Maruti Suzuki to revamp used-car business

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Mumbai: Sixteen years after Maruti Suzuki India Ltd entered the used car market, it is sharpening its focus on the business that is expanding rapidly.

As part of the exercise, the Japanese carmaker’s local arm, which sells second-hand cars under the True Value brand, will set up a network of 150 independent outlets across the country by March 2018, and increase it to 300 by 2020.

New and used cars are sold from the same outlets at present.

India’s largest carmaker is in the process of revamping its 1,800 showrooms, 3,000 workshops and as many as 1,000 pre-owned car showrooms under the True Value brand, Mint reported on 11 July.

The new outlets, which will also be based on a franchise model, will be set up by Maruti’s dealers, who are likely to invest close to Rs60 lakh-Rs90 lakh in each, depending on the area and city.

The market size of used cars in India is 1.2 times that of new cars, said R.S. Kalsi, executive director of sales and marketing at Maruti Suzuki.

In the fiscal year 2016-17, Maruti sold 350,000 used cars. Of this, 30% were procured from buyers who traded their used Maruti models for a new one and 22% were certified by the company for quality.

The organized used car segment in India is advancing at over 25% every year, according to a study by Indian Blue Book, a vehicle pricing guide.

“Our market research showed that the customer is looking for an experience which is similar to buying a new car as his first car,” said Tarun Garg, executive vice president, head of marketing at Maruti.

The new outlets, he said, will boast of a larger display area and will be digitally integrated through a website so that customers can access details of all the cars available at all the outlets nation-wide.

The used cars will come with three free services and a year’s warranty and “ensure quality and reliability,” through 376 checkpoints for quality, he said. “There’s hardly any model in India that integrates technology with physical space. We have tried blending the two,” said Garg.

Mahindra FirstChoice, the multi-brand used car business of the Mahindra group, also boasts of similar attributes, including multi-point checks for quality and assurance.

True Value, Garg clarified, will not deal in other brands and remain focused only on Maruti badged cars.

The e-commerce boom that has spawned a raft of technology-based firms in the used car space has added heft to the market. But Garg doesn’t see e-commerce sites as competition as most of them are confined to generating leads while actual transactions take place in showrooms.

Puneet Gupta, associate director at I.H.S Markit, a market research and sales forecasting firm, said the success of the Nexa, the retail outlet for Maruti’s premium models, has encouraged the company to replicate the marketing and branding exercise to other sales channels.

“The entire exercise of offering a better value proposition will really help them in retaining customers within the Maruti fold and lead the market for the next decade,” he said.

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