Mumbai: Utility vehicle maker Mahindra and Mahindra Ltd (M&M) is creating a new division that will seek business opportunities after vehicles are sold including reselling of its used vehicles, vehicle servicing and the sale of spare parts, as it aims to streamline its various businesses.
Mahindra First Choice Ltd, the used-car business, Mahindra First Choice Services Ltd, which will service vehicles, and Mahindra Spares will be combined to target a turnover of Rs3,000 crore by 2015. Presently, M&M’s used-car business or the purchase and sale of pre-owned cars, and automotive spares businesses together have a turnover of about Rs730 crore. This is the first time that M&M will be servicing vehicles of other makes through its First Choice multi-brand service outlets.
“Our focus in the first two years will be on setting up our own service outlets,” said Rajeev Dubey, president (HR, after-market and corporate services) and member of group management Board, M&M. Dubey is heading the new division. The company opened its first multi-brand service outlet in Mumbai on Monday. It will invest Rs250 crore over the next seven years in setting up about 70 such company-owned service outlets, catering to all types of vehicles. Including franchisees, the number of these outlets will reach more than 690 by 2018.
Car sales in India, Asia’s third largest automobile market, rose 12.2% from a year ago to touch 1.5 million units in the year ended March.
Car sales at M&M though rose much higher at 45% during the year, on the back of strong sales of Logan, Scorpio and Bolero multi-utility vehicles. The company sold almost 26,000 Logans, while sales of utility vehicles were up 16% compared with the year-ago period.
“(The) size of the business space currently is at Rs12,000 crore and likely to grow to Rs30,000 crore by 2015,” said R. Subramani, chief executive, Mahindra First Choice Services Ltd.
Meanwhile, Mahindra First Choice also plans to increase the number of its used-car showrooms to 230 outlets over the next five years, out of which 30 will be classified as superstores. Presently, it has 60 used car outlets spread across 40 cities. It has only one superstore located in Goregaon, a suburb in Mumbai, spread across in area of 40,000 sq. ft and capable of displaying 150 cars of all types.
At the same time, M&M is also expanding the scope of its spares unit to also provide spares for non-Mahindra vehicles. The company is targeting a turnover of Rs1,000 crore from its spares business by 2011, according to R. Bhurat, chief executive, Mahindra Spares Business, M&M.