Ayudhya Capital Auto Lease managing director Pairote Cheunkrut unveils the main strategies of Thailand's second largest automobile hire-purchase company, and explains to The Nation's Pichaya Changsorn why innovation is central to his focus.
After a cautious approach adopted in 2009, Ayudhya Capital Auto Lease (Aycal) is this year roaring ahead on its so-called "smart growth" strategy, aiming to maximise its growth potential as both the economy and the automotive sector recover strongly.
Managing director Pairote Cheunkrut said that under its "smart growth" strategy, Aycal, better known among local consumers as Krungsri Auto, had been focusing on four key areas:
1. Reinforcing brand value
Using its strong product brands like Car4Cash - which is very well known in the market - the company is striving to strengthen its Thai corporate brand, Krungsri Auto. Consumers are being informed of Aycal's complete range of products and the fact that it is no longer a direct subsidiary of multinational finance company GE Money, but a unit of Bank of Ayudhya (known by many Thais as "Bank Krungsri"), which is 32.93-per-cent owned by GE.
2. Expanding sales and service channels
Aycal regards its ability to gain access to customers around the country as one of the key factors for success. This is because the firm is constantly researching the needs of consumers before all else.
As some of its products may be suitable only for certain sales channels, much importance is placed on "harmonising" products to appropriate channels. Besides its own 34 branches, Aycal has access to more than 500 branches of Bank of Ayudhya (BAY) around the country.
3. Creating product differentiation
Two key challenges have been maintaining the company's status as the "one-stop shop auto-finance leader", on one hand, and "market shaper" on the other. Being the "one-stop shop auto-finance leader" means it must be able to fulfil all consumers' requirements within its range of products. Being a "market shaper" requires Aycal to maintain its position as a leader in innovation. In this, the firm has a good track record, and has been first to introduce many new products and services over the past 17 years.
4. Customer centricity
Aycal has a so-called "care project", in which staff are trained and motivated to provide services to customers with their hearts, and to conduct regular research for developing products and designing distribution channels that are better suited to customers' needs. Its staff have also been trained in giving advice to customers.
Pairote said the results of the strategy were so far meeting the company's "smart growth" targets. In the first half of this year, Aycal recorded loan growth of 52 per cent, extending new loans totalling Bt32 billion. Because the second half is normally the high season for automobile sales, the company is clearly well on track to achieve its 2010 loan-extension target of Bt70 billion, he said.
In the first six months of this year, Aycal has also increased its net earning assets by 17 per cent and raised its market share in various segments. Its hire-purchase lending for new cars has risen by 90 per cent, compared with market growth of 50 per cent; for used cars, its Car4Cash auto-refinancing loans have grown by 23 per cent, compared to market growth of 12 to 13 per cent; and for motorcycle loans, it has booked growth of more than 40 per cent, compared to the market average of 25 per cent.
Pairote said that despite the recent reorganisation, Aycal had retained its entire staff and its corporate culture, nurtured over 17 years as a direct GE subsidiary. This culture comprises learning, thinking, execution and team building.
Behind its execution and innovation success, Aycal has a special unit, headed by a so-called "quality leader" who is part of the senior management team. The unit has been responsible for rolling out many new products and services, as well as major-improvement projects that have helped to save costs or enhance efficiency, he said.
Because of intense competition in the Bt500 billion automotive-financing market, Pairote said he placed great importance on not only the capability to execute, but also on the speed of execution, as well as the ability to create new products and services - thus being able to "shape the market".
Pairote said the value of Aycal's net earning assets reached Bt100 billion in the first quarter of this year, an effort that took almost two decades to achieve. Nevertheless, BAY's chief executive and president Mark John Arnold has asked Aycal to expand its net loan portfolio by another Bt50 billion within the next two years, he said.
Aycal is a core subsidiary of BAY. According to Tris Rating, Aycal's total receivables as of December 2009 accounted for 16 per cent of BAY's consolidated loans outstanding, while the firm's net income contributed 30 per cent of BAY's consolidated net income for the same period. Furthermore, loans to Aycal accounted for 74 per cent of BAY's total lending to subsidiaries as of June 2009, up from 26 per cent a year earlier.