THAILAND - Industry
Managing Director, Goodyear Thailand
Finbarr O’Connor has over 30 years of experience in the automotive industry with extensive experience with complex distribution networks elevating to executive general management with full P&L responsibility. He has specialized in sales and marketing, business development, strategic marketing, and distribution planning in automotive retail, wholesale, parts, service, and automotive finance including over 10 years with international experience in the Asia Pacific region. He has a Bachelor’s of Business in Marketing and a Master’s of Marketing from Melbourne Business School.
The first thing is that we are here. We are one of the only two Thai manufacturers that have been here this long; therefore, our commitment to Thailand and the domestic market goes back a long way. Many of our dealers, surprisingly, have been aligned with us as partners for that long. When I go the market and visit our dealers, I am now meeting second- and third-generation owners and it is gratifying to see what successes we are able to achieve working so closely together. A lot of them are highly educated and very sophisticated. Our longevity is parallel to the longevity of our branded retail distribution system. We are supported by our presence in Indonesia, Malaysia and China. The “Made in Thailand for Thais” concept is paramount; people want locally made tires. However, there is a need to supplement that from other plants with specialist capabilities. For example, for commercial truck tires we bring in tires from Indonesia. There are certain small volume tires in Thailand that we cannot justify producing here; therefore, we import them from China where they manufacture considerable quantities of the same tire. We supplement the business from our regional footprint; it is not a stand-alone Thai business in its own right. Nonetheless, we have a large export base out of Thailand. As a result, we are able to offer local consumers and dealers a full product portfolio. The most significant piece of technology to build the broadest range of tire products is here in Thailand, not in Indonesia or Malaysia. We have one of the most sophisticated pieces of equipment here that we installed a few years ago to give us the capability to build certain tires. That capability means that we can sell a full range of passenger tires here in Thailand and import only the premium top-end products.
About half of what we manufacture gets exported on aggregate. Hence, what predominately stays in Thailand from a passenger and truck tire component goes to the OEMs and replacement tire markets. With aviation tires, for example, we have key customers, such as Thai Airways, and we also supply Lion Air in Indonesia. The vast majority of our aviation business is exported. In terms of the aviation business, there are only two plants where Goodyear manufacturers tires around the world. One is here and the other is in the US; those are our two centers of excellence. Because the design and production of aviation tires are so heavily regulated, it means that this is an extraordinarily advanced and strictly monitored, audited plant. We also build passenger and truck tires that must adhere to these same exceptionally high standards, which gives us the highest quality that you can possibly imagine. In terms of exports, we are a major provider of tires all over the world, but predominately to Australia, New Zealand, ASEAN markets, and China.
There are two lines of consumption: the new car purchases and the replacement industry. The amount of cars that are on the road, whatever age they are, determines how many tires there will be in the industry. If you have 10 million cars on the road, a significant portion of those cars will require new tires approximately every two or three years. The second part that drives consumption of tires is the OEMs. The OEM industry has experienced a slump. The OEM buys tires from us, puts them on cars, and sells them domestically or exports them. Exports have been relatively stable, but domestic car sales have slowed down; therefore, OEM demand has slowed too, along with the replenishment of the car parts. However, what has not slowed down is that the new car buyers in 2012 and 2013 saw a massive spike for two years. As a result, the car part sector significantly increased. As a result, there is a distorted position right now in the marketplace. Car owners have to keep their vehicles because they borrowed money at low interest rates but now they need to replace the tires because the cars are three or four years old. Currently, the tire industry is doing well, even though new car sales are not. The question is what it will mean for us in 2019 and 2020.
For the industry, there are things to be worked on over 2016 and we hope it will more forward successfully. There is some resistance in that; however, we are the sixth largest exporter of tires in the world at $3.4 billion, while Indonesia is at $1.9 billion and Malaysia is probably half a billion. Therefore, Thailand can set the standard for the region. In terms of the company, we have made a great effort over the past three years to build our retail network capability, which allows us to have a clear understanding of the channels we will use to go to market, how to brand it, and where it will go; for example, showrooms, wholesales, or OEMs. Before, we had 36 branded Autocare stores in Thailand; today, it is 61. We have spent millions of baht outfitting and branding these stores and we are building 10 more this year and 10 more in 2017. They are big businesses that are owned by the dealer. That is one channel, and it is a dominant and successful one for us. We are a major supplier to modern trade partners and to the automotive industry care showrooms. I probably spend 60% of my effort on building capability in the dealer network. At the end of the day, I don’t see anything in the foreseeable five-10 years that will significantly change how we sell tires in Thailand.
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