Mahindra and Mahindra Ltd. will secure a stake in TVS ASPL, with MFCSL becoming a subsidiary of TVS ASPL.
Mahindra has announced that it has initiated a share swap transaction with TVS Automobile Solutions Pvt. Ltd. (TVS ASPL). While Mahindra’s aftermarket service network – Mahindra First Choice Services Ltd. (MFCSL) – will become a subsidiary of TVS ASPL, in return, the former will gain a stake in the latter. TVS ASPL is the parent company of myTVS, an independent multi-brand automobile aftermarket brand that specialises in service and repair. For now, the First Choice brand will remain, though that is likely to change with time.
The Indian independent automotive aftermarket has been growing at a CAGR of 7-10 percent over the past five years but is currently quite fragmented and unorganised. This move will allow the two companies to find a more solid footing. However, the transaction has yet to go forward as it is subject to regulatory approvals, including an approval from the Competition Commission of India (CCI).
With the transaction, TVS ASPL would be able to leverage MFCSL’s network of over 475 franchise partners and 100 distributors in over 350 towns across 25 states and two union territories. The netwek is also set to expand with G Srinivasa Raghavan, managing director, TVS ASL, stating that they will continue to invest and grow the network to over 10,000 garages in the next 18-24 months.
Speaking about the plans, R Dinesh, Director, TVS Automobile Solutions,said “I am delighted with this deal as two great brands have come together for the benefit of the overall aftermarket ecosystem. India’s USD 10 billion aftermarket segment is fragmented and needs strong support for relevance and growth amidst changing technology landscape in the automotive sector.”
V S Parthasarathy, president, Mobility Services Sector, Mahindra Groupsaid, “MFCSL has developed a large, trusted, multi-brand car service franchise and distribution network over the years. I believe that consolidation, scale and phygital solutions will drive the next phase of growth for the company as well as the industry.”
The two companies have not revealed plans on the path ahead though from the statements, it is obvious that a strong digital push in envisaged, with R Dinesh also stating, “We would take this opportunity to bring thousands of entrepreneurs into a digital platform wherein they can get benefited from digital technologies across marketing, diagnostics, customer experience, quality parts, access to training and digital payments”. The company believes that by bringing the stakeholders on to a technology platform they will be able to ensure delivery of services or parts within 24 hours across the country.