Company to invest $50 million in 2-3 years, build 5-7 new auto hubs and sell more vehicles
While marketing Subaru vehicles in Thailand for the past 10 years, Tanchong Group boss Glenn Tan had never once talked about plans to assemble the Japanese brand in this country.
But in a short interview in Jakarta recently, Tan raised the topic and said that within two years the company would spend as much as Bt2 billion to grow its business in Asean, with Thailand playing a more important role in this plan.
Tan, who is CEO of Tanchong International and Subaru distributor Motor Image Subaru, told The Nation the company is seriously considering plans to assemble vehicles in Thailand and stressing that this is a high possibility.
Tan said this is the first time Subaru has made such a comment. In the past Subaru considered Thailand as a niche market for the brand, with not much sales per year.
“Today we see significantly increased potential in the Thai market, partly because of a wider range of vehicles being available as well as the Asean free trade policy that allows us to do more marketing,” he said. “The approval by Fuji Heavy Industries (the manufacturer of Subaru) to assemble vehicles in Malaysia has benefited us in terms of competitive pricing in Asean countries including Thailand. The production target of the Subaru XV in Malaysia is 5,000 vehicles per year, and if the market has higher demand, it means that the chance for Thailand to assemble Subaru vehicles will come sooner. Meanwhile, the company needs to strengthen its business in Thailand to cater to the expected growth.” He added that the model to be assembled would have to be decided at a later stage.
Tan also said that in order to prepare for growth in Thailand, the company has decided to invest US$50 million (Bt1.53 billion) in the next 2-3 years, after the initial $30-million investment that has already been made. The money will be used to renovate the plant in Lat Krabang and build 5-7 auto hubs starting next year. The hubs would be integrated showroom and service centres for all brands distributed by Tanchong, namely Subaru, Foton (a Chinese brand that has recently been launched in Thailand), Fuso and MAN.
“This is to prepare for growth in Thailand as well as increase our capability in servicing our customers. Most importantly, it will help strengthen the image of Subaru and Tanchong Group in this market,” Tan pointed out.
This year the company has been restructuring its management in Thailand and has been continuously expanding its dealer network in the Kingdom and Asean.
The firm’s sales target in Thailand has been set at 2,000 vehilces in 2013, meaning that it would grow by three times compared to 2012. It would also make Thailand the number one candidate in the Asean region against Singapore.
However, that remark was made during the third quarter of 2011, and Tan has even bigger plans now. Tan said Tanchong plans to expand its network in the Asean region by 10 times, with 60 new sales outlets in Malaysia, Thailand and Indonesia, in addition to the present 76 outlets in 10 countries.
Thailand will get 10-15 new dealers from the current six offering sales, service and spare parts.
Motor Image Subaru general manager Apichai Thamsirarak previously told The Nation that Subaru is going through a major rebranding in Thailand, which includes organisational and marketing restructuring.
“The project will cost Bt500 million, with Bt300 million-Bt400 million being used for new showrooms and service centres and Bt100 million for marketing,” he said.
Subaru hopes the rebranding will help push sales to 500 vehicles in 2012, up from just 100 in 2011. And by 2013, sales are expected to reach a record 2,500.
After production of the XV commences in Malaysia, Subaru will enjoy dramatic growth in Thailand, which has always been a niche market with CBU (completely built up) sales of no more than 200 vehicles per year. Free trade will allow Subaru to sell the XV at prices that are competitive against other brands in the market.
“The XV is a crossover and will be the first Subaru CKD (completely knocked down) model to be sold in Thailand. The new model is price-competitive. We also plan to introduce the BRZ sports car (which has just been launched in Singapore), the new Forester and the Outback minor change,” he revealed.
However, bulk sales will come from the XV.
“The C-segment and the compact SUV segment that the XV belongs to is growing dramatically. This year the C-segment market is expected to reach 80,000 vehicles, with 10,000 being priced at Bt2 million and above. Meanwhile, the compact SUV market will be about 11,000-12,000 vehicles, meaning that the market that the XV will compete in will have a size of about 20,000 vehicles. The XV is a new model that has been designed to cater to market requirements in Thailand, and we hope that it will be able to win at least a 10-per-cent share,” Apichai said.
He also said that Subaru will have twice the budget for next year, up from Bt500 million in 2012 to Bt1 billion in 2013.
It will have 16 showrooms (five in Bangkok and 11 upcountry) in 2013, and the figure will rise to 26 (10 in Bangkok) by 2015, covering every sales area in the country.