Original Equipment Manufacturers (OEMs) like Maruti Suzuki and Hyundai, along with many dealerships, are looking at alternative business models for vehicle ownership. Latest to jump on the bandwagon is Mahindra and Mahindra Financial Services Limited, a subsidiary of Mahindra Group that announced its entry into vehicle leasing and subscription business with its new venture called ‘Quiklyz ’ on Wednesday. The company wants to target both individual as well as corporate buyers with this program.
“We believe that there’s going to be a large customer base who will look for wanting to use a vehicle but not necessarily own a vehicle. We believe this is the solution to that. These kinds of customers normally address institutional needs, we think these are required for retail consumers as well,” Ramesh Iyer, Vice Chairman and MD, Mahindra Finance said. The company sees this as a great opportunity to create value for its stakeholders with a profitable business model and build a strong balance sheet out of emerging opportunities in this adjacent business vertical.
“Car leasing and subscription is a lucrative and fast-growing business in India. We aim to achieve a book size of Rs 10,000 crore in a span of 3-5 years. Leasing is seeing significant traction in the last mile mobility space especially with EVs, something our business module will also focus on. With leasing being a relatively new concept for Indian retail consumer, we wanted Mahindra Finance to be at the forefront of this module facilitating millennials and new age corporates alike for hassle free ownership of vehicle,” Iyer added.
A 2020 survey conducted by Grant Thornton in India, in partnership with the auto industry body Society of Indian Automobile Manufacturers (SIAM), found that 15 per cent of respondents chose subscription model as a preferred mode of owning vehicles and 66 per cent favoured pay-as-you-go options. “This is a very large opportunity that we do not want to miss,” Iyer pointed out.
In the initial phase Quiklyz will launch its services in metro cities like Bengaluru, Chennai, Delhi, Gurugram, Hyderabad, Mumbai, Noida, Pune, and will further expand it to other cities across India, including Tier 2 cities, covering 30 locations over the next one year. Quiklyz is also in discussions with several automotive OEMs and will announce partnerships with them on Leasing and subscription shortly.
“Apart from the changing pattern of ownership, what we’re also looking as a business we’re looking at a new set of customers. Mahindra Finance has always been rural dominated, but with Quiklyz we’re looking at the corporate and the salaried segment in urban markets as well. This creates a new kind of balance sheets for us,” Turra Mohammed, SVP and Head, Leasing and Subscription, Mahindra Finance said.
“We use leasing typically for the corporate segment or fleet operators. These two segments have been existing in the market for some time and there are other companies working in this segment. Corporate segment which is overall 10 per cent of the car market, leasing is around 10 per cent of that. So, it’s 1 per cent of the overall market which is very small. We expect that in the corporate segment, this 10 per cent will grow to 20-25 per cent penetration in next 3-5 years,” Mohammed said.
He added further that the company will focus on the B2C segment targeting millennial-mindset customers and early adopters. “This is the segment we’re focusing on. This segment is very nascent, there’s hardly any penetration of subscription in this segment. And we expect this can go up to 3-5 per cent of the overall car market in next 3-5 years. Which means pre-pandemic if you were doing 30 lakh cars, 3-5 per cent is 1 lakh plus cars. That’s the kind of opportunity in this segment,” he said.
Quiklyz competes with players like Avis, Orix Automation, Revv, Zoomcar and Myles in the Indian market.
“The leasing and subscription module in India is currently at a nascent stage and we at Mahindra Finance would be pioneer in this segment. Coupled with the multi-faceted advantages accruing from the Mahindra Group companies, our spread and reach pan India would be an advantage as we expand our coverage. I am confident that our customers, individuals and corporates alike would be very encouraged with our customized and unique packages on offer,” Raul Rebello, Chief Operating Officer-Core Business, Mahindra Finance said.
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