Germany based Allianz and Volkswagen Financial Services, the financing arm of carmaker Volkswagen, are planning to enter into a strategic alliance to set up a new car insurance joint venture.

The new joint venture, wich will be formed only after receiving approvals from supervisory authorities and other regulatory bodies, is expected to be headquartered in Braunschweig, Germany, and to be named as Volkswagen Autoversicherung beginning from 1 April 2013.

Volkswagen Financial Services will own 51% stake in the new entity, while Allianz will hold remaining 49% of its shares.

Allianz Global Automotive CEO Karsten Crede said the firm is partnering with automotive industry to offer insurance product at convenient pricing with the launch of the joint venture.

"In the future, car buyers at dealerships will be able to take advantage of modular products at attractive prices with competent and ongoing service and advice about all car insurance topics," Crede added.