South East Asian Automotive News

Most of the significant auto parts companies in Thailand are subsidiaries or affiliates of bigger, vertically integrated groups. These groups are already structured as holding companies for a series of joint ventures with Japanese companies. Financial information is often scarce. The optimal route to finding acquisition or joint venture opportunities in the market is likely to involve approaching the parent companies of the major groups in the industry. BDA has had contact with the senior management of the companies mentioned on the following pages. They are suffering considerably from the downturn. This should result in parent companies being more willing to sell equity stakes and in lower prices for new investors. However, profitability in the industry will be low, or nonexistent, for the next two years.

1. BOONSOONG / TRI PETCH ISUZU GROUP

Boonsoong is an assembler, distributor, retailer and auto components manufacturer and trader. Jootee Boonsoong founded the Group in 1949 and the parent company is still held by the Boonsoong family. The Group also has interests in tin mining, trading, hotels, soft drinks and consumer and chemical product distribution. Some subsidiaries are co-owned.

Tri Petch Isuzu Sales is a Boonsoong subsidiary, 30% owned by Mitsubishi Corporation. Boonsoong is the sole assembler and distributor of Isuzu motor vehicles and spare parts in Thailand. It has a retail network of over 200 showrooms and 140 parts and service centers nationwide.

Boonsoong has extensive interests in auto component manufacturing. Its plants manufacture airconditioners, alternators, pistons and other engine parts, spark plugs and tires. In late 1996 it set up a joint venture between a subsidiary, Tri Petch Isuzu Sales and Tokyo Drop Forging to establish a plant to manufacture engine parts for pickup trucks. Boonsoong has one of the best parts distribution and retailing networks in Thailand and exports a significant proportion of its truck parts. Auto Technic (Thailand), the distributor of Saab cars, is a Boonsoong affiliate.

2. KAMOL SUKOSOL GROUP

The Kamol Sukosol Group is one of Thailand's largest industrial groups. Auto assembly and distribution remain the core businesses, but the group has diversified into trading, finance, insurance, manufacturing and real estate. The Group is still family run, principally by Kamalee Sukosol, the daughter of the founder. The Group is closely connected to the AutoAlliance venture, set up in 1995, which will produce pick-up trucks in equal numbers for Ford and Mazda.

The Sukosol & Mazda Co Ltd was formed to handle assembly and nationwide distribution of Mazda pickup trucks. The Sukosol & Mazda Engineering Co Ltd currently manufactures automotive parts, including gearboxes. The Group produces a number of other auto parts for Ford and also for the Ford/Mazda's AutoAlliance venture.

3. KPN GROUP

KPN is managed by Kasem Narongdej and his wife Phornthip. The Group emerged from a family feud within the Phornprapha family. Phornthip, nee Phornprapha, and her husband were ousted by her brothers from the Siam Motors Group in 1995. They subsequently persuaded Yamaha Motors to transfer the Yamaha motorcycle assembly and distribution franchise to the KPN Group, which was the initial springboard to KPN's subsequent growth.

The KPN Group has aggressive growth plans, with the target of being a fully integrated vehicle company with sales of Bht100bn (US$2.5bn) by the year 2000. In 1996, KPN's revenues were Bht30bn (US$7.5bn). The group has rapidly established over twenty joint ventures with a wide variety of foreign automotive manufacturers. KPN holds Yamaha motorcycle assembly and distribution franchise. It has a JV with TRW to manufacture linkages and suspension products. It holds a 10% stake in the Ford/Mazda AutoAlliance plant. KPN has also linked with Cagiva, the Italian motorbike assembler.

4. MMC SITTIPOL GROUP

The Lee-Issanarukul family controls the MMC Sittipol Group. The group has had a relationship with Mitsubishi since 1961, when it was appointed as distributor for Mitsubishi vehicles. Sittipol now assembles Mitsubishi passenger cars, pick-ups and light and heavy trucks. MMC Sittipol has followed the same route as other auto-related companies by partnering with foreign parties.

Since 1980, the group has had a JV with Japan's Stanley Electric Public Company, Thai Stanley Electric. This company produces auto light bulbs and lamps and currently holds a near monopoly position in Thailand on such items. Thai Stanley Electric is listed on the SET and in 1996 had sales of Bht1.6bn (US$40m). Sittipol assembles Mitsubishi passenger cars, pick-ups and light and heavy trucks. Through its partnership with Pacific Industrial of Japan, the group produces valves, stamping products, electronic devices, press dies and moulds for the auto industry.

5. SIAM MOTORS GROUP

The assembly and distribution of Nissan vehicles remains the core activity of the Siam Motors Group. The Siam Motors Group is 75% owned by the Phornprapha family, with Nissan holding the remaining 25%. The Siam Motors Group has been distributing Nissan vehicles since 1952 and assembling them since 1962. Siam Motors owns most of its retail network and has links with Fiat, Alfa Romeo and Suzuki. Preecha Phornprapha is the patriarch, who continues to run the Group with the help of three sons (see also KPN Group, above).

The group's franchises include the assembly and distribution of Nissan vehicles. Siam makes forged parts including cylinder heads for pickup trucks. It supplies its largest competitors, Isuzu and Toyota, with engine parts in a joint effort to cut the costs of parts. Siam Motors has a joint venture with Meiwa to produce plastic moulds. It has a joint venture with UT Automotive to produce electromechanical and electronic components including heater fan switches, relays, multi-function switches, door lock switches, remote keyless entry systems and door lock control modules. It has a joint venture with Torrington and NSK to produce steering axles for passenger cars.

6. SOMBOON GROUP

The core of the Somboon Group is the auto components business, but it also has interests in real estate and office equipment. The Group has annual sales of over Bht1bn (US$25m) and manufactures a broad range of brake, drivetrain, engine and suspension components. The Kitaphanitch family continues to run the group, with Somboon Kitaphanitch himself as Chairman and a number of other family member also being involved. The group has close ties with various Japanese partners and has invested heavily with them in the sector.

Somboon Group has a joint venture with Asahi Tec Corporation to produce cast iron parts, and another joint venture to produce aluminum truck and car suspension parts. The Group has a joint venture with Asahi Shippo Moulds to manufacture aluminum moulds. Somboon has another joint venture with Yamada Seisakusho to produce steering and transmission parts.

7. SRIKRAVIN - BONYTHON

The core business of the Group is the auto assembly, distribution and retail of Volvo vehicles through Swedish Motors. Swedish Motors is listed on the SET and in 1996 its sales totalled Bht4.8bn (US$120m). Churairat Bonython and her Australian-born husband Simon hold substantial stakes and management control. The Principal also holds a stake through a holding company. Volvo has done comparatively well in the Thai market with a 3.5% market share and a much higher presence in Thailand than in the rest of Asia. This can be largely attributed to a strong management team and a secure relationship between the Group and the Principal. Outside the auto sector, the Group is involved in real estate, finance and insurance. Srikravin-Bonython is involved in a joint venture with Lear of the US to make leather seats for export.

8. THAI SUMMIT GROUP

Thai Summit was founded in the 1960s. The principal auto subsidiary of the Group, Thai Summit Autoparts Industry Co, was established in 1977. It was originally a manufacturer and exporter of press parts for automobiles. It has subsequently expanded into manufacturing a wide range of auto components. The Group is privately owned by the Jungrungruangkit family, with all five of the founder's children involved in the business. The Board of Investment has awarded the Group promotional privileges to manufacture a wide variety of parts.

The Thai Summit Group manufactures a variety of parts including air filters, electrical cords, interior trim, shock absorbers and seats. Thai Summit has a joint venture with Taiwan's Cheng Shing Spring Enterprises to manufacture motorcycle springs. The Group has a joint venture with Mitsuba Electric in electrical motors and AC generators. The Group has a joint venture with Nihon Sanso to make moulds for auto parts. Thai Summit has a joint venture with Press Kogyo in chassis production. Thai Summit Autoparts Industry Co continues to manufacture and export press parts for automobiles.

Thai Summit has had close ties with the Mitsubishi group since its foundation. Since 1990, five of the group's affiliates have been involved in the consortium to produce Mitsubishi L200 trucks under the auspices of MMC Sittipol. Thai Summit is engaged in a wide number of joint ventures.