April 23, 2024

Mitsubishi Corporation will Start an Automobile Dealership Business in India

Mitsubishi Corporation has a 30% stake in a company that manages car dealerships in India and sells Honda and other Japanese cars. To encourage their widespread use, Mitsubishi will also handle electric vehicles (EVs). India ranks third in the world in new vehicle sales after China and the US, but Japanese companies, except Suzuki, need more. Mitsubishi is building a sales network for Japanese cars and developing a vast market.

TVS Mobility, a significant car sales company in India, will spin off its car dealership business, and Mitsubishi will invest a little over 30% in the new company. Mitsubishi’s investment is expected to be 5 to 10 billion yen, and it will also dispatch employees. The company will receive approval from the regulating authority to invest in it this summer.

The new company will develop exclusive stores for each brand. It has approximately 150 outlets, making it India's largest independent car dealership.

Mitsubishi intends to make the new company a sales hub for Japanese and Indian cars. First, it aims to expand sales of Honda, which is already handled by TVS. It is in charge of negotiating with Japanese automakers to increase the number of Japanese car brands and models. It will allow customers to book maintenance appointments and purchase insurance through a smartphone app and will help expand sales through attentive service.

In India, sales are conducted through exclusive dealerships set up by each automobile manufacturer. Suzuki, which has Maruti Suzuki as a subsidiary, has built a strong network of exclusive dealers through several sales companies and is the largest company with a 40% share of passenger car sales in 2023.

On the other hand, Toyota Motor (5%) and Honda (2%), which have weak sales networks of exclusive dealers, have low market shares. Expanding the number of exclusive stores under the initiative of manufacturers would require a heavy investment burden, and it would also take time to expand the number of new stores. MC will increase the number of exclusive dealers for several Japanese car brands in the latest company and help them grow their market share.

India, a burgeoning market, overtook Japan in domestic sales for the first time in 2022, securing its position as the world's third-largest automobile market. This growth trajectory, fueled by population expansion and other factors, is set to continue. The Society of Indian Automobile Manufacturers (SIAM) predicts that new vehicle sales (shipment basis, total of passenger cars and commercial vehicles) in 2023 will reach approximately 5.08 million units, a 7% increase from 2022, surpassing Japan for the second consecutive year. With rising income levels, a robust growth of 6%-7% is anticipated, painting a promising picture for Mitsubishi's entry into the Indian automobile market.