In conversation with Naveen Philip, Promoter and MD of Popular Vehicles And Services Ltd

With a diversified product portfolio across passenger, commercial, and electric vehicles and an expansive network, the company is well-positioned to cater to the anticipated rise in demand across urban, semi-urban, and rural markets, states Naveen Philip, Promoter and MD of Popular Vehicles And Services Ltd.

How did the company fare in Q3FY25, and what are its future growth objectives for both top-line and bottom-line?

The entire consumer industry, including the auto sector, continued to remain subdued due to various external factors such as general elections, heatwaves, floods in Tamil Nadu, rising crude prices, inflation, customer range anxiety, and subdued festive sentiment during the first nine months of FY25. These challenges kept overall demand weak, resulting in a volume decline of approximately 4 per cent YoY in Q3FY25.

Additionally, elevated inventory levels since March 2024 have increased our interest burden, while higher discounts driven by weak festive demand have impacted our revenue and profitability. Consequently, our revenue degrew by approximately 4 per cent YoY in Q3FY25.

Despite short-term setbacks, the company remains optimistic about a turnaround from FY26 onwards, targeting 20-25% revenue growth from FY25. In terms of profitability, we expect to return to FY24 levels, driven by strategic initiatives such as geographic diversification, expanding our footprint with current OEMs, inorganic growth opportunities, luxury vehicle expansion and the 2-wheeler EV business.

Furthermore, cost optimisation measures, divestment of underperforming businesses, and growth in high-margin service and premium/luxury segments are expected to strengthen our profitability trajectory further.

Can you provide insights into the company's product mix, its various business segments, and the contribution of each?

Popular Vehicles and Services Limited is a diversified automobile dealership in India with a fully integrated business model. We are present across a retail value chain that caters to the complete life cycle of vehicle ownership, right from the sale of new vehicles, servicing and repairing vehicles, distributing spare parts and accessories, facilitating the sale and exchange of pre-owned vehicles, operating driving schools and facilitating the sale of third-party financial and insurance products. Presence across the value chain helps us serve customers better, thereby ensuring customer stickiness and strong brand recall.

The integrated business model benefits from the inherent synergies arising out of our business verticals, diversifies our income streams, and contributes to higher profitability margins.

We have divided our business into four key verticals: 1) New Vehicles sale business, 2) Pre-owned vehicle business, 3) Services & Repairs and 4) Spare Parts Distribution.

In terms of segment presence, we are present across the spectrum of automobiles, from PVs to CVs to 2-wheelers & 3-wheelers. In 2 & 3-wheelers, we are currently present only in the EV category. For 9MFY25, in terms of revenue split, PV, including the luxury segment, contributed ~60 per cent, CVs ~33 per cent, EV ~1 per cent and spare parts distribution business contributed ~5 per cent.

Could you elaborate on the company’s partnerships with key OEMs, particularly with JLR and Ather, and discuss their role in expansion, network growth, and increasing touchpoints?

Company partnership with key OEMs:

The company has a long-standing presence and partnerships with leading OEMs. In PVs we have Maruti Suzuki and Honda, the top players in this segment.

Our relationship with Maruti started in 1984, so it's 40 years plus with Maruti, with presence from economy to premium vehicles under the brands ‘Arena’ and ‘Nexa’.

Our Honda dealership is operated under the ‘Vision’ brand and caters to the premium vehicle sub-segment of our passenger vehicle offerings.

We commenced our JLR dealership in 2010 in Karnataka, and this is operated under the ‘Marqland’ brand, which caters to the luxury vehicle sub-segment of our passenger vehicle offerings.

In the CV segment, the company is empanelled with India’s largest player in this segment, i.e. Tata Motors and this is operated under the ‘Popular Mega Motors’ brand and caters to a wide range of commercial vehicles offered by them.

Our BharatBenz dealership is operated under the ‘Prabal Trucking’ brand and caters to a range of commercial vehicles.

We expanded our product portfolio to electric 2 & 3-wheelers with Ather and Piaggio, respectively, in 2021. Our Piaggio and Ather dealership is operated under the ‘Ecomarq’ brand and cater to a wide range of electric 3-wheeler & 2-wheeler vehicles, respectively.

So, for all of our OEMs, we have a well-defined corporate structure and brand in place with a separate business head regarding the CEO.

Over the years, the company has built an expansive sales and services network across the territory in which we are currently based. Excluding service centres, as of December 31, 2024, we have showroom touchpoints as follows:

• Maruti Suzuki: 20
• Honda: 8
• JLR: 2
• Tata Motors (CV): 13
• Bharat Benz: 8
• Piaggio: 7
• Ather: 5

To give a holistic view of our footprints, we have:

• 63 showrooms
• 136 Sales outlets & booking offices
• 32 pre-owned showroom-cum-outlets
• 146 Service centres
• 7 Driving school
• 47 retail outlets and 24 warehouses for our spare parts distribution business.

So, in total we have 450+ touch points spread across 4 states.

Company’s expansion with JLR and Ather:

The recent collaborations with Jaguar Land Rover (JLR) and Ather are pivotal to the company's expansion and network growth strategy. The company has received a letter of intent to establish a state-of-the-art 3S facility for JLR vehicles in Nagpur, Maharashtra, which also comprises the neighbouring 11 districts we cover. The expansion marks the company's growth beyond Southern India, complementing the existing operations in Karnataka. Operations are expected to commence by September FY26.

Additionally, we have received a total of 4 LOIs for establishing Ather, of which three will be in Kerala and one will be in Tamil Nadu. Operations at all four locations are expected to commence in Q1 FY26. These alliances expand the company's geographical footprint and align with its strategy to tap into premium, luxury, and electric mobility markets, while enhancing customer touchpoints across regions.

What are the company's top three strategic priorities moving forward?

Top three strategies for the company in the future:

1 - Diversification:

• In terms of de-risking, our revenue company has achieved success by bringing down our Kerala revenue share to 61 per cent from 74 per cent in FY21, and further, we expect it to reach its sub-50 per cent level in the next 2 years. Recent expansions like the Jaguar Land Rover dealership and Bharat Benz 3S (Sales, Service and Spares) facility in Maharashtra and Ather Space 3.0 in Tamil Nadu are key steps in broadening our geographical footprint beyond Kerala.
• We are also looking to acquire dealerships with other OEMs, thereby increasing the brand profile of our existing portfolio in highly concentrated or growing demographic areas. With rising EV adoption, the company is actively expanding its Ather two-wheeler EV dealerships, reinforcing its commitment to sustainable mobility and tapping into the fast-growing EV segment.
• We will strategically diversify existing product offerings.

2 - Focus on High Margin Business:

• Increase share of automotive distribution business by tightly monitoring our finance and inventory levels.
• Increase sales of services & repair business by creating a customer database through the sale of insurance & financial products and contacting customers regularly. We intend to add incremental service bays and additional authorised service vendors in the markets in which we operate to cater to additional customers and further enhance our higher-margin service and repair revenues. We also use database and analytics to track vehicle owners’ maintenance records and provide advance notice to them when their vehicles are due for periodic service and other services as such. We continue to train our service personnel to establish relationships with their service clients to promote long-term business relationships. We have one of the highest retention rates across brands in terms of customers who have been with us for more than five years.
• Improved product mix by selling luxury and premium vehicles, thereby benefiting from higher ASPs and sale of after sales services.

3 - Deeper Penetration:

• To pursue inorganic growth by taking over dealers' businesses with the consent from OEMs.
• Organic growth is driven by exploring open opportunities from OEMs in new states & locations by setting up new showrooms and outlets.
• To enhance customer penetration, we are improving our digital and online presence and, creating awareness and making it more user-friendly & informative about the products and services we offer.

How do you view the long-term growth prospects of India’s automobile sector?

India's automobile sector holds immense long-term growth potential, driven by favourable economic, demographic and policy-driven factors. The country is poised to become the third-largest automobile market globally by FY26, with sustained expansion across passenger, commercial and electric vehicle segments.

Several structural enablers are fuelling this growth trajectory. Rising household incomes, expanding urbanisation, and a large young population contribute to increasing vehicle ownership. India's robust R&D ecosystem and supportive government policies make it an attractive destination for global OEMs to set up manufacturing operations. Additionally, the government's focus on infrastructure development and recent income tax relief are expected to enhance consumer sentiment and sustain growth momentum.

The Auto Expo 2025, held under the Bharat Mobility Global Expo 2025, highlighted the industry's vibrancy. With over 1,500 automobile exhibits, the event witnessed major product launches across segments. Notably, Maruti Suzuki unveiled its first-ever electric car, the e-Vitara electric SUV, underscoring the growing significance of EVs in India’s automotive landscape.

The EV market represents a transformative shift for the sector. Increasing OEM investments, coupled with government incentives like the PLI scheme & expanding charging infrastructure, are set to accelerate EV adoption.

India’s low car ownership ratio of 33 cars per 1,000 people presents a significant untapped market. According to some reports, this figure is projected to rise to 56 cars per 1,000 people by 2032, indicating immense growth potential for the automobile sector.

India’s Automotive Mission Plan 2047, expected to be finalised by June 2025, envisions the country as a global hub for automotive manufacturing and R&D. Already the largest producer of two-wheelers & a leading player in commercial vehicles, India is projected to add capacity for 4 million passenger vehicles by 2032.

The overall automotive market is forecast to grow from 5.1 million units in 2023 to 7.5 million units by 2030, with the passenger vehicle segment alone reaching 6 million units. Alongside new car sales, the aftermarket and used car segments are set to witness significant growth, with the vehicle parc expected to double between 2020 and 2030 and the used car market tripling in size.

SUVs have emerged as a dominant segment, with their market share rising from 32.4 per cent in 2020 to over 50% in 2024, and projections indicate this could surpass 60 per cent by 2030. The growing demand for premium and luxury vehicles, along with the rise of EVs, is reshaping the market landscape.

Looking ahead, a revival in rural demand, new model launches, and government initiatives to boost middle-class consumption are expected to sustain the sector’s growth momentum. With these favourable drivers in place, India’s automobile sector is well-positioned to play a pivotal role in the country’s economic advancement.

Will the tax exemption on annual income up to Rs 12 lakh boost consumption-driven sectors like automobiles? How does your company plan to capitalise on this opportunity?

The tax exemption on annual income up to Rs 12 lakh announced in the Union Budget is expected to ease the financial burden on middle-class taxpayers, enhancing their disposable income and driving consumption across sectors like automobiles, consumer durables, and FMCG. This move is likely to revive demand in the entry-level and mass-market car segments, particularly for two-wheelers, three-wheelers, and budget-friendly passenger cars, which have been under pressure in recent quarters.

Additionally, the exemption is expected to boost the manufacturing sector, positively impacting commercial vehicles by driving demand for freight and transport vehicles. Popular Vehicles and Services Limited plans to capitalise on this opportunity by offering attractive financing options, promoting pre-owned vehicles for value-conscious customers, and strengthening its service packages.

With a diversified product portfolio across passenger, commercial, and electric vehicles and an expansive network, the company is well-positioned to cater to the anticipated rise in demand across urban, semi-urban, and rural markets.