Procurement and sales technical training programme and certification training programme.

= Dealer orientation programme: To orient dealers with all the content so that they can demand the desired beh-avior and skills from their employees.

Over and above these trainings, they have also designed a four step certification programme for its dealer employees 'DSTAR'. 

Technology infusion @ franchisee’s network

Suraj Kumar, National Head  Business Development, MFCWL, says, “The majority of our dealers are from unorganised market, hence they lack the ability to capture and leverage data.  So, to inculcate the culture of effective data management, we have developed a tool called Outlet Management System (OMS).” Dealers are using this tool and getting benefited. OMS has following features:

= Lead management  Better Conversion ratio

= Manpower management  Better feedback and Performance improvement

= Inventory Management  Most critical in used cars business; Demand/ Supply analysis to decide on inventory mix

= Website Integration  More leads; Better Walk-ins

= Call Centre New Leads as per your stock and demand.

Accolades for best performing franchisees

It's the constant endeavour at MFCWL to appreciate the franchisees' yearly performance via Dealer Performance Excellence Programme (DPEP) which seeks to recognise and reward its dealers based on overall operating performance across various areas of the business. DPEP is an integral part of the MFCWL process and has been conducted every year since 2010. As per Tarun Nagar, National Head    Franchise Operations, MFCWL, “DPEP aims to ensure a consistent experience for the consumer by focussing on five major parameters to measure dealer performance, encompassing critical aspects of the used car transaction experience: business performance, people and processes, infrastructure facilities, financial performance and corporate sustainability.”

Current Market Trends

As per CRISIL report, the used car sales to grow at a healthy 11-12% Compound Annual Growth Rate (CAGR) over the next 5 years. While the entry of more OEM-backed operators will give organised players control on one-fifth of the market by 2018-19, financiers too will benefit from the higher share of organised dealers.

As per the market facts, the pre-owned car market is currently 1.3 times bigger than the new car market. It is expected to grow up to 2.5 to 3 times by 2020, driven by affordable prices and increasing presence of sale points.

Market analysts feel that the used car market in India is growing fast and is likely to accelerate in coming years. India’s automobile industry is one of the fastest growing in the world and it is already the sixth largest globally. According to a Society of Indian Automobile Manufacturers (SIAM) report, annual car sales could reach five million vehicles by 2015 and more than nine million vehicles by 2020

Industry drivers

Decreasing replacement cycle–  avg. of 54 months (FY07) to (expected) 42 months in FY-17OEMs promoting used car market to support dealer profitability

Improved quality relative to new cars supported by significantly better unit economics Rapidly evolving online classified sites (several) enabling easier location of desired inventory

MFCWL boosts dealers’ network

Being the only multi-brand player of certified used cars, MFCWL boasts of having a strong dealership network run by horde of young entrepreneurs who are reverberating with zeal to run an automotive business. With strong support from MFCWL, these entrepreneurs are running their outlets successfully in different corners of the country. 

Let's take quick glimpse at what motivated them to join hands with MFCWL and how they have been able to add maximum revenues and thereby building a strong footprint within their designated territories. 

Requisites for taking up MFCWL franchise

Investment: Varies for A/B/C/D cities

Area: Varies for A/B/C/D cities

ROI: 30-40%

Existing stores: 525+

Upcoming stores by FY 2015 (Company-owned +Franchise): 700 stores by 2015

Franchisees are operating stores via multi-unit and master franchise model: 48 Dealers

MFCWL closed F-15 with sale of 69,000 used cars, which is 29% growth over the last financial year.


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