Case Study

Mahindra’s aftermarket business: Bringing Silicon Valley inside

21 pages
December 2017
Reference: IMD-7-1916

The case focuses on the challenges of achieving scale and profitability for an entrepreneurial business operating as a subsidiary of a large multinational company. Mahindra and Mahindra Ltd. is the leading utility vehicle manufacturer in India and the largest-selling tractor brand by volume in the world. The company launched its aftermarket business in 1999 and the fledgling business was re-branded as Mahindra First Choice in 2008. Mahindra First Choice Wheels (MFCW) was in the business of selling and purchasing multi-brand pre-owned vehicles, and Mahindra First Choice Services (MFCS) operated an automobile service chain. The case traces the growth challenges of the two companies as they shifted from a company owned and operated model to a franchise model to scale up aggressively, becoming India’s largest multi-brand certified used car player and a leading service chain for out-of-warranty vehicles. Displaying an entrepreneurial spirit they continually innovated to launch first-of-their-kind cloud-based services, such as online auctions, pricing guides, service estimates, etc., which were well received by the market. However, profits were elusive. At the same time, the competition was escalating as a new breed of online players entered the used car market. Going forward, the CEOs of MFCW and MFCS had to chart the strategy for achieving sustainable growth and profitability: How should they demonstrate a proven business model for aggressive expansion? Should they sell stakes to foreign private equity investors to strengthen their growth objectives? Was it time to expand overseas?

Learning Objective
  • Understanding the challenges of organizing an unorganized market
  • Creating and capturing value in a business ecosystem
  • Developing strategies for scaling up and expansion
  • Assessing the franchise business model
  • Identifying the advantages and disadvantages of corporate ownership for entrepreneurial firms
Keywords
Ecosystem, Car, Sales, Services, Franchise, Private Equity, Intrapreneur, Scaling, Growth, Profitability, Business to Business, Bricks and Clicks, Multi-brand, Company Ownership
Settings
Asia, India
Mahindra First Choice, Automotive, Automobiles
2008–2017
Type
Field Research
Copyright
© 2017
Available Languages
English
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