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Maruti's foray into used cars this fiscal

Our Bureau

NEW DELHI, Sept. 6

THE country's largest car manufacturer, Maruti Udyog Ltd, intends to enter the fast-emerging company-promoted second-hand car business this financial year, the company's Managing Director, Mr Jagdish Khattar, said today.

Maruti, a joint venture between the Indian Government and Japan's Suzuki Motor Corporation, would enter the operations under a new brand name, Mr Khattar told reporters.

A declining car market and an effort to build brand loyalty has attracted leading car manufacturers such as Ford India Ltd to enter the used car business in India under the 'Ford Assured' brand name.

Media reports had earlier said that General Motors India Ltd is also considering plans to enter this business.

The segment has also found new companies which are not in the automobile manufacturing business, like Automart India.

``We are working out the details. We will certainly enter the business before the financial year ends,'' Mr Khattar said.

Maruti has already been testing waters on this front. A company-promoted service centre in New Delhi has already been doing this business, possibly as a prelude to making the foray into the used car business.

``We have been selling about 10-15 cars a month there,'' Mr Khattar said.

An increasingly competitive car market and falling margins had made Maruti look at diversifying into previously unchartered territories such as dealing in second-hand cars and entering the recently opened up insurance sector.

These forays are part of a recast and diversification plan submitted to Maruti by management consultancy company, A.T. Kearney.

The Maruti board has already approved the diversification plans, Mr Khattar said.

``We have not taken a final decision whether we should be entering the used car business for Maruti cars alone or for all cars,'' Mr Khattar said.

The company's plans to enter the insurance sector as a broker has not yet fructified as the Government is yet to announce the norms for insurance brokers. A Bill to that effect has already been introduced in Parliament.

After making a loss of about Rs 250 crore in financial year 2000-01, Maruti has been trying to find ways improve profitability.

A slew of measures aimed at improving profitability include reduction in workforce, cut in vendor and other costs and diversification into new areas.

In this direction, Maruti is readying a voluntary retirement scheme to reduce its workforce. Details of the scheme are expected in the near future.