Warren Buffet enters India through Auto Insurance

Legendary investor Warren Buffet’s Berkshire Hathaway is making its entry in to India through Auto insurance. Buffet who’s investment philosophy has been to remain within circle of competence is highly successful through its Insurance and reinsurance business.

Gecko the lizard, hallmark of Geico Insurance in US reminds me of my stint with Auto Insurance in US. When Gecko started popping up on TV and urging to check how much you could save on the car insurance through Geico, I cold not escape the temptation like any car owner. True to its claim, the quote was surprisingly lower to be believed. Called the customer service to make sure and remained with it for about 3 years. The first time talked to agent was to verify and then on it was purely an online business.

Geico, is one of the poster boys of BH’s portfolio now.

Berkshire Hathaway has put its foot on Indian market through online Insurance distribution model at berkshireinsurance (dot) com. It has no significant content presently and would be launched on 25^th March by the man himself who is touring India (first visit) on his philanthropy drive.

Presently in India the FDI for insurance is 26% , which BH feels a lot smaller by it's standards to invest as they believe the amount of efforts required for 26% is same as 50% or 60%. So may be that is the reason for them to be an agency than an insurance company themselves yet.

But I am sure it is the space to watch for millions of auto insurers in India.

VW, Honda, Hundai to be questioned on the grounds of fair price practice for the spare parts

In an interesting move, CCI (competition commission of India), the agency that works as watchdog to hold fair price/trade and practices  in India has ordered an enquiry in to Foreign automakers Honda/VW and Hundai. According to the complaints apparently by consumers, the auto spare parts are only available through the authorized dealer network and are sold at high price. They claim the parts are not available in normal retail outlets like parts from various Indian vehicle makers.

The availability and cost of genuine parts of these foreign brands are always an issue. If the claims are true, it is interesting to know the case for Hundai motors that is second highest selling brand in India now and has vast network and distribution system.

The other brands fairly lesser in sales, and often times the issues is to get the parts to be replaced in time. The dealers even order parts to replace. So it not sure why would they stack them at retailers or the retailer would be interested to stock them.

Honda has been facing issue in its aftermarket due to higher parts costs and has been struggling in sales, not necessarily due to the higher part cost, but it could be one of the prime factors when there is ample choice available for consumer. VW, started its journey through luxury segment and now it has Polo and Vento on market so might take a while to gain its spread.

However CCI, has ordered the investigation requesting a report within 45 days, so it would be interesting to know the outcome of report which most likely would not turned out anything significant.

TATA introducing Divo - Intercity luxury buses for India

TATA motors, the largest CV maker of India has decided to add competition to Volvo and Mercedes in luxury intercity bus segment. TATA that owns Hispano Carrocera, the Spanish bus body building and bus maker is launching its luxury intercity model Divo by 1^st quarter of 2011.

TATA took 100% control of Hispano in 2009 by acquiring balance 79% of remaining  stake making it 100% subsidiary called TATA hispano. TATA already has popular Globus model running on Indian roads with body built by hispano in Goa, India.

The Intercity luxury bus market is growing significantly with private and government owned corporations investing heavily in acquiring the fleets. Presently Volvo, the Swedish automotive major controls over 50% share in the segment followed by Mercedes. TATA, planning to price the Divo at around 10% less than the global brands and giving same luxury thinks it would position well in this segment.  

Picture - TATA hispano