In conversation with Aryaman Thakker, Executive Director of Landmark Cars Limited

As customer interest and inquiries for electric vehicles grow, we are well-prepared to address their needs and provide excellent service, states Aryaman Thakker, Executive Director, Landmark Cars Limited. 

In the September 2023 quarter, the top line witnessed a decline of 9.56 per cent from the previous year, reaching Rs 770.69 crore, while the bottom line reported a growth of 21.55 per cent from the previous year, totalling Rs 20.50 crore. What were the factors contributing company’s performance? 

 In the first quarter of this financial year, we faced challenges that impacted our top-line sales. One contributing factor was the temporary discontinuation of certain models we represent. For instance, models like the Jazz and the WR-V ceased production in April due to the implementation of new OBD2 norms. Additionally, the launch of the new Honda Elevate and the inclusion of the Mercedes GLC in our portfolio only occurred in the second quarter. 

The Jeep Compass 4x2 diesel, automatic variant, was introduced in September. The Jeep Compass petrol also ceased production in April. These factors collectively led to a slight reduction in our top-line numbers for that quarter. However, with the introduction of these new models and their subsequent sales, we anticipate the gap to narrow in the coming quarters.

Could you provide insights into any exclusivity agreements or restrictions regarding partnerships with other high-end car dealerships, particularly about the collaboration with Mercedes? How does the current partnership impact your ability to explore opportunities with other brands?

Our partnership with Mercedes is robust, making us the largest partners in the country, contributing to 16 per cent of the national market share, a percentage we have consistently increased over the years. We anticipate continued growth opportunities with Mercedes in the future.

To address your first question, no restrictions are preventing us from partnering with other luxury brands or carmakers. We are open to exploring opportunities for growth in this segment. Over the 15 years of our association with Mercedes, we have expanded from one dealership in Gujarat to operating in four states, solidifying our position as their largest franchise partner in the country.

Can you provide a concise overview of BYD Auto's current sales trajectory and scaling dynamics? Also, we would appreciate insights into the status of homologation clearance for BYD and any ongoing challenges. 

We are BYD's partners in Mumbai and Delhi-NCR. Presently, sales figures are regularly reported, and they currently operate on a fully CBU model, importing the Atto 3 and BYD E6 into the country. They currently fall within the government's two-and-a-half thousand car limit before homologation is required. They have applied for homologation certificates with the Automotive Research Association of India (ARAI), and upon approval, the two-and-a-half thousand car limit will no longer apply.. 

With the shift towards premium and luxury vehicles, what is the outlook for growth in average selling price and margins in the coming years? 

So, the average selling price of the cars has gone up. I think at Landmark, the average selling price of our vehicles is Rs 20 lakh rupees at a group level, which has gone up substantially over the last year, year, and a half. A lot of it also, of course, has to do with the mix of products which are changing. I think the customers prefer premium vehicles, safer vehicles, bigger vehicles, better-equipped vehicles. 

And they are even within those, they prefer the top-end variants of those models. That clearly shows the changing preferences of the customer. But also, there have been price changes, and increases across the automotive industry, which have also resulted in the ASP going up. And I think in January, again, across the board, most manufacturers have already announced further price increases due to multiple factors. So those factors will continue to impact the ASP. And I think the margins will be pretty stable at what we are currently. 

What is the expected contribution of electric vehicle sales to your overall volumes over the next 3-5 years? How are you equipping sales and service teams to handle EV products? 

In the current Indian automotive landscape, electric vehicles (EVs) contribute around 1.5 per cent to just under 2 per cent of total sales. Estimates for the future penetration of EVs in the overall private vehicle industry vary from 19 to 30 per cent. Even with a conservative estimate of around 20 per cent by the end of the decade, the number of internal combustion (IC) engine vehicles will still increase due to the industry's rapid growth. 

While the EV market in India is still in its early stages, the Original Equipment Manufacturers (OEMs) we represent—BYD, MG Motors, and Mercedes—already offer EVs. Our teams and sales and after-sales staff are fully trained to service and cater to EVs. We are adapting to the EV trend by establishing EV charging networks at our touchpoints for Mercedes and MG, ensuring customer convenience and readiness. Additionally, our after-sales side, including equipment, machinery, and manpower, is well-trained to handle EV repairs and maintenance.

As customer interest and inquiries for electric vehicles grow, we are well-prepared to address their needs and provide excellent service.

What is the scope for increasing finance penetration and thereby driving more value-added revenue from financing and insurance sales? What is the target of this metric? 

In India, from the perspective of selling new cars, finance penetration is already quite high, ranging from 75 to 80 per cent across brands. Customers who take finance for procuring new cars and the majority of it comes through, is done via dealerships. This level of finance penetration is expected to remain relatively stable, with only slight fluctuations of a couple of percentage points. 

Similarly, for insurance, 90 per cent of new car buyers choose to purchase insurance at the dealerships, indicating a high penetration rate. This trend is anticipated to continue within a similar range.

You mentioned inorganic expansion through acquisitions is a key strategic priority. Could you share more details on the opportunities and pipeline you are evaluating for M&A? 

Landmark has strategically embraced mergers and acquisitions (M&A), distinguishing itself as one of the few in the industry to successfully execute multiple transactions. Currently, 25 per cent of our outlet count results from M&As. While M&A remains a key strategy, we approach it with a conscientious and balanced perspective. Our focus is on selecting acquisitions that align with the brand, location, and a sensible price point. 

We adhere to a template with a fixed payback period in mind, ensuring the profitability of our acquisitions. Our commitment is to pursue sensible and profitable growth, avoiding expansion solely for the sake of growth.

Disclaimer: The opinions expressed above are personal and may not reflect the views of DSIJ.