Mitsubishi & TVS Mobility ink pact for new auto dealership business

Japanese conglomerate Mitsubishi Corporation has picked up a 32% stake for Rs 300 crore in TVS Mobility for a new subsidiary that the Chennai-based automotive distribution and aftermarket player is creating by hiving off its existing vehicle dealership business.

The new joint-venture subsidiary called ‘TVS Vehicle Mobility’ – for which an internal restructuring is to be effected – will offer an integrated suite of mobility services from sales & services to financial, insurance, for B2B (both small & medium businesses as well as large corporates) and some B2C customers through a plug and play model. The investment is awaiting regulatory approvals.

The deal marks Mitsubishi’s second partnership with TVS Mobility Group after the 2019 investment in the after-sales services provider TVS Automobile Solutions. It is expected to give the maker of Pajero and Lancer a downstream foothold in India – the third largest automobile market after the US and China. TVS Mobility, from the stables of the erstwhile TVS Group, will gain from Mitsubishi’s global experience and best practices to scale up the business model faster.

Making the announcement on Monday in Chennai, TVS Mobility Director R. Dinesh said the Rs 300 crore sum from Mitsubishi will serve as seed capital. “We have a goal (for the new subsidiary) to be close to $2 billion in revenue in 3-5 years. Our target is of hitting Rs 15,000 crore revenue in 3 years. The scale is important in this business and profitable growth is very important,” he said. TVS Mobility currently has an annual revenue of Rs 5,000 crore.

Beyond the independent aftermarket, the new venture will also provide integrated solutions across vehicle sales, operating of vehicles and ‘Vehicle-as-a-Service’ (Micromobility) solutions to enterprises, corporates or fleet owners and vehicle manufacturers.

Dinesh said the partnership with Mitsubishi is strategic in nature, where they bring value through their downstream capabilities and presence in other global markets like Thailand and Indonesia in the form of knowledge-sharing.  “The partnership has the ability to increase TVS Vehicle Mobility’s scale and profitability much faster by virtue of being somebody who has understood what works in other markets. They also bring relationships which can be scales up much faster than if we started from scratch,” he added. While the company will look at expanding into other geographies in future, the immediate focus is on India.

Shigeru Wakabayashi, CEO of Automotive and Mobility Group at Mitsubishi Corporation, said, “The latest investment in the multi-brand dealer TVS VMS widens MC's investment coverage through enhanced service capabilities even further (than the investment in the after-sales services provider TVS Automobile Solutions) and should propel its aim to develop comprehensive mobility solutions spanning not only after-sales services and multi-brand sales, but also vehicle-as-a-service model, and other automotive operations.”