Landmark Cars 22/12/2023
Navigating the Dynamics of Car Dealerships and Used Car Sales
The world of car dealerships and used car sales is complex. Recently, I've delved deeper into the operations of a particular company, Landmark Cars, and its journey in this sector.
Consistency in Messaging: A Sign of Reliability
Image source: https://www.entrepreneur.com/en-in/news-and-trends/landmark-cars-betting-big-on-festive-season/462832
Over time, I've noticed the promoter of Landmark maintains a remarkable consistency in his public statements. Check out any of his interviews on YouTube. This consistency reflects the company's steady approach towards its business strategies. It helps hammer home the messaging that he wants to give out for the company. Listening to a few such interviews also helped me understand what the promoter is trying to do.
The Untapped Potential of Used Car Sales
One significant growth avenue for Landmark could be the used car sales business. Despite the presence of startups in this field, none have established a strong moat. Landmark's unique advantage lies in its existing customer relationships through car sales and services, providing a deeper understanding of each vehicle's history. This knowledge enables them to offer more reliable assurances to potential buyers, backed by maintenance contracts. Think about it. You buy a car from Landmark and then you keep going back to them to get it serviced time and again. Now after a few years they have a pretty good understanding of your car. After a few years once you start getting bored with your car, you are looking at someone who can help you sell it. And who better to do that than Landmark?
Organizing the Unorganized: The Used Car Market
Image source: https://auto.economictimes.indiatimes.com/news/opinion-how-organized-and-unorganized-sector-tie-up-can-drive-used-car-market-to-next-level/90490422
The Indian used car market, larger in volume than new car sales (need to recheck the source for this), remains largely unorganized. This scenario presents a great opportunity for Landmark to be that one salient brand, especially in the premium segment where they have a strong presence. This is also a network effect business in a way. The more used cars they sell, the more they become the go-to-place for both buyers and sellers.
Multi-Brand Servicing: Operating leverage opportunity
The concept of multi-brand servicing outlets is another area where Landmark can leverage its current knowledge and relationships. By servicing various brands under one roof, they can optimize resource utilization without compromising on customer loyalty or service quality. A premium car brand would not want to share shop floor space with another brand when it comes to sales. They want their brand to be the only thing that the customer can see in the shop. But at the time of servicing the customer just wants a great service experience. He does not care if cars from other brands are also being serviced by the same place. Also the car buyer may not physically visit the service center himself. May be he would send his chauffeur to get the car services or may be Landmark would send someone to pick up and later return the car.
Investment Considerations and Future Prospects
As an investor, the company's approach to respecting capital, like avoiding real estate purchases for workshops and dealerships, is commendable. However, the underlying moat of the company is still something that needs deeper exploration. May be one moat is that they have a lot of contextual knowledge. What do I mean by that? When you run a car dealership you need to understand the radius in which you are operating. What are the kind of people who live in that radius? What is their purchasing power? Do they like to be spoken to in Hindi or English or another regional language? How many of them go for premium car features? Which festivals are significant in that location? Once Landmark gets this contextual information about that location for a single car brand, they are well placed to offer the same expertise to another car brand. Whether this actually starts happening on the ground is something that we need to observe going ahead.
Conclusion: A Company Worth Watching
In conclusion, Landmark appears to be a company with potential, especially if they successfully capitalize on the used car market and continue to innovate in their service offerings. As I keep a close watch, it's essential to wait for more favorable valuations before making an investment decision.
Disclaimer: The views expressed in this blog are personal. I may or may not hold investments in the stocks mentioned.