Have you been eyeing the Mercedes S class or BMW 7-series for years? But do you have a limited budget? What about buying a used luxury car? Think twice if you’re hesitant about the idea. It could be a good option.
The Indian used-car market is expected to grow by 20-25 percent per year. What is even more surprising is that the premium segment of the market is growing at a similar rate.
Mahindra First Choice Wheels recently entered the premium used car market by opening Mahindra First Choice Edition Stores, the first of their kind.
In an exclusive interview with Entrepreneur, Mahindra’s top management discusses the opportunities in the segment mentioned above and the role that omnichannel will play.
Timing
The used car market is growing in India at a rate of 20-25 percent. According to Ashutosh Pandey, CEO of Mahindra First Choice Wheels, the premium car segment is the place where it’s at.
He thinks the premium segment will grow much faster than mid-level cars because the base of the vehicles is smaller, and people’s incomes are increasing.
Rajeev Dubey, group president (HR and Corporate Services), Mahindra & Mahindra Ltdechoes his opinion when he states that India is just at the beginning.
In India, the ratio between new and used cars is approximately 1.2:1. He said that as the nation grows and the income per capita increases, the balance between used vehicles and new cards will continue to increase. “In the US it’s 3:1 so we are just starting our journey in India at 1.2.” We will continue to improve the ratio, and we hope that one day, it will reach three. This means the growth of used cars will always be higher than the growth of new vehicles.
Dubey believes that the online format is a boon for all stakeholders, both on and off the cloud.
“We definitely need to be on the cloud. The platform is important. Purchasing a used vehicle is similar to signing a contract. The customer must touch, feel, and view the car in person before making a purchase. “Any organization that can attract customers and has a physical outlet will deliver,” he said.
Growth Strategy
Mahindra has more than 1000-1200 used car partners in the country. In the premium car segment, Mahindra plans to remain exclusive and hopes to open 20-25 stores in 2020.
Pandey, when discussing the best way to master this format, says that “for this to work, it requires a great inventory, and a great experience center – which is why you need the right partner, as well as time.” “I think that now is the best time to enter the market, as both the partnership and the inventory are falling in place.”
Mahindra also plans to be selective in selecting partners and expanding its edition stories while canceling any bad customer experience stories.
“With this format we plan to be slightly more specific, as we believe that this will require a great deal of care and we wish to be in a micro market. We will be in all of the major micro markets across the country, including Juhu, Worli, and South Mumbai, as well as similar locations in Bangalore, Delhi and Calcutta. But this will take some time, and we’re not in a hurry,” he said.
