Tuesday, 26 May 2009

replacement market in focus

By Chalida Ekvitthayavechnukul
The Nation
Published on May 26, 2009

Group changes emphasis as OEM segment slides

The Siam GS Battery Group has shifted its sales strategy to focus on the replacement-equipment manufacturing (REM) market, as original-equipment manufacturing (OEM) is expected to shrink 40 per cent, in line with overall automotive production this year.

The group comprises two companies in the automotive-battery industry: manufacturer and exporter Siam GS Battery and domestic distributor Siam GS Sales.

Siam GS Battery projects revenue of Bt3.8 billion this year, declining 21 per cent from Bt4.8 billion in 2008. Of last year's revenue, it sold 60 per cent to Siam GS Sales to serve demand in the REM market, 25 per cent was supplied to the OEM market, and 15 per cent was exported.

With an optimistic outlook for the REM market, its sales to Siam GS Sales will be raised to 70 per cent this year, with the rest generated equally by the OEM market and exports.

SM GS Battery exports to Burma, Cambodia, Laos and Malaysia.

"We've been hit by the global economic crisis, which has resulted in a drastic drop in automotive production in OEM and exports. However, growth in the REM market remains robust, thanks to more demand from the maintenance of used vehicles," said Siam GS Battery and Siam GS Sales director Prakasit Phornprapha.

Siam GS Sales, which has a market share of 35 per cent in the REM market, therefore expects to boost its battery sales by 30 per cent from 1 million units last year.

However, sales revenue will increase only slightly this year, from Bt2.98 billion to Bt3 billion, due to cheaper product prices in line with a drop in the price of lead since last year. Lead is a major raw material in the making of batteries.

The company cut its prices by 25 per cent at the beginning of the year but has no plan to boost them despite the upward price trend of lead over the past three months.

Saran Chinprahat, managing director of Siam GS Sales, said it planned to expand its distribution channels by increasing the number of dealers from 250 to 300 across the country this year.

He said the company targeted increasing its market share to 40 per cent in the next three years by developing and launching new products, as well as using below-the-line marketing activities to promote the understanding of new products.

No comments: