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Published on November 28, 2007

Managing director Vitorn Sukanjanapong said the decision followed the company's need to expand its local market to make up for damage inflicted on its export trade by the strong baht.

Vee Rubber hopes to lift its domestic sales to 40 per cent of total sales by the end of 2009, from 30 per cent now. The company recorded Bt3 billion worth of sales last year. Of that, 40 per cent came from motorcycle tyres, 30 per cent from bicycle tyres and the rest from car tyres. As much as 70 per cent of sales came from exports.

The company expects revenue of Bt4 billion this year after recording sales of Bt3.8 billion in the first 10 months.

Vee Rubber, which was established 30 years ago by the Sukanjanapong family, has registered capital of Bt500 million.

Vitorn said the company had to expand its domestic market to balance its income and reduce the negative effects of the baht's appreciation.

"Our net profit this year will be lower than last year's by nearly 10 per cent despite sales growth of about 33 per cent, so we must expand our domestic market to balance our portfolio," he said.

Although the company increased the export price of its tyres an average of 6-7 per cent in each of this year's quarters, it has still been unable to compensate for higher production costs, because of rising rubber prices and the strength of the baht, Vitorn said.

With a new focus on the domestic market, Vee Rubber yesterday launched two new tyres: the Marathon-EVO for pickups and the Targa-D for sport-utility vehicles (SUVs).

The company is also considering increasing its prices in the domestic market next year, in order to match rises in production costs.

"We cannot say how much the price increase will be, but it may be 5-10 per cent," he said, adding that despite the hike, Vee Rubber's tyres would still be nearly 20 per cent cheaper than those of its competitors.

"We believe our share of the local replacement market will increase from 2 per cent now to 7 per cent within five years, following the launch of our new products for the niche pickup and SUV markets," Vitorn said.

"The total value of the local replacement market is Bt20 billion, with a demand for 17 million tyres."

Somluck Srimalee

 The Nation