Mahindra Group bets on branded car spare parts


Now opt for a Mahindra First Choice spare for your Maruti car

  Imagine if you have a choice to replace the damaged brake-pad of your car for one-third the price if you went for a brand other than your original equipment manufacturer (OEM). Many car owners whose vehicles are out of warranty might opt for a different brand provided the spares were authentic.

It is this understanding that triggered Mahindra First Choice Services, part of the Mahindra Group's after-market division, to come up with MFC branded spares for fast moving auto parts. Launched about five to six months back, MFC branded spares already accounts for nearly 10 per cent of Mahindra First Choice Services (MFCS) turnover and YVS Vijaykumar, chief executive officer of MFCS claimed it can grow up to 30-40 per cent of MFCS turnover over the next few years.

MFCS posted a turnover of around Rs 60 crore in 2015-16, and is eying a topline of Rs 100 crore by the end of the current fiscal. On a longer horizon, the wholly owned subsidiary of the $16.9 billion Mahindra Group, is targeting a turnover of Rs 1,000 crore by 2020-21.

Vijaykumar explained, “We have already tied up with eight vendors for the spares and currently have around 23 distributors which we plan to take up to 100 by the end of the fiscal. We maintain a 30-day inventory for the MFC branded spares and whenever needed we supply from our warehouses.”

The company has been cautious to start the spares business with fast moving parts like wiper blades, brake pads, suspension parts, clutches etc. which need replacements at regular intervals. MFCS has also recently launched a lubricant oil under the brand Proleum.

The company is planning to tie up with leading automotive component makers for tie ups for IPR protected parts. “We are in talks with majors like Anand Group and Bosch Group for tie ups. These could either be co-branded parts or private labels. At the same time, we are also working on how to create special schemes for sale of spares through our channels,” Vijaykumar said.

The company as such is in the process of expanding its network. It currently has 160 outlets and has another 300 outlets in the pipeline that are expected to get operational by fiscal end.

As far as customer reaction to  MFC branded parts go, dealers say the divide is around 50:50, that is around 50 per cent of customers who come for servicing at the MFCS outlets opt for the MFC branded spares.  A Vadodara based dealer said that since the cost of MFC branded spares is around 60 per cent lesser compared to the parts of the original brand, many customers opt for MFC branded parts. "In case of premium or luxury brands, the demand for MFC parts is very less. These customers prefer to stick to their original brand," the dealer said. 


However, if multi-brand car service providers get into the spares business, is this not a threat to the auto-component makers? Vijaykumar does not seem to agree. "The car servicing and spares market in India is huge, about Rs 20,000-22,000 crore and it is clocking a 10 per cent CAGR. The share of multi-brand service outlets is just about one per cent in this, which is expected to go up to 8-10 per cent by 2020 when the market will touch around Rs 30,000-35,000 crore," he reasoned. 

Nearly 46 per cent of Indian cars are now serviced by authorised service centres, 53 per cent by the unorganised sector, and only one per cent by multi-brand service centres. Each of the 23.6 million off-warranty cars on Indian roads needs 2.5 services and 0.25 repairs a year, adding up to 65 million trips to the workshop. At an average cost of Rs 3,500 for a service and Rs 5,000 for repairs, the size of the car service industry is just above Rs 20,000 crore, which will go up to Rs 33,000 crore by 2020.