Mahindra & Mahindra’s pre-owned car unit Mahindra First Choice is ramping up its dealership network to tap into the fast growing pre-owned car market as new car sales remain stagnant.

First Choice, which is still a small fraction of Mahindra’s overall auto business, is growing at 35 percent annually, while the used car market in India is growing at a rate of 15 per cent. “This year, if all goes well, we expect to grow 80-85 per cent. We have invested a great deal in understanding the market. We have mapped down to catchment areas for almost 80 percent of the market--the demographics, location analysis to figure out where we need to set up new set of outlets. We’ve done very detailed analysis in the last six months,” Nagendra Palle, Managing Director and CEO at Mahindra First Choice Wheels, told BusinessLine .

Used-car market in India is currently estimated at about ₹90,000 crore with 3.3 million units sold per year and growing at 15 per cent annually. The new car market on the other hand is about 2.8 million with average transaction price of ₹7 lakh. The market however remains almost stagnant for the last five years.

Mahindra First Choice currently has 883 dealers. Palle said Mahindra will also invest heavily in the expansion by investing in marketing activities, which may prevent it from posting profit at least in the next couple of years.

“This fiscal, Mahindra First Choice would be around $20 million in revenue. We are investing heavily in technology. Indian Blue Book is a platform that we’ve invested in,” Palle said.

Mahindra First Choice has four lines of businesses — Mahindra First Choice franchise dealer business, online B2B car auction business (selling 7,000 vehicles per month) and Inspection business called Autoinspekt and car pricing and analytics platform Indian Blue Book.

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