Mahindra to invest Rs 2,500-mn

Mumbai: Auto major Mahindra & Mahindra Ltd will invest Rs 250 crore in three to five years in setting up a chain of multi-brand service outlets.

This was announced at the launch of Mahindra’s new business vertical which consolidates its after-market business, mainly servicing, sale of pre-owned cars and spares business.

The company is planning to launch about 700 multi-brand service outlets under the brand name Mahindra First Choice Services Ltd across the country in 10 years.

“We will set up company-owned outlets in the initial years and gradually we will have franchisee-owned outlets too. We hope that the entire after-market business will generate revenue of Rs 3,000 crore by 2015,” said Mr Rajeev Dubey, Member of the Group Management Board, Mahindra & Mahindra, who heads the new vertical.

“With a growing economy, the after-market business is also growing. We want to build an eco-system for pre-owned car market which replicates the ecosystem of new car market,” said Mr Anand Mahindra, Vice-Chairman and Managing Director, Mahindra Group, after inaugurating the first multi-brand servicing outlet of Mahindra First Choice Services Ltd in Mumbai.

“With the growing population of vehicles in India, there is a vast untapped potential in the after-market space covering multi-brand pre-owned vehicles, servicing and spares,” said Mr Mahindra.

The company is planning to increase the used car outlets from current 67 to 240 in five years, out of which 30 will be developed into superstores offering multiple services.

The spare parts division of the company, which sold spares of Mahindra vehicles alone, will soon start selling spares of other manufacturers too. “About 70 per cent of vehicles in India are from Maruti and Tata Motors. We will first sell the spares of those vehicles,” said Mr R. Bhurat, Chief Executive, Mahindra Spares Business.

“We will initially sell 20-25 mass moving service products. We will procure them from about 1,000 vendors we have who also supply to other manufacturers. We will also import from Korea, China and Thailand,” said Mr Bhurat.

Currently, the spare part business fetches revenue of Rs 550 crore for Mahindra, while the used car sales bring in about Rs 180 crore.