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Maruti to offer vehicle insurance products

India's largest carmaker, Maruti Udyog Ltd, announced on Friday it had tied up with two insurers to offer vehicle insurance to its buyers to help boost customer loyalty in an increasingly competitive market.

Maruti, an equal venture of the Indian government and Japan's Suzuki Motor Corp, said its two new wholly-owned subsidiaries, Maruti Insurance Distributor Services Ltd and Maruti Insurance Brokers Ltd, would act as agents for private insurer Bajaj Allianz and state-run National Insurance.

Maruti, which has a 59 per cent share of the Indian new car market, said the policies would be available through its 254 sales outlets and 333 dealer workshops in 156 Indian cities.

"We'll be able to service our customers better and create revenue for ourselves and our partners," Jagdish Khattar, Maruti's managing director, told a news conference.

The insurance initiative is the company's fourth service venture announced in the past six months to deepen its relationship with customers.

The company earlier launched separate ventures for used cars, car finance and corporate fleet management.

Khattar declined to quantify how much revenue the new service initiatives would bring, but said he expected them to contribute two per cent of Maruti's after-tax profit over a period of time.

Maruti's vehicle sales generate Rs 3.0 billion in insurance premium every year, of which it hopes to get a fraction through commissions.

Investment in the new venture would be mainly through providing back-office processing, Khattar said.

New Delhi-based Maruti, slated to be privatised later this year, had more than 80 per cent of the domestic car market until 1998.

But it has lost marketshare to newer entrants such as South Korea's Hyundai Motor, local firm Tata Engineering and Locomotive Company Ltd and Italy's Fiat.

Maruti's sales grew 0.51 per cent in 2001-02 (April-March) to 352,415 vehicles, matching the industry's growth of 0.48 per cent.

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