Maruti Udyog Ltd is looking at four new business opportunities""finance, insurance, certification and lease financing. To kick off the initiative, christened Operation Vistaar, four core groups have been set up within the company to look at the possible avenues in these areas. The groups will be assisted by consultancy firm A T Kearney.
"The reports should be ready in three to four months' time," MUL managing director Jagdish Khattar told Business Standard.
According to Khattar, the rationale behind the effort is the fact that the price of the vehicle accounts for only one-third of the money spent by a consumer on the vehicle over its life; fuel and additional services account for one-third each.
"We can't do anything about fuel but we can grab a part of the other one-third business," Khattar said. In the area of finance, MUL already has two joint ventures"" one each with Citibank and Countrywide. The focus of the core group, hence, is to come up wih new finance schemes for the consumers, though MUL is not averse to more such joint ventures.
The group on insurance, is working out a plan whereby MUL and its dealers would act as either brokers or agents for a general insurance company. MUL is waiting for the final guidelines to be issued by the Insurance Regulatory & Develop- ment Authority to draw out the detailed plans. It is yet to identify an insurance company to tie up with.
The certification business will involve putting a value to second hand cars. According to Khattar, there is a growing demand from consumers for such a service as a majority of them gets short-changed by brokers. To study the dynamics of the used car market, MUL has despatched one team to Japan and another to the US.
So far as lease financing is concerned, the company's plan is to lease out cars to corporates for a certain period of time. All maintenance would be taken care of by the concerned dealer. And at the end of the stipulated period, MUL or its dealer will buy the cars back, certify and refurbish them and sell them through their used car businesses.
This is the first time in the country when a car company is looking at the lease finance market. One of the benefits that will accrue to the company is the added depreciation in its books.
All the four initiatives will be launched at the dealer's level. "The objective is to improve the profitability of the dealers," Khattar added.
