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Mar, 02 2016

A smooth drive

Businesses thrive on trust and similar is the franchisor-franchisee relationship. It is the same thing that translates into excellence in the deliverables resulting in higher customer satisfaction ratio, eventually driving profitable returns.

One key performance indicator of a good franchisor-franchisee relationship is by evaluating how many multiple outlets are being taken up by the franchisee. This is the differentiating edge at Mahindra First Choice Wheels (MFCW). It has over 725 dealerships across 330 cities across India, out of which 65 franchise partners have multiple dealerships. What has made such a strong relationship between MFCW and its franchise partners? Let's explore...

Used car Industry is at the cusp of inflection and expected to grow to 5 million vehicle market in the next 5 years. This is primarily driven by first time car buyers who comprise of 73 percent of used car buyers. Among these a high percentage of customers upgraded from two wheelers.

With the advent of organized players in the used car segment, and greater emphasis on certification and warranty on used car, the perception of used car has changed from an affordable to sensible car purchase. “Used car as an industry is becoming an exciting place to be in. It is an attractive option for first time car buyers who have their options limited in the new car space. Moreover with the trust of Brand like Mahindra, they can afford a bigger better car at the price point of 2.5 to 3 lakh,” opines Vijay Obhan, Dealer, Automaxx.

The Brand Value

MFCW has been instrumental in organising the rampantly unorganised category of used car over the past two decades. Brand Mahindra has aided in not only removing the stigma around used car purchase, but has also helped in building a bond with the customer, with many of them coming back for repeat purchases. Prasad Birwadkar, Dealer, Car Planet Wheels Pvt Ltd, “We ensure that the customers don't see used car as an option because of their budget constraints. We use our robust process of certification and warranty to convince the customer that at any price point a used car is a value alternative to a new car. This helps us in getting repeat purchases and referrals through positive word of mouth”

The Franchise Edge

The success of any franchise depends on how the franchisor is able to translate the value proposition of the brand to the franchisee and how the franchisee delivers the same to the customer. Especially in the used car space, where every car is unique in its own way, it has taken years of experience to put a robust certification, warranty and training ecosystem. This helps the dealer to churn out what is called a Certifirst Car, car that comes with the backing and trust of Mahindra first choice. Firoz Khan, Dealer, Concept Cars, explains, “Last 6 years of used car experience gives MFCW know-how on entire certification, warranty and sales processes around the used car space. This know how is communicated through effective training processes and validated by qualified certification engineers, thereby making sure every car that is certified stands up to the MFCW brand.”

Driving Ahead

Ultimately the transformation of all the above points boils down to dealer profitability through a frugal and effective processes leading to lower costs with attractive per car margins., Successful MFCW franchise have had a paid back of less than an year with a ROCE of 25 percent over a period of three year. Virendra Singh, Dealer, Win Win Automobiles who owns multiple franchises admits, “The primary reason why we opted for multiple dealerships is huge opportunity. Having realized that a properly run used car business is profitable we have expanded our business.”

Writer is National Head -Franchise Operations of Mahindra First Choice Wheels

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