The automotive industry's production chain is a business structure that is linked to the global economy and is also one of the major arteries that nourish the Thai economy. The macro-level impact of COVID-19 has disrupted the global automotive industry. Domestic purchasing power has decreased by more than half. Many factories must slow down production and job termination occur. How will the car business adapt to this situation? Listen to the perspective of Dr. Sanhawut Thammchuanwiriya Group Chief Executive Officer Master Group Corporation (Asia), the leader in retail and complete service in the automotive business in Thailand. Come and find out what will help spark the start of the automotive industry to move forward in Thailand again. Talk session together with Mr. Sornchai Suneta, Managing Director, Chief Investment Office, SCB Securities Co., Ltd. (SCBS).

Become a leader in the integrated automotive business

Dr. Sanhawut discusses the growth of the Master Group Corporation (Asia) (MGC-Asia) business, which started in 2000 as Millennium Auto Group, is a dealer for BMW MINI and BMW Motorrad. MGC-Asia now covers all segments of the Automotive Retailer business from upstream to downstream. Except for the production of cars only. It consists of 5 business groups:

1) Automotive Retail Service Business is a car dealer. Complete car service center Including service sectors related to cars It can be said that it provides complete services from buying, selling, renting, and servicing.

2) Automotive Importer Business Peugeot, Rolls-Royce, Aston Martin, Maserati
Automotive Importer Business is an importer of Peugeot, Rolls-Royce, Aston Martin, Maserati cars, etc

3) Finance & Insurance Business is a business based on rental cars Operating Lease. This includes the Retail Finance and Howden Maxi insurance business, which is a partnership with Howden Broking Group, a subsidiary of Hyperion Insurance Group, England.

4) Yachts Business is an authorized dealer of Azimut yachts from Italy.

5) Creative Solution Business is a business group that acts as a support department. Such as information technology, training centers, and digital technology

Over the past 20 years, MGC-Asia's Key Success has been a dedicated staff. The employees at all levels in the affiliate must have knowledge and understanding of the 5 main businesses of MGC-Asia from upstream to downstream. And that the company has gained the trust of business partners Both from the world's major automobile manufacturers, SCB, and other business partners that allow MGC - Asia to prove themselves and expand their business until now. And today the world has changed a lot the company has invested in developing and establishing a dedicated team of digital businesses such as all digital platforms. Be a person who understands and adapts to the digital world. It is called Digital Transformation in the organization.

Managing COVID-19 Crisis

The COVID crisis has had a serious impact on every business sector. Including the car business with COVID, sales fell 40-50%. In a part of MGC - Asia, Dr. Sanhawut said that in January - February. There are some signs that sales start to drop but it's not clear. When coming in late March the numbers became clear. Caused by the panic of consumers. financial institution sector, the leasing company continued to declare a state of emergency at the time. Later in April announced a lockdown. Various forecasts have come out, which are shocking to consumers, partners, even the company itself. Which, after having regained consciousness, must adjust as quickly as possible. All sides speculate that COVID will change everything. When it comes back, it's not the same. Which is a problem that many businesses must face.

In terms of MGC-Asia, the first thing we do is check the stock quantity. From normal stock count all the time But this time, we need to assess the impact this will have on Automotive Retailers in the next three months. Which is car stock Which is a difficult problem for many companies Because if there is too much stock, it is scary. Due to the contraction of trading, Even automakers have stopped production for fear of stock flooding. Fear the dealers cannot sell. But on the other hand, if the stock is not enough, not having a car for sale there will be no income. Which during May - June the automaker also

Stock planning also covers tourism-related businesses. MGC-Asia Group has a sixth car rental business with over 1,200 cars. In late April Executives met on the closure of airports throughout the country according to the government. And decided to drain more than 50% of the rental cars, leaving only about 500 cars within 2 months. By releasing through the used car lane at market prices through over ten outlet chains nationwide. And when the market returns to improve again in July from domestic tourism the car rental business is making a comeback as well. What he learned from this crisis is the importance of making quick decisions and adjusting to the situation.

However, despite the opinion that the car market will decline greatly but as a car retail business Dr. Sanhawut believes that customers still have the power to buy cars. But not the same in each segment. In terms of MGC-Asia, car products are divided into 3 main segments, which are 1) High Luxury Segment (HLS), namely Rolls-Royce, Aston Martin, Maserati, etc., which still has purchasing power, normal trading, some stumbles during April. 2) Premium, such as BMW, MINI, by April, sales fell 50%, but in May and June it was back 65% and 70% respectively, and in July it was back 85%, close to the normal level. 3) Mass Premium like Peugeot and Honda, where the launch of the new Peugeot model received positive feedback, but Honda's sales decreased in line with the market situation, but fell only 30-40%, which was better than the overall market decline.

Key Milestones of MGC - Asia

Over the past 20 years, MGC - Asia has been expanding continuously. Dr. Sanhawut explains the picture of the growth in 4 phases: Phase 1, 2000 - 2006: Organic Growth that Business went well and expanded. Phase 2 2006 - 2016: Synergy Growth: Businesses promote each other. Phase 3 2016 - 2019: Scale Business Growth creates growth from a comprehensive business scale. The business grew more than 10% above the market average. Achieve 25,000-million-baht goal. Phase 4 2019 - present: Business Transformation Expanded to digital platforms, focus on Mobility Service, Retail Finance, Automotive Service, Big Data use, more customer segmentation, and prepare for the enforcement of the Personal Data Protection Act 2019 (PDPA), which is the aforementioned key milestones have been achieved.

Responding to customer behavior in the New Normal era

There is a question that after COVID-19 occurred Will customer behavior switch to online channels at all? Dr. Sanhawut divides customers into two groups, first being customers who are permanently adapted to the new environment after COVID. For this group of customers, the work team must clearly study and understand customer behavior. Since choosing to buy a car, using a car, including car loan programs and services to design services to suit customer behavior after COVID. And another group is customers who may be shocked by the incident. Not sure that the behavior will change according to the new environment. Or still have the same car buying behavior that was used to. But if the customer changes to the new environment, the team is ready to adjust according to the customer.

In the opinion of Dr. Sanhawut Consumers now follow the globalization of the digital world. Where mobile is an integral part of life. Until it comes to the point where excessive online ads disrupt daily life. It creates a nuisance to consumers. This is something that entrepreneurs need to think about and prepare themselves for with digital. And from the experience of Dr. Sanhawut himself has never met customers who buy cars 100% via online channels and a way to contact. But not yet a way to close the sale. Therefore, as a user taking advantage of the digital platform, MGC- Asia is focused on customer experience design, reaching customers through digital channels. Along with going out to meet more customers during the COVID period, customers do not come to the showroom. Like taking the car to see and test drive at home or organizing activities such as One-on-One. For example, at the launch of the BMW 7 Series, it managed to sell 50 units in 2 months. That is to adjust to the current situation, cannot selling as a mass, then selling as a niche group, but making it more frequent. Including the most effective cost-management design Customization to meet the customer groups as much as possible and be adapted for the Mass market.
 

In the auto show, which is the main channel of the automotive industry in Thailand, there are 3 big events: Bangkok International Motor Show, Big Motor Sales, and Thailand International Motor Expo. The latest Bangkok International Motor Show was held in July of the past. It still received a good response MGC-Asia achieved sales of 70-80% of last year which is higher than the overall market.

Another important tool in business planning is Data. Dr. Sanhawut pays great attention to the design process, data collection (Data), selects useful data storage to be input to data analysis (Data Analysis). The main analysis with KPI from various departments on the principle of productivity efficient monitoring comes out as an output that can be used for many benefits. For example, used to plan activities for customer's stock plan service program design. For example, offering products that correspond to the income and lifestyle of customers, etc.

Advice to business owners

In the opinion of Dr. Sanhawut If we see it as a crisis, we must be out of the industry. But I want you to come back and analyze yourself where it is because a perfect storm is a perfect opportunity. But will we be able to seize the opportunity in time or not?

For MCG - Asia, there are plans to expand the business. Who used to focus on what we must do next. Do not manage as if to close the business. Because it will make employees feel hopeless and frustrated. Don't make the staff feel that way. Business owners need to build morale to allow employees to be motivated in their work. Dr. Sanhawut sees that in every crisis there is an opportunity. But it depends on whether we find those opportunities or not. Or alternatively, don't look for opportunities Let's look at the opportunities that we have and whether we are doing well enough or not, such as a lean business that MGC-Asia does not add people but has plans to expand the business. By opening 4-5 new outlets and relocating the existing staff to voluntarily spread to the news outlet. As a result, the average cost per outlet decreased and added IT technology instead. And most importantly, it makes business partners trust us the most. This will help our business never go down. This may be in a steady state. Waiting for the opportunity to return to grow as before.

For industry and automotive business, the destination, that is, the consumer group is important. If the destination gear doesn't turn, it will affect many other sectors, including the finance, leasing, finance, insurance, and manufacturing industries where there are many clusters of operators in the supply chain. If the government stimulates the consumer incentives at the end of consumption by helping with the financial risks in the leasing or finance part well. This will help spin the destination cog and contribute to the backlash of 3-4 businesses related to the automobile industry of hundreds of thousands. Because if let the business slows down, the destination cannot be sold, it will adversely affect the manufacturing sector at the source and related beyond. Whether it is cutting workers, laying off, stopping production in many clusters. If governments can stimulate destination consumption in different ways, such as a financial program, tax compensation, etc., will stimulate the economy and set the backlash for the auto retail industry and related businesses to move forward.

Source SCBTV BEGIN AGAIN the Series Episode 2 “Ignite the New Engine” delves into the future of the automotive business. By Dr. Sanhawut Thammchuanwiriya Group Chief Executive Officer Master Group Corporation (Asia)