Sanjay Thakker, Landmark Cars’ chairman executive director, reflects upon his company’s growth strategy, and explains the reason behind diversification into non-luxury brands.
03 Feb 2025 | 3906 Views | By Ketan Thakkar & Shahkar Abidi
In December 2022, as Landmark Cars Ltd prepared for its initial public offering (IPO), Sanjay Thakker, the company's chairman, promoter, and executive director, was brimming with optimism. His luxury and premium auto dealership chain was on an upward trajectory, with plans to expand aggressively through a mix of brownfield and ...
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In December 2022, as Landmark Cars Ltd prepared for its initial public offering (IPO), Sanjay Thakker, the company's chairman, promoter, and executive director, was brimming with optimism. His luxury and premium auto dealership chain was on an upward trajectory, with plans to expand aggressively through a mix of brownfield and greenfield acquisitions.
At the time, Landmark boasted 112 outlets across 32 cities, including 59 sales showrooms and 53 after-sales service and spare parts facilities, catering to aficionados of marquee brands such as Mercedes-Benz, Honda, Jeep, Volkswagen, Renault, and BYD. The company had made significant inroads using an acquisition-driven model, with around 27% of its total outlets resulting from strategic takeovers aimed at penetrating new territories.
Thakker is seen as a pioneer for trying to corporatise the automotive retail business in the country – a sector heavily dominated by family run enterprises. Not only could he bring in a global private equity player to fund the retail chain's expansion, but was also able to offer it a profitable exit through an IPO. Flush with IPO funds, Landmark made a surprising move in early 2023—it decided to go slow on its acquisition plans. Instead, it opted for a recalibration, postponing new showroom acquisitions until the latter half of the year.
The decision was rooted in concerns over valuations. Thakker described the automotive market at the time as "frothy," characterized by high demand that far outstripped supply. Thakker is referring to the remarkable rebound seen in the sector in 2023. After two years of supply chain bottlenecks that choked production and left dealership lots sparse, the industry roared back to life.
Domestic sales hit an all-time high of 4.1 million vehicles, surpassing the previous record of 3.79 million. Showrooms were thriving, and the resulting financial windfall only served to inflate acquisition prices across the board. In this environment, Landmark's decision to step back and reassess its strategy seemed prescient rather than hesitant.
Pacing Up as Markets Stabilise
With the market now stabilising, Landmark has again shifted gears, embarking on a rapid expansion drive. By the end of fiscal year 2024, the company had opened 20 new outlets, with plans to add 24 more in the coming year with an investment of over Rs 75 crore.
The expansion is part of a broader strategy to tap into the luxury and premium car segment in India, where growth potential is significant but penetration remains low. Luxury cars account for just 1% of the Indian passenger vehicle (PV) market, compared to 10% in countries like China and the United States. Annual luxury car sales in India hover around 40,000 units, a mere fraction of the country's total PV sales of 4 million.
Additionally, only 4% of Indian millionaires purchase luxury vehicles, compared to a global average of 60%, according to a recent report by ICICI Direct Research on the company. As income levels rise and the number of high-net-worth individuals (HNIs) increases, the luxury car market is expected to see double-digit growth in the coming years, outperforming the mid-single-digit growth projected for the broader PV sector.
Furthermore, Landmark is focusing on capitalising not only on car sales but also on after-sales services, a highly lucrative segment for the company. After-sales services account for 25% of Landmark's revenue but contribute a substantial 70% to its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Diversification
Landmark's growth has not just been about the top line. The company has been proactive in diversifying its brand portfolio, recognizing that its previous reliance on a few core brands left it vulnerable to market fluctuations.
In recent years, Landmark has added partnerships with Mahindra, MG Motors, and Kia to its stable. These growing SUV brands offer significant growth potential, particularly as they ramp up production and increasingly expand into electric vehicles (EVs).
Mahindra, for example, is targeting mid-to-high teens growth for the fiscal year and plans to electrify 30% of its SUV portfolio by 2027. Kia, aiming for a 15-17% share of India's EV market by 2030, has aggressive plans for 2025. MG Motor India, now backed by JSW, has committed Rs 5,000 crore to the development of new energy vehicles, with a goal of capturing 33% of India's new energy vehicle market by 2030.
But what were the criteria behind Landmark's selection of these brands? Thakker’s says the company continued to prioritize premium and luxury vehicles – brands that maintain an average selling price of Rs 11 lakh and above, excluding GST.
This threshold ensures the unit economics work not just for sales but also for after- sales services. For context, cars sold by Landmark have an average selling price of Rs 20 lakh, while the industry average is Rs 8-10 lakh. Similarly, its average service revenue per vehicle hovers around Rs 25,000. In recent quarters, Landmark has expanded its footprint significantly following a series of strategic acquisitions.
Among its notable moves, the company added MG Motor dealerships in Indore, Bhopal, and Goa, while also entering the pre-owned car market. To bolster its service infrastructure, Landmark has established a Mercedes-Benz workshop in Hyderabad.
The company's growth continued with the acquisition of MG Motor dealerships in Ujjain, Ahmedabad, and Mumbai, alongside a partnership with Mahindra & Mahindra (M&M) for dealerships in Hyderabad and Kolkata and with Honda in Rajasthan. Additionally, Landmark's presence in Kolkata got a boost with the acquisition of a Kia dealership, and it has received Letters of Intent (LoIs) from both Kia and M&M to expand operations further in Hyderabad.
In the case of Kia, Landmark took over the operations of an existing dealership in Kolkata, when the previous owner sought to exit. Landmark began handling both sales and service there as of August. Thakker underscores that the company's strategy involves deepening its presence in select geographies.
The rationale behind focusing on cities like Kolkata and Hyderabad over other cities, Thakker explains, stems from Landmark's existing base in these regions. In Kolkata, for instance, Landmark's Mercedes-Benz operations allow for synergies with Kia and Mahindra dealerships.
The same applies to Hyderabad, where Landmark aims to capitalize on shared resources, from manpower to operational costs. "We choose a geography, we go deep with it. We choose an OEM (Original Equipment Manufacturer), and we go deep with it," he said. Landmark has combined its Jeep service facility in Navi Mumbai with Renault and has resized its Worli showroom to bring in BYD.
Apart from additions, the company has exited two Renault outlets in Punjab due to unfavourable unit economics. In Mumbai, where Landmark is Renault's sole partner, both partners have worked on a model that makes the business viable. According to Thakker, while the luxury market – may be a two-horse race, the premium segment presents a more diverse landscape.
Landmark has competed with other dealers for brands like Honda and Volkswagen, often emerging victorious. In several instances, the company has been able to acquire rival dealerships outright. Most of Landmark's acquisitions have, in fact, involved competitors in these towns and cities.
During the last financial year, Landmark reported a slight decline in revenue to Rs 3,298 crore, while profits fell to Rs 56 crore due to higher depreciation. While the company's PAT in FY-24 was lower due to higher depreciation, the cash profits for FY-24 were similar, claimed Thakker.
And if one were to include revenues generated from Mercedes Benz - its biggest brand that directly sells to consumers - Landmark's proforma revenue should be Rs 4655 crore - almost 30% higher than the reported revenue. Thakker and his leadership team have set a target to reduce overheads, including manpower costs, to just 4% of revenue.
"We need to stabilize," Thakker said, emphasising that 2024 has been a year of aggressive expansion and the company will look to reap benefits of the money spent this year. "This is that period, and we need to build our base well," he added. Landmark has also introduced a novel hiring approach, bringing in talent from industries like fast- moving consumer goods (FMCG) to infuse fresh perspectives into its operations, particularly in the after-sales business.