Maruti-Dealer Popular Vehicles prefers Stronger Services Network Over New Brand Additions

Popular Vehicles & Services Ltd. aims to strengthen its existing services network instead of focusing on the addition of new brands to its portfolio.

"We will continue to be with the brands that we have and grow with them instead of just adding brands," the company's Promoter and Managing Director Naveen Philip told NDTV Profit on Monday.

The company, which is in the business of automobile dealerships of new as well as preowned vehicles, went public last year with its Rs 601-crore initial public offering. Popular Vehicles’ portfolio includes top brands like Maruti Suzuki, Tata Motors and Ashok Leyland, among others.

"In terms of strategy going to the future, this has been a philosophy from day one, and we have repeated it even during the IPO course in terms of building up our service infrastructure in the passenger car business," he added.

Philip mentioned that given Maruti Suzuki's deeper market penetration and customer base, the expansion efforts of Popular Vehicles & Services Ltd. will largely be driven by the automaker.

"Being the largest brand for the last 40 years, Maturi’s base for sales, the car park that is already present in the country is the largest in the country. So, our expansion in service and the expansion to other states and all that would predominantly be Maruti-led, in terms of the passenger vehicles," he added.

Naveen Philip highlighted that the company plans to increase the revenue contribution from the services and pre-owned vehicle segments. These two segments make higher contribution to the company’s Ebitda and PAT compared to new cars.

"Last year, we had a turnover of approximately 5,000 crores, about 750 crores, came from our service business, but close to about 56% of EBITDA came from the service and spare parts business," he said.

“Over the last five years, we have clocked a CAGR in our service and spare business of approximately 20% and the contribution (to revenue) which was 15% last year was 11% three to four years ago. So, that’s a growth we would like to maintain and we are confident to do it. As we grow in that number, like I said that contribution from 11% to 15% would go up and in terms of Ebitda margins,” Philip added.

The top executive also shares his take on the changes that the penetration of EVs might bring to his company.

“Out of the 55% Ebitda that we generated last year. Close to about 70% came from our accident repairs. Now that, whether it's an EV or an ICE engine or, any other powertrain, the accident repair result doesn't get affected because of the greater number of vehicles on the road," he underlined.

Shares of Popular Vehicles And Services Ltd. were trading 0.18% lower at Rs 156.30 a piece, while the benchmark Nifty 50 was 0.53% higher at 23,733.85 points, as of 10:17 a.m.