Siam Motors shifts to property
Profit margin in automotive too low
Siam Motors Group, owned by the Phornprapha family, plans to focus on property development and move away from its core automotive business.
The eventual plan is to cease car distribution after Siam Motors thinned its distribution network from 20 to 13 outlets. Some were shut down and others were sold to investors.
Siam Motors is the car distributor for Nissan and Honda.
Pranitan Phornprapha, president of Bangkok Komatsu Sales Co (BKS), a Siam Motors subsidiary, said the group is winding down its automotive business because the competitiveness in this sector is reducing profit margins.
Founded in September 1952 by Thaworn Phornprapha, Mr Pranitan’s grandfather, Siam Motors began trading in new and used vehicles.
Later, the group was commissioned to be the first overseas dealers of Japan’s Nissan.
In 1962, the group joined with Nissan to operate the first manufacturing plant in Thailand under the name of Siam Motors and Nissan Co, which has since been renamed as Nissan Motors Thailand.
“Siam Motors was a family business when the group started in the automotive segment 66 years ago. There were only 3-4 car companies in Thailand, but most global car brands have entered the market and produce finished cars locally,” Mr Pranitan said.
“We will not leave the automotive business, which represents roughly 60% of the group’s revenue, because we have many related companies in this sector, including Siam Motors’ auto parts business.
“The automotive segment supports our total auto supply chain in the long run.”
Apart from Nissan and Honda, Siam Motors produces and distributes many auto parts brands, such as GS Battery, Yuasa, Valeo, NSK, Hitachi and KYB, among others.
Mr Pranitan said the auto parts business remains strong for the group, but car distribution will not make a healthy profit in the long term.
For property development, he said the group is exploring every business opportunity.
“The group owns many plots in the Eastern Economic Corridor [EEC], mainly in Chon Buri, and some plots have been developed to become Siam Motors golf courses and lifestyle hotels, while other plots are set to serve the tourism sector,” said Mr Pranitan.
Some plots where car outlets have been closed down will be considered for condo development as they are located in the central business district.
Siam Motors runs six business units: automotive, auto parts, construction/ industrial, education, hospitality/lifestyle and investment.
Mr Pranitan is in charge of BKS in the construction and industrial unit. BKS is the first overseas distributor of Japan’s Komatsu, a maker and distributor of construction and mining equipment, utilities, forest machines and industrial machinery.
Komatsu formed a joint venture with Siam Motors in 1956. Siam Motors set up a subsidiary company Bangkok Motor Works to run BKS.
For this business, Mr Pranitan expects total sales of 850 units in 2018 with a value of 4 billion baht, unchanged from a year before.
He said although the government has many megaprojects to stimulate the country’s economy, BKS has yet to see any concrete projects started, leaving the construction sector flat.
BKS forecasts spending on overall new construction machinery will stand at 14.5 billion baht in 2018, equal to 2017.
Bangkok Komatsu and Siam Motors together have a manufacturing venture at Chon Buri’s Amata Nakorn Industrial Estate.
The plant has a production capacity of 9,000-10,000 units of Komatsu excavators, backhoe loaders, skid steer loaders, forwarders, harvesters, and forklift trucks among others. Some 85% of the output serves 17 countries across Asia-Pacific.