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Old 27th August 2016, 21:04   #1
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Default Mahindra First Choice forays into self-branded spare parts

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Mahindra First Choice Services, a separate after-market division of the Mahindra group, has started it's own Mahindra First Choice (MFC) branded spare parts to mostly cater to used car buyers whose cars are out of warranty and who are constantly on the lookout for authentic spare parts for their cars which are cheaper than OEM (Original Equipment Manufacturer) branded ones.

Launched about six months back, MFC branded spare parts now account for nearly 10% of all turnover of the Mahindra First Choice Services, and it is assumed that this share will increase to 30-40% of the entire turnover of the MFCS division in the next few years.

For the record, MFCS posted a turnover of Rs 60 crores in FY2015, which is expected to touch Rs 100 crores by the end of FY2016. By their own estimates, MFCS is targeting a turnover of Rs 1000 crores by FY2020!

MFC has teed off it's spare parts business with faster moving spare parts such as wiper blades, brake pads, suspension parts, clutches, etc., which need replacements at quicker, regular intervals. They have also recently launched a lubricant oil under the brand name "Proleum".

Customer reaction to MFC-branded spares has been positive. Dealers claim that around 50% of all customers who come for servicings at the MFCS outlets opt for MFC-certified spares, which carry upto 60% lesser prices than OEM spare parts. This makes them a cheap and viable option specially for those who own cars of foreign brands.

For the future, MFC is looking to tie up with leading automotive component manufacturers for Intellectual Property Rights (IPR)-protected spare parts, as it prepares to spread out it's network to nearly 300 outlets (from the existing 160) by the end of this fiscal.

YVS Vijaykumar, chief executive officer, MFCS:

"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.

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.

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."

Last edited by RavenAvi : 27th August 2016 at 21:05.
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Old 29th August 2016, 10:50   #2
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Default Re: Mahindra First Choice forays into self-branded spare parts

Given the notoriety MFC has in the used car market, I am not sure how many will go for this, atleast from the informed ones. Probably fleet owners could make a mad dash because they are getting better for cheaper kind off
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Old 29th August 2016, 14:48   #3
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Default Re: Mahindra First Choice forays into self-branded spare parts

Originally Posted by RavenAvi View Post
which carry upto 60% lesser prices than OEM spare parts.
Definite potential in positioning there. Just like their servicing department, the pricing of MFC spare parts can sit between cheap + unreliable unbranded ones and the expensive OEM range.

Having an in-house brand also lets them source a product from anywhere. Say, 50,000 air filters from China rebranded as MFC.

'Private Labels' or 'In-house Brands' are a popular business strategy in the USA. Here's two neat articles on the topic from Harvard & Yale.
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