Mahindra First Choice Wheels Limited (MFCWL), the number one multi-brand certified pre-owned car company has signed a definitive agreement to raise Rs.94 crore from San Francisco based investment advisor firm, Valiant Capital for a minority stake in the company. This is the second round of external private equity raised by MFCWL, with the first one back in 2008 from the Delhi-based Phi Capital, who continues to be an investor in the company. MFCWL has experienced rapid growth in its retail, wholesale and technology enabled businesses. The capital will be used to fund it growth plans over the next few years.
From (L-R): Rajeev Dubey, Nagendra Palle and Anand Mahindra.
Founded by Aand Mahindra, MFCWL’s mission is to organise every facet of the pre-owned car industry and most important of all, provide used car consumer with a choice of certified pre-owned vehicles and a purchase experience that mimics the new car buying experience, according to a company statement.
Anand Mahindra, Chairman and Managing Director, Mahindra & Mahindra and also the Chairman of Mahindra First Choice Wheels said: “MFCWL is yet another example of innovation and entrepreneurship within the group, where new business models are being explored and implemented with persistence. It is exciting to see marquee investors attracted to MFCWL and participating in its growth story where much is yet to come.”
In fact, MFCWL is the only true used car business with a successful hybrid business model bridging the consumer experience online and on the ground With the physical presence critical to the used car business, the company has invested aggressively to provide consumers with a consistent omni-channel experience.
Speaking about this strategy, Rajeev Dubey, President (Group HR, Corporate Services and Aftermarket) and Member of the Group Executive Board, M&M said: “We believe the brick+click eco-system is very powerful in the used car business and over the years, we have seen our consumers and dealers appreciate this value proposition. We will continue to invest in the overall growth of the hybrid model int he years to come.”
In order to enable the hybrid used car eco-system, MFCWL has launched several technology enabled products and services to address the key drivers of trust deficit in a pre-owed car transaction, namely – vehicle condition, paperwork, pricing and experience. “Consumers are looking for more tools and insight related to used vehicles. We are leveraging our deep wholesale and retail experience on the ground to launch a slew of technology enabled products that will materially increase the confidence with which they can transact on used vehicles – whether buying or selling”, Dr. Nagendra Palle, CEO and MD, MFCWL said and added: “We have had a very successful partnership with Phi Capital over the years and we welcome Valiant Capital as a new partner to support us in our endeavour to become a world class used car company.”
MFCWL plans to use the fresh funds infusion to accelerate its growth both of the physical network s well as adoption of its technology enabled products and services used by all stakeholders in the industry – NBFCs, banks, OEMs, dealers and consumers. MFCWL is planning to end this fiscal with 500 franchise outlets and grow to 1,800 plus outlets in the next five years. What is more, the company also plans to use the funds to broaden its reach for its products and services across other used vehicle categories. In the FY ending 2015, MFCWL used vehicle volumes sold will be 1.40 lakh between its retail and wholesale and it will complete 1.40 lakh Autoinspekt inspections.
Used car market
The used car market, with an estimated size of 3,2 million units is already larger than the new car market and is growing faster than the new car market. The current slowdown notwithstanding, it is expected that the used car market will become almost double the size of the new car market in the next five years.