MGC masters the auto business
Group sets its sights on taking AEC market by storm
In 2000 we started from zero and in 2012 we reached Bt12 billion. Everything is a challenge, including the goals that I have always thought that I would achieve. We are not looking only at Thailand but are betting our future is in the ASEAN region."
This is the viewpoint of a young automotive executive that is quickly gaining attention from the industry. Sunhavut Thamchuanviriya is the group managing director of Master Group Corporation (Asia), or MGC.
Since stepping into the automotive business, Sunhavut has succeeded in every business he has touched, whether it's the Millennium BMW dealership and being the only authorised Mini dealer, or the Master Certified Used Car, Master Car Rental and Master Motor Services.
Sunhavut recently announced bigger plans for his group, especially with the ASEAN Economic Community (AEC) hitting the road in the next two years.
The Nation reports.
HIGHER GROWTH THAN EXPECTED IN 2012
Sunhavut says his company's growth in 2012 was higher than targeted, with financial results leaping from Bt8.5 billion in 2011 to as much as Bt12 billion last year, thanks to the addition of six new automotive businesses.
They include Rolls-Royce Motor Cars Bangkok, the authorised Rolls-Royce importer and retailer in Thailand which opened in the first quarter of 2012, and MMS Tuning Centre, which is part of MMS and is the official importer of AC Schnitzer accessories for BMW as well as TechArt accessories for Porsche.
Master Car Rental also became allies with Sixt, the top German car rental company, in the second quarter last year, along with an insurance-broker company during the third quarter. They have all teamed up to prepare the group for the ASEAN market, and the company now needs to have Bt10 billion to Bt20 billion in funding.
"The economy has been helpful and we have designed businesses to cater to that growth. You can see that we don't get First Car or eco-car privileges. We have seven major businesses featuring new cars, used cars, rental cars, and after sales (MMS-Bosch Car Service and accessories). The sixth group is the IT and Call Center business, while our seventh group delivers training that we organise with Assumption University . They all team up to help drive Master Group's businesses," Sunhavut revealed.
He said that although every business experienced growth, the percentage achieved by the used car business was very high.
"This means that this group needs to find financial resources because this kind of growth needs funding. MGC's portfolio is already at the Bt4 billion to Bt5 billion level and there is more growth opportunities due to the city's expansion and foreign investment. This has enabled MGC's fleet to leapfrog," Sunhavut said.
But there are risks, and becoming allies with Sixt and changing the brand to Sixt has helped boost our customer base from less than 15,000 to 20,000, he added.
"We have the rights to seven countries in Asean, and surely we have plans for investing, forming a joint venture or appointing representatives. This is the first business that we will penetrate in the region," Sunhavut noted.
EARNINGS TO REACH BT15 BILLION
Apart from the momentum carried over from 2012, the inclusion of a new business in the group - a Honda dealership - is expected to generate even more income.
The fully integrated Honda showroom will be built on a 7-rai plot of land in Pattanakarn and requires an investment of Bt1 billion.
"We are presently negotiating the details with Honda and although the sales quota is still not clear, we hope to sell about 2,000 cars in the first year. This year our earnings could reach Bt15 billion without difficulty, with 60-65 per cent coming from new vehicle sales, 10-12 per cent from car rental and the rest from the other businesses," he revealed.
BT30 BILLION WITH ASEAN MARKET
Once the AEC takes effect in 2015 (it is possible that it could be postponed to 2016), MGC Asia will have more time to strengthen its foundations before stepping into the regional market. Once that happens, the group will have a portfolio of as much as Bt30 billion, Sunhavut said.
In terms of Sixt, a 30-year land rental contract in Vientiane has been signed with the Laotian government, while talks have been held with partners in Myanmar, Malaysia and Vietnam. However, the final details have to be worked out as conditions in each country differ, he said.
"Ask me whether the market is large for Asean, which has 600 million people, and I will tell you that we want just 0.0001 per cent from the 600 million, which is mostly made up of expats who invest and operate businesses in this region. We must admit that every road is heading towards ASEAN now," Sunhavut said.
Besides being a Sixt ally, the group has launched an offensive in becoming an auto dealer and importer in Southeast Asia. Negotiations have been conducted with many auto-makers from the US and Europe. He said that in certain markets, parent companies hesitate to enter due to the small size of the market.
BT50M INVESTMENT GROWS TO BT30 BN EMPIRE
Sunhavut stated that MGC had invested just Bt50 million when it started business, not including the Bt100 million in working capital. But today, the company's working capital is worth more than Bt1 billion per month.
Up to date, MGC has invested as much as Bt5 billion in expanding the BMW, Mini and Rolls-Royce showrooms, plus going in for a big Honda outlet.
Sunhavut stressed that apart from good strategy, one also needs good partners and human resources in order to be ready to meet targets.
"We have given much importance to this issue. I believe that all our personnel have a passion for their work. We possess a good number of capable individuals from the automotive industry and they help manage our business branches. We are investing this much in order to secure the future growth that we are aiming for," he said.
Although Sunhavut's Bt15-billion target may already sound impressive, there are chances the figure could rise to Bt20 billion in 2013. You just can't underestimate a person like Sunhavut.