ISUZU MOTORS: With a solid capital base, the commercial vehicle leader bas s
strategies for riding out the industry slowdown

Isuzu had humble origins in Thailand as an agricultural product venture of Mitsubishi Corporation in 1921. In time, Mitsubishi realised that gasoline engines did not suit trucks, but it saw vast business potential in diesel models. It hooked up with Isuzu Motors Ltd, a diesel truck specialist, and imported the first Isuzu diesel model in 1957.

‘Import duties and excise tax reductions should be taken into consideration. If the government wants Thailand to transform itself into a pickup export base, it has to boost domestic demand to reduce production costs’
HISASHI KUNIFUSA
President, Tri Petch Isuzu Sales

The fact that half of Isuzus worldwide production capacity is in Thailand shows the importance the company places on the Thai automotive industry.

Isuzu has been the most popular commercial vehicle brand for the past 16 years, in addition to dominating the one-ton pickup truck market. Fuel economy and an efficient after-sales service network have helped Isuzu maintain its dominance in the commercial vehicle segment.

Much has changed in the local automotive market since the recession began, but Hisashi Kunifusa, president of Tri Petch Isuzu Sales Co(TIS), has a short-term strategy to deal with the downtrend.

"In general, our marketing strategies will consist of four main points: to maximise customers' satisfaction, maintain our market share, leadership in the commercial vehicle segment, stay on top in the pickup market, and become the leading brand in the Sport Utility Vehicle market."

In an understatement, he acknowledged the "unusual situation" in the local market, saying 1998 would be the toughest year.

"Every company has to take all possible measures in the struggle for survival. TIS is no exception. We are battling against heavy odds. We have combined the downsizing of Isuzu Group operations with the efficiency improvement of dealers, factories and vendors."

TIS is one of the few large local automotive players that has not had to raise capital this year, which is one sign of its strong financial base.

To promote more cash inflow to Thailand, export-oriented policies for pickup trucks are
vital because the latter account for about 50% of the total vehicle market in Thailand, he said.

At the same time, however, domestic market expansion is needed to push exports because higher production volumes create economies of scale.

"Import duties and excise tax reductions should be taken into consideration. If the government wants Thailand to transform itself into a pickup export base, it has to boost domestic demand to reduce production costs."

Isuzu exports from Thailand began in 1985 with a shipment of truck parts to Egypt. Thai
land became Isuzu's export base for diesel engines in 1990. Current destinations include
Cyprus and Malta, with future export potential in Australia, Pakistan, Bangladesh and Sri,Lanka.

TIS also accepts the need to continue improving labour skills and upgrading technology to make the Thai industry competitive, he said. "We emphasise human resources by actively en-hancing staff knowledge and capability, creating -high morale as well as providing complete wel-fare benefits to ensure a high quality of life for all employees."

TIS has training programmes for both general and specialised,. with about 400 factory personnel trained in Japan this year.

"It is our policy to promote capable Thais to top management positions as we have always regarded TIS as a Thai-managed company,"Mr Kunifusa said. "At present the positions of executive vice president, director and general manager are all held by Thais."

The company's Product Planning Office and Isuzu Technical Centre (Thailand) Co., Ltd work on the technology side: testing and evaluating the, performance of vehicles according to local usage requirements; modifying specifications to consumer requirements; designing and evaluating the quality of parts for export; and training local staff and engineers to carry out the process.

Isuzu's current sales performance has been remarkable, given the poor year the industry is having. It dominated the one-ton pickup segment decisively and even led total vehicle sales for the first five months of the year. The latter was extraordinary because Isuzu is not a major force in passenger cars.

However, a product exchange programme with Honda has enabled Isuzu to market the Ver-tex passenger car, essentially a rebadged Honda Civic. For its part, Honda markets a rebadged Isuzu pickup called the Tourmaster.

Isuzu relinquished the total vehicle sales lead in June to Toyota by a slim margin, which came as no great surprise to Mr Kunifusa. He remains bullish, though, about prospects in the commer-cial and one-ton pickup segments; its market share in the latter is 40.25 %

In the fast-emerging SUV market, Isuzu is third with an 11% share, and second in 4x4 pick-up sales in the first half of the year.

The SUV segment is a phenomenon since most buyers use their sporty vehicles in metropolitan Bangkok and not on rugged terrain. Industry observers note that women also like the feeling of safety and a commanding view of traf-fic that an SUV provides. The future of the market is difficult to predict.

Community activities also play an important part of Isuzus operations, Mr Kunifusa said. "We cannot forget our role in Thai society"

Isuzu's social contributions include the Isuzu Group Foundation, responsible for construction of school buildings nationwide. It sponsors the Isuzu Cup Thai boxing programme, along with a Youth Relations Project to help students, and environment conservation activities.

Tri Petch Isuzu Sales Co
Established: Mitsubishi Corp brought the first Isuzu diesel truck to Thailand in 1957, while the name change to Tri Petch Isuzu took place in 1974
Registered capital: 200 million baht
Major shareholders: Thai shareholders holding 51% consist of the Boonsong (18%), Sarasin (6%), Chansue (6%) and Kridakara (1%) families, BTM Investment and Securities (Thailand) (5%) and Thai MC Co (15%). Japanese shareholders with 49% consist of Mitsubishi Corp (20%), Isuzu Motors Ltd (19%) and Mitsubishi (Thailand) Co Ltd (10%)
Main business: Sole distributor in Thailand of Isuzu vehicles, parts supply and maintenance services with nearly 300 after-sales centres
Number of employees: Tri Petch Isuzu 700, factories 1,200
Factories: Isuzu Motors (Thailand) Ltd, Phra Pradaeng, Samut Prakan; Isuzu Engine Manufacturing Co (Thailand) Ltd, Lad Krabang Industrial Estate

Worldwide
Headquarters: Tokyo
Number of countries: 20
Number of employees: Japan 13,877 (overseas n/a)