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Business News/ Companies / News/  Landmark Cars looks at M&As to grow

Landmark Cars looks at M&As to grow

Apart from acquisitions, Landmark, the only listed car dealership chain in India, is hopeful of higher business from its dealer outlets for MG Motor and M&M

Landmark Cars expects more automotive dealership groups in India to consolidate and some to eventually list on stock exchanges.Premium
Landmark Cars expects more automotive dealership groups in India to consolidate and some to eventually list on stock exchanges.

New Delhi: The 3,127-crore Landmark Cars, the only listed car dealership chain in India currently, is looking to expand its business through acquisitions and by leveraging its new partnerships with original equipment manufacturers (OEMs) such as MG Motor India and Mahindra & Mahindra (M&M).

The acquisition route is not new for Landmark. A quarter of its 117 outlets in 29 cities concentrated in nine states including Maharashtra and Gujarat, consists of dealerships that it has bought out from previous owners. 

“The pace of our acquisitions is certainly likely to go up because today, there are many family-run dealership groups in India that have succession issues, financial stress, or they may want to migrate to another business," Sanjay Thakker, promoter & chairman, Landmark Group, said. “We are in a position to pay them a fair market price, and many groups will be happy to fold into the Landmark umbrella over time."

Landmark Cars is the largest retail partner for Mercedes-Benz, Jeep, Honda, BYD and Volkswagen in India. Varun Motors, Sai Service among other are some Maruti Suzuki dealers among the largest in the country. Competent Automobiles is a listed Maruti Suzuki dealership network.

Apart from acquisitions, Landmark is hopeful of higher business from its dealer outlets for MG Motor and M&M, which operate in the high average-selling-price passenger vehicle market. 

According to Thakker, these brands also have a healthy runway to grow their footprint in certain geographies. “Our MG foray is an acquisition, too. We are, however, not targeting any [specific] number of outlets that we want to open. We acquired the MG dealer in Goa because that was the quickest way for us to enter a new state", he said.

According to a Crisil report, automotive dealers will see revenue accelerate 8-10% this fiscal, driven by 5-7% increase in sales volumes, premiumisation and price hikes of 2-5% by original equipment manufacturers (OEMs).

American private equity fund TPG Growth, which had invested in the group in 2014, had exited the company fully earlier this year through an open market transaction. It sold 11.25% of its remaining stake (it had reduced its stake from 29% at the time of Landmark's IPO to 11.25%) worth over 290 crore this June. Landmark listed its business on the Indian bourses last December, when its issue of 552 crore was subscribed over three times. 

Since listing, Landmark’s stock price has risen 66% to close at 761.85 on the National Stock Exchange on Wednesday.

In terms of strategy, Thakker said he prefers establishing new outlets only for new brands or in new cities. But for existing stores, he prefers to sweat the assets and squeeze out more productivity. “Our workshops in most cases operate on a single shift. We want to consider if we can move to double shift first, rather than open one more workshop," he said. “Manpower productivity in India is not as much as in developed countries. Can we have lesser but quality manpower, and deliver more? Those are the matrixes that we should be looking at for getting efficiency in the system."

From an industry perspective, Landmark remarks in its Q2FY24 investor deck that it expects more automotive dealership groups in India to gravitate towards consolidation and recruit professional management teams to organize their businesses, and some may eventually look to the stock exchanges to list. “World over, OEMs are showing a preference to work with lesser number of organized, meaningful players, instead of diluting their brand as a result of price wars," the deck noted.

Thakker underscores this belief: “I'm sure there will be many, many groups that will consolidate and look to list. There is space for more in our country. In every other country such as China, Europe, Australia or even South America, there is a trend of dealership chains. In India, which is the third largest market, we are the only one."

"The consolidation of dealer networks is anticipated in the coming years as carmakers have started preferring working with limited dealers. This approach also reinforces trust and brand equity among car buyers. However, in the premium sector, the issue remains with the stagnation of the overall volume of luxury brands, which is not rising above 1%. Nevertheless, the rise in average selling prices for luxury carmakers continues, which supports the overall business aspect of the dealers", Gaurav Vangaal, Gaurav Vangaal, associate director, S&P Global Mobility, told Mint.

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Alisha Sachdev
Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
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Published: 24 Nov 2023, 12:02 AM IST
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