Case Study Analysis on Mahindra First Choice Wheels Limited, Mahindra Pre-owned Car Sales Business: Ken Research

Mahindra first choice has transformed their business model from company owned to franchisee based used car outlets.The company has managed to reduce their losses due to closure of company owned outlets with steady cash flows from franchise business.

MFCWL was rebranded by Anand Mahindra in 2008 (started as Auto Mart India in 2003) to leverage the used-car segment in India through the offering of certified pre-owned multi brand vehicles to the customers. The venture was started as a three-way joint venture between the Mahindra group, HDFC and Sah & Sanghi. The idea behind the venture was to provide better experience to the buyer for the purchase of used car similar to the purchase of new car.

According to the Research Analyst, Ken Research MFCWL follows the “click and mortar” model in the after-sales car market. Presently, all the MFCWL outlets are owned and operated by franchisees, while the company plays the parenting role of guiding and facilitating the used car sales operations for every franchisee.

The financial performance for Mahindra First choice services has remained strong since FY’2012. During FY’2014, the company has closed all their company owned outlets and has decided to expand their network through franchisee model only. The asset-light model of conducting the business through franchisee route has been less risky and hassle-free as the company does not need to invest heavily in procuring used cars, maintaining their inventory and pay rentals.

In the coming years, the company is looking to boost their franchisee business by expanding dealer network and their profitability. The company is planning to expand its outlet count to more than 1,800 franchised outlets by FY’2020, According to the Research Analyst, Ken Research