Mahindra First Choice eyes 10 percent market share in 3-4 years

Mahindra First Choice Services (MFCS), a wholly-owned arm of Mahindra & Mahindra, has chalked out plans to enhance growth into a fragmented multi-brand car service business and capture 10 percent of the market in 3-4 years.

The company took a step in that direction with the opening of its first franchise outlet in Chennai recently. According to YVS Vijay Kumar, CEO, “We have plans to take the number to over 400 in three years. In this fiscal, our target is 100 outlets.” MFCS aims to be in the Top 3 players for out-of-warranty cars in India by 2018.

At present, MFCS has 28 company-owned and company operated or CocO outlets across the south, west and north of the country, 16 of which were opened last year. It has, over the past six years, also built a robust network of spare parts distribution backed by strong IT processes. “Over the last 3-4 years, we have used our experience to ensure high level of customer satisfaction, understand customer needs and ensure our services and product packages are suited to their particular needs,” Kumar added.

At present, the multi-brand car service space is largely dominated by independent garages with a  few organised players that include MyTVS, Carnation Auto and Carz. With the franchise route, MFCS hopes to tap the tap the huge potential in Tier 2 and 3 cities in India.

In Chennai, where the first franchise opened last week, MFCS hopes to add 10 franchises within three months. According to Kumar, the southern region has the highest process adherence levels and given the demanding customer here, this is a good testing ground for the franchise model. The CoCos that MFCS operates are mainly in Tier 1 cities so they are relatively big in size and have 15 bays. However, with the franchisee outlets going into smaller towns, the bay size is expected to be 8-10.

MFCS intends to offer the franchisees a complete spares supply through clusters with door-step delivery free of charge with a van carrying parts that go to the outlets thrice a day. The aim is to ensure that the outlets won’t have inventories of over 50 days, thus keeping a check on working capital costs. “With lower inventories, door-step deliveries, availability of spare parts and better margins, we believe that this value proposition is attractive for all the franchisees,” says Kumar. The target is to cover Tamil Nadu with 50 franchises in about 18 months. It will look at expanding to Pune and Mumbai in the west, followed by NCR and Punjab in the north and Bangalore, Hyderabad and Kerala with a cluster warehouse at Kochi in the south.

In India, at present, 50 percent cars are serviced by OE dealers and the remainder by private garages with 30-32 percent being first-time buyers. For a typical car user, maintenance costs begin to increase in the third year onwards, post warranty. This is when the car owner begins looking for alternatives besides OEs dealers mainly due to considerations of time and cost. With its skilled technicians, modern equipment, robust processes, free pick-up and drop facility, MFCS hopes to give customers a better deal.

On other fronts, MFSC recently launched an online car dent estimator tools which can be used not just by its own customers but by any car owner.