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GM, Automartindia tie up for used car business

Anand Krishnamoorthy

NEW DELHI, Oct. 11

GENERAL Motors India (GM) and Automartindia, leaders in used car business, have joined hands to promote buying and selling of used cars at all GM outlets.

Under a memorandum of understanding signed between the two parties recently, all GM dealerships will have a space earmarked for the conducting of sales and purchases of used cars.

The purchase and sale of used GM cars would be done under the OK 5 Star brand, while the purchase and sale of cars of other manufacturers would be done under the Automartindia brand, the Automart Chief Executive Officer, Mr Vinay Sanghi, told Business Li ne.

OK Five Star is the brand under which GM dealers function in the used car business. GM has been wanting to expand its business after conducting a pilot project in Indore and Hyderabad.

``There is a revenue sharing arrangement between Automart and GM,'' Mr Sanghi said.

``It is a win-win situation for all. For GM, more customers come into its show room. For the dealer, it means more business. For us, we get access to a wide range of GM show rooms at prime properties at various places,'' Mr Sanghi said.

The two parties intend to start the venture in Mumbai, Delhi, Pune, Bangalore and Chennai. It will be expanded to other cities later.

``By December, we will have our first outlet,'' Mr Sanghi said.

Automartindia Ltd will shortly have a new equity partner in the form of a financial company, which will buy 18 per cent of the equity of the company.

After the new company buys the equity, Mahindra and Mahindra Ltd will hold the largest share with 47 per cent of the Rs 25-crore equity. Sah and Sanghi will hold 20 per cent equity and HDFC 10 per cent. The rest will be held by the employees.

The market for used cars is about nine lakh currently. Seeing the huge volumes, Maruti Udyog, Ford Motor, Hyundai Motor have all firmed plans to enter this lucrative segment.