B1bn firm to target US auto parts market

       A Thai-owned auto parts distributor in the United States will join with Thai aftermarket auto-parts producers to set up a holding company worth 1 billion baht to purchase 30 auto repair centres in the US within two years.
       The move is part of a strategy by the Cluster of Thai Automotive Parts to expand its members' markets to improve industry performance when local demand is weak because of the slump in vehicle sales and production.
       "We have been trying to enter the US market for more than 10 years, but were unsuccessful because we didn't use the right channels," said Samart Deebhijarn, the president of the cluster.
       "But the current strategy, through signing a memorandum of understanding to distribute local products to a US parts distributor and to invest in garages there would help us access the US market better."
       He said that owning garages would also give Thai producers a better understanding of US parts customers.
       Cluster members visited the US last week on a mission that also included representatives of the Thailand Trade Representative (TTR) Office, Thailand Automotive Institute and the SME Bank.
       The memorandum calls for cluster members to supply parts to US-based Autotech Engineering Co, one of the largest auto parts distributors in Los Angeles, owned by a Thai businessman.
       The new company would have to purchase 500 million baht worth of Thai auto parts within one year,3 billion baht within five years and 15 billion within the next decade, said Vachara Phanchet, the Thailand Trade Representative.
       Establishing a holding company would raise 1 billion baht from members of the cluster and Autotech Engineering Co to buy 30 garages within the next two years. This should generate parts sale and service income worth 3 billion baht by 2012 to the new firm.
       Vallop Tiasiri, director of the Thailand Automotive Institute, said more American drivers are repairing their cars to keep them in service longer in the downturn, creating opportunities for aftermarket parts makers.
       Vichaya Vitheethum, executive director of the SME Bank, said the market size in the US and the weak dollar also offered opportunities for Thai parts producers.
       The bank is working out measures to support establishing the holding company. Its board is also considering changing its collateral regulations to promote Thai investment overseas.
       "We used to allow overseas collateral to be used as guarantees for our lending to overseas business, but we faced problems estimating asset value so the system was scrapped. But the board is reconsidering this model in order to promote local business to invest overseas," Mr Vichaya said.
       The TTR, meanwhile, is preparing to adopt similar strategies to promote access to other markets such as Germany, Australia and the Middle East.
       "These markets use a lot of Asian cars form which our parts are applicable. Similar strategies such as overseas investment to win distribution channels will also be applied to promote other industries such as processed food,"Mr Vachara said.