Mahindra's used vehicle arm raises $15 million from Valiant Capital

New Delhi: Mahindra group's multi-brand used vehicle retailer, Mahindra First Choice Wheels Ltd (MFCWL) on March 20 raised USD 15 million (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 private equity raised by MFCWL which puts the valuation of the company at around USD 100 million. The first round of funding was in 2008 from Delhi based Phi Capital, which continues to be an investor in it.   

The company said it plans to use the fresh funds to accelerate its growth both of the physical network as well as adoption of technology enabled products and services. MFCWL is planning to end this fiscal year with 500 franchise outlets, 700 by next year and to grow to over 1, 800 outlets in the next 5 years. In addition, it plans to use the funds to broaden its reach for its products and services across other used vehicle categories.

For the ongoing fiscal, MFCWL said its used vehicle volumes will be 1,40,000 units."This is an extremely important vertical for the group and it shows the way we do business, of how a large group like us enters into the 21st century business with a hybrid model bridging the consumer experience online and on the ground," said Mahindra Group Chairman Anand Mahindra, while stressing on the significance of the used-car vertical.

Mahindra & Mahindra President (Group HR, Corporate Services and After-Market) and Member of the Group Executive Board Rajeev Dubey said MFCWL has been investing on physical presence that is critical to the used car business, besides working to provide consumers with a consistent omnichannel experience.

He said the offline and online ecosystem is very powerful in the used car business and the company "will continue to invest in the overall growth of the hybrid model in the years to come". In order to enable the hybrid used car ecosystem, MFCWL has launched several technology enabled products and services to address the key drivers of trust deficit in a used car transaction namely vehicle condition, paperwork, pricing and experience, the company said.

"Consumers are looking for more tools and insight related to used vehicles," said MFCWL CEO & Managing Director Nagendra Palle, adding the company will 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". The used car market in India is estimated to be 3.2 million units. It is expected to be almost double the size of the new car market in the next 5 years, the company said.