Here is Why Mahindra First Choice is Betting High on Used Premium Car Segment
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Eyeing that Mercedes S class or BMW 7 series forever now? However, are you low funds? How about buying a second-hand luxury car? If you are apprehensive about that thought - think twice because this might be the way forward.
The Indian used car market is all set to grow with 20-25 per cent per annum. However, what is more astonishing is the fact the premium car segment is also growing more or less at the same pace.
To tap into this opportunity, Mahindra First Choice Wheels recently ventured into the premium used cars market with Mahindra First Choice Edition stores, which the company claims to first of its kind.
In an exclusive conversation with Entrepreneur, the top management from Mahindra discusses the opportunity in the aforementioned segment and what role omnichannel would play here.
As mentioned before, the used car market in India is growing at the rate of 20-25 per cent. However, according to Ashutosh Pandey, CEO, Mahindra First Choice Wheels premium car segment is where all the action is.
He believes the premium car segment is growing much faster than the mid-level cars because the base is smaller, people’s income is increasing and the growing interest in luxury cars.
His opinion echoes with Rajeev Dubey, Group President (HR and Corporate Services) of Mahindra & Mahindra Ltd as he says India is at the beginning of the journey.
“The ratio of used cars to new cars in India is roughly 1.2: 1. As the nation develops and there is an increase in the per capita income, the ratio of used cars to new cards keeps on increasing,” he pointed out while adding that, “In the US, it is 3:1, so in Indian, we are really starting the journey at 1.2 today. We will keep on increasing the ratio and hopefully, we will be at three, which means the growth rate of used cars is always going to be a higher than the growth rate for new cars.”
Talking about the growth of online players in the segment as against the offline format, Dubey feels it's a bounty for stakeholders who are present in the cloud and on the ground (online and offline).
“We certainly need to be in the cloud - the platform is very important. Having said that, buying a used car is like signing a contract wherein the customer has to touch feel and see the car before buying it. So, any organization that has the ability to attract customers and actually have a physical outlet will also deliver,” he shared.
Discussing the right way to master the format, Pandey says, “For this to work out, it requires a good inventory, a good experience centre - for which you need time and the right partner. I think, fortunately, now it is the right time for us to enter the market as both the partnership as well as the inventory are falling into place”
Mahindra is also planning to be selective about the partners while expanding its edition stories to cancel out any poor customer experience stories.
“With this format, we are planning to slightly more specific as we believe this will require a lot of care and we want to be in the right micro market. Having said that, all the key micro markets in the country - Juhu being one, Worli and South Mumbai being another with similar places in Bangalore, Delhi, Calcutta, we will try and be present in most of the high network micro markets but this will take time and we are in no rush,” he concluded.