Kwik-Fit sees motor insurance as new base

policies for 15 insurance companies.

A #5m marketing campaign will target the owners of four million cars

that pass through the exhaust and tyre replacement company each year

with the objective of converting one million policyholders or 5% of the

UK market.

The Edinburgh-based company, which started life in Buccleuch Street in

1964, normally would spend about #15m annually on promotion but there

will be a rub-off effect from the new activity.

Nearly 130 people have been recruited for the office at Tannochside

Park in north Lanarkshire which is highly convenient for transport. The

biggest expenditure has been on the building with the overall cost

assisted by various grants.

The economy will receive another boost this morning when Whitbread

unveils its expansion plans as the most dynamic of the drink and food

companies develops the Scottish market.

Kwik-Fit chairman Tom Farmer said yesterday that the Kwik-Fit brand is

one of the strongest in any sector in Britain and this represented an

opportunity to use it in selling insurance. He added he has been very

impressed by the success of the Royal Bank of Scotland's Direct Line

which had created a brand for itself -- it now claims a fifth of the

private motorist sector.

In a counter-attack, he had been approached by other insurers to sell

policies.

The reasoning is that if a customer is confident about buying a tyre

or an exhaust from Kik-Fit, would the same person be as confident about

buying an insurance policy under the same brand name.

Market research has shown that the answer is ''yes, if the price is

right''.

Kwik-Fit itself will carry no risk and receive only a commission from

the participating insurers.

The question of profitability was answered only vaguely apart from it

being likely to be a useful contribution to the group which last year

increased the pre-tax total by 15% to #29.3m. Instead the objective is

to increase customer loyalty.

Part of the problem for car insurers competing against Direct Line has

been that of lack of branding. Many have tried to emulate it through

telephone marketing by are calling themselves GRE Direct, Royal Direct

or General Accident Direct or some such name. But the Midland Bank has a

very successful and high-profile banking subsidiary called First Direct

and so is the customer buying car insurance or banking financial

services?

The Kwik-Fit concept is that a customer will take an interest in the

Kwik-Fit insurance policy, contact a freephone number and be able to

deal on the spot using a credit card for immediate cover rather than

having to complete the formalities of a bank direct debit.

Mr Farmer said that customers would become members of a Kwik-Fit club

which would not only deal with replacement business and insurance but

also look after those who may have had a windscreen damaged by providing

a replacement vehicle or at least arrange for help.

He was in a particularly ebullient mood yesterday: ''Things are good

just now, we are getting a bigger share of the market.'' It has 30% of

the exhaust market and 20% of the tyre sector.

The Town & Country fleet maintenance business is performing

exceptionally well, targeting the corporate sector with an increase from

80 to 100 vehicles this year. It does all the maintenance for one car

dealer with 47 outlets with dealers overall becoming increasingly sales

organisations requiring much less by way of backshop facilities thanks

to the reliability of the modern car -- Mazda is about to introduce a

five-year or 100,000-mile warranty.

Kwik-Fit is extensively used by both Lex and Cowie as large fleet

operators for tyre and exhaust maintenance with its own ''implants''

operating in their workshops.

Mr Farmer partly explained his personal philosophy.''If born with high

energy, you get up early in the morning.

''I love to shop. I like watching people how they serve customers and

get annoyed when they miss an opportunity to sell.''

His other interests include being a non-executive director of

Airtours, various Scottish business enterprise and community groups and

a high personal involvement towards resolving social problems such as

drug abuse and handicapped children.