Hino identifies the problems

For Hino Motor Sales (Thailand), sales of its pickups in Thailand are more closely related to the effects of the strong baht and the increase in oil prices than to political uncertainty or the economic slow-down. Company president Yoshinori Noguchi admits it is "quite difficult" analysing the local truck market.

"This year, we can't say that the market is good, although truck sales were not so bad from the start of the year until April," he said. "But by June, they had dropped, and the reason was Thailand's export business."

Noguchi believes exports of Thai products have remained stable because exporters have tried to maintain competitive prices in world markets. This means they have accepted lower returns, because of the appreciation of the baht.

"So they [the exporters] try to reduce investments and maintenance by holding on to old trucks, rather than replacing them. They also try to use cheaper, imitation parts to lower maintenance spending," he said.

The resulting drop in demand for new trucks has affected Hino's business.

Hino is the No 1 brand in Thailand for large trucks of three tonnes and over, with a market share of 42 per cent. Its Thai operation is also its largest in Asia outside of Japan, with sales of 8,000 to 10,000 units per year. The company also has operations in Indonesia, Malaysia and Vietnam, where it sells 5,000, 2,000 and 1,000 units respectively for an Asean total of 17,000 units per year. It runs smaller operations in China and India.

Hino is now planning to revive export operations from Thailand.

"Six or seven years ago we used to export trucks to Australia, but specifications changed with new models, so we had to stop exporting," Noguchi said. "However, we are planning to start exporting again in the future and we need to meet the requirements of the export markets."

Hino's two-tonne trucks already measure up to Euro 3 standards in terms of emissions, and by next year the company's large trucks will achieve the same standard.

Thai-made Hino trucks carry a local content of between 30 per cent and 35 per cent and the company aims to raise the figure to 40 per cent in the future.

Automobiles and trucks from China and India are now penetrating the global market, including Thailand, but according to Noguchi, Hino is not worried.

"We are not afraid in terms of quality. But in terms of price, they are much cheaper than we are," he said. "However, our policy is not to compete on pricing. We give priority to our after-sales service."

Hino has been in Thailand for 45 years and has as many as 137,000 of its trucks and buses in operation in the country.

"For our customers our vehicles are like machines," Noguchi said. "They need to be kept running in order to maximise up time.

"Selling trucks using a pricing strategy is easy, but maintaining 24-hour up time is not," he said. "When we take good care of our customers - who are commercial people - and they believe that we are a premium brand, we have no need to fear companies from China or India. They can't do what we do in just one or two years."

Noguchi said a closely related issue is the recruiting and training of truck drivers.

"When I visit my customers, I often find that they face problems finding good drivers, so we have started programmes to assist them."

Over the past few years, Hino has organised training courses for truck drivers, with emphasis given to road safety and fuel economy.

"Last year, 4,600 drivers trained with us and we plan to train another 5,000 drivers this year," Noguchi said.

From the manufacturer's point of view, government regulations, including emissions standards, are a problem, especially in terms of enforcement.

"Next year we have to meet Euro 3 standards, but we are still unsure whether it will be enforced. This is not the first such case. The same thing happened with Euro 1 and Euro 2. So it's difficult for us to prepare and this is not good," he said.

Noguchi pointed out that while 95 per cent of trucks in Thailand belong to Japanese brands (Hino and Isuzu have a combined 80-per-cent market share), the emissions requirements here are based on a European standard rather than a Japanese standard.

"If Thailand used the Japanese standard it would be easier for us to do business," he said, adding that the reason behind Thailand's adoption of European standards remains a mystery to him.

"It could be that whenever Thai government officials want to learn something new about the industry, they visit Europe. The Japanese government is lacking in efforts to invite Thai - or other Asean government - officials to discuss developments in the industry."

Noguchi has been president of Hino Trucks (Thailand) for a year, although he was executive vice president from 1998 to 2003.

"I have seen big changes in everything in Thailand," he said, pinpointing the political situation. "But business-wise the situation today is much better than during the economic crisis in the late 1990s. In those years our parent company had to give much assistance.

"During those years the biggest problem was with our 45 dealers, who were unable to collect money from customers, so they were also unable to pay us," he said.

Presently Hino is also involved in the CNG (compressed natural gas) project, and is modifying 900 BMTA buses for CNG use.

"For the future for completely new CNG buses, we may join but we are not sure yet. However for trucks, we are developing a CNG-truck prototype for testing and can introduce it from next year onwards," he said, adding that collaboration between Hino operations in Thailand, Indonesia and Pakistan could be initiated for this project.

Kingsley Wijayasinha

The Nation