Thai Rung Union Car Public Company Limited

SET Opportunity Day, 8th March 2006

Presented by:
http://www.thairung.co.th Sompong Phaoenchoke, Managing Director
1
 Contents

• Introduction

• Scope of Business

• Group Structure

• Industry Overview

• TRU Sales Breakdown

• Future Strategy

• TRU’s Performance Prospects for 2006F

2
 Scope of Business

• Research & Development (‘R&D’),

Body Design & Process Engineering
• Tool & Die Making
• OEM (‘Original Equipment Maker’)
Pressed Metal Parts
• Auto Assembly
• Contract Assembly
• Original Design
• Seats & Seat Components
• Land Rover Dealer for Greater
Bangkok
• After-Sales Service 3
 Group Structure
Thai Rung Union Car
Public Company Limited
46% 30 %
“TRU”
Delta-TR Co. Ltd. Thai Auto Conversion Co. Ltd.
(Joint venture with Delta Kogyo) • R&D (Joint venture with Toyota Group)
• Pressed Metal Parts
• Auto Seats & Components • Auto Assembly • Special Purpose Vehicles

94 % 94 % 91 % 91 %
Thai Rung Tools & Thai V.P. Auto Thai Auto Press Thai Auto Body
Dies Co. Ltd.* Service Co. Ltd. Parts Co. Ltd. Assembly Co. Ltd.
(Amata City, (not yet active)
• Dies & Jigs • After-Sales Service Rayong Province) • Specialist Auto Body Maker
*Former name Thai • Spare Parts • Special Orders
• Pressed Metal Parts
Rung General Motor • Body Repair & Paint • Government Tenders
• Plastic Parts
90 %
99.53 %
TRU Leasing Co. Thai Ultimate Car
Ltd. Co. Ltd.

• Rental, Leasing and • Land Rover Dealer for Greater Bangkok

Hire-purchase Finance • Accessories & Spare Parts
of motor vehicles 4
 Thailand’s Total Vehicle Production and Exports
(1996-2010F)

Units Production Exports

2,000,000
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006F 2007F 2008F 2009F 2010F
Sources: Actual to 2005: Thailand Automotive Institute, Forecast: TRU

• Thailand’s total vehicle production rose 21.25% in 2005 to 1,125,356 units, surpassing the million mark a
year earlier than targeted. Out of this total, 440,715 (39.2%) were exported.
• We believe growth will continue over the next few years at a lower, sustainable, rate of around 12% p.a.
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 Total Auto Sales in Thailand (1996-2010F)

Units
1,500,000

1,250,000
.
p.a
9%
1,000,000 23 .
th
gr ow 703,432
g e
era
Av 626,041
750,000
589,126 533,176

500,000

250,000 144,065

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006F 2007F 2008F 2009F 2010F
Sources: Actual: Thailand Automotive Institute, Forecast: TRU

• At 703,432 units for the year, new vehicle sales for 2005 were up 12.4% on 2004, despite higher fuel prices,
surpassing most forecasts.
• The Thai auto market continues to grow despite worries over the general economy.
• We expect growth to continue over the next few years at a lower, sustainable, rate of around 8% p.a. 6
 Total Export Value, Vehicles & Parts,
1996 to 2005
Baht millions
300,000

250,000

200,000
150,000 Parts

100,000 CBU
50,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Thailand Automotive Institute

• In 2005, Thailand’s total CBU exports reached 440,715 units, 33% up on 2004.
• Total automotive & parts exports for 2005 shot up by 45.6% compared to 2004, to reach 294
billion baht.
• TRU increasingly benefits from rising demand for OEM auto parts used in finished auto
exports, which looks set to continue.
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 Export of Auto Parts from Thailand

Baht millions
100,000

80,000

60,000

40,000

20,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Thailand Automotive Institute

• Thailand’s auto parts exports exceeded Bt.91 billion in 2005, up by an impressive 72.6% on 2004.
• Despite rising fuel costs and other worries, the trend looks set to continue.
• TRU’s OEM auto parts sales have started to benefit and will benefit further from Thailand’s
continuously expanding auto exports.
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 TRU Sales Breakdown 4Q05
Total Sales

Q4/04 Q1/05 Q2/05 Q3/05 Q4/05

Bt. millions 879.14 673.34 669.00 776.05 847.24
Change QoQ-14.9% -23.4% -0.6% +16.0% +9.2%
Change YoY-22.6% -33.4% -27.8% -24.9% -3.6%

Breakdown Q4 2005 •In Q3 2005 TRU’s sales recovered somewhat,

thanks to sales of taxis and improving parts sales.
Service & Other Modified Vehicles •In Q4 there was further growth, largely from Service
Sales Income 17.4%
23.0% and Other Sales Income, which rose by Bt.81m or
71% QoQ.
•TRU’s 4Q2005 sales were down by just 3.6% YoY,
Dies & Jigs
3.2%
indicating that recovery is under way.
Parts Sales
30.9%

Retail Vehicle
Sales 25.5%
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 TRU Sales Breakdown
Both the the fall-off in sales of modified vehicles and the Company’s success in boosting the OEM Parts area
of its business, are reflected in the changing breakdown of sources of income as seen below, with Modified
Vehicles down from 37% of Total Revenues in 2003 to just 24% in 2005, and OEM Parts Sales rising to 29%
from 9% two years ago.

Year 2003 2004 2005

Total Revenues Bt.3,326 million Bt. 3,970 million Bt. 3,050 million
Service & Other Service & Other
Sales Income Modified Vehicles Sales Income Modified Vehicles Service & Other Modified Vehicles
403 M฿ 1,218 M฿ 463 M฿ 1,686 M฿ Sales Income 744 M฿
12% 37% 12% 42% 589 M฿ 24%
19%
Retail Vehicle Retail Vehicle
Sales Sales
1,016 M฿ 1,092 M฿ Retail Vehicle
31% 27% Sales*
693 M฿
23%
Dies & Jigs
OEM Parts 110 M฿ Dies & Jigs OEM Parts
Dies & Jigs SKD 317 M฿ 3% OEM Parts 143 M฿ SKD Export 875 M฿
31 M฿ Export 9% SKD Export 5% 6 M฿
148 M฿ 471 M฿ 29%
1% 341 M฿ 12% 0%
10% 4% Note: Retail Vehicle Sales includes some charges for
assembly and fitting of accessories
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 TRU OEM Parts Sales Trend 2003-2005

OEM Parts Sales % Growth

Mil. Baht % Growth

1,000 100%
900 85.74% 90%
800 80%
700 70%
600 60%
500 48.34% 874.93 50%
400 40%
300 471.05 30%
200 14.55% 20%
100 10%
317.54
0 0%
2003 2004 2005

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 TRU Future Strategy: Boosting Parts Business

• TRU’s strategy is to continue boost the contribution made by parts sales.

• Margins on OEM parts are lower than those on modified vehicles, typically not more than 15% gross
for standard pressed parts. However, parts orders tend to go with model life, and therefore provide
stability and volume.
• Opportunities to enhance margins by adding value, e.g. by incorporating design elements, sub-
assembly.
• Greater growth potential given continued relocation of multinational automakers to Thailand and their
increasing use of Thailand as an export manufacturing base.
• Automakers expanding production facilities – e.g. Toyota’s new plant at Chachoengsao, Nissan’s
production expansion and export plans. TRU will boost capacity in order to make the best use of all
opportunities arising from this growth.
• We have recently imported additional machines for Thai Auto Pressparts Co Ltd., the Group’s modern,
purpose-built press plant at Amata City Industrial Estate, Rayong.
• We have started selling plastic parts (fenders, etc.) made by Thai Auto Pressparts.

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 TRU Future Strategy: Boosting Parts Business

• OEM Sales team has been strengthened and enlarged.

• We have expanded our customer portfolio, adding a number of new names including Mitsubishi (2 nd
tier.) We will continue to broaden our range of customers.
• Upgrading and expanding die-making facilities at Thai Rung Tools & Dies Co. Ltd (formerly Thai
Rung General Motors.)
• Estimated capital expenditure: Thai Auto Pressparts Bt.500-600m + Thai Rung Tools & Dies Bt.120m.,
total Bt.620-720m. over the next three years.
• The ‘flat deck’ which we have been making for Isuzu for the last few years, has been performing very
well, with exports running to several hundred per month. We aim to maximize this further.
• Opportunities for developing new versions of ‘flat deck’ for other pick-up makers, both for export and
with a view to introducing this type of deck to the Thai market.
• We are branching out into new areas of parts making: - accessories, plastic parts – initial success of
“Parto” accessories for Toyota Fortuner, plans for Yaris accessories, initially for Thai market, but with
good prospects for exports in the future.

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 TRU Future Strategy: Modified Vehicles

• TRU will continue to develop and bring to market new multi-purpose vehicles, in line
with its long success story of meeting Thai customers’ needs for comfort, luxury and
versatility.
• Update on deliveries of TR Bangkok Limousine taxis
• We sold a total of 257 units in 2005 mainly under the joint TR-SME Bank project.
• Forecast for 2006 is 800-1,000 units.
• Margins on sales of taxis are similar to those on other modified vehicles.
• Medium-term aim is to capture 10%-15% of total taxi market. There are currently
around 80,000 taxis in operation. By law they must be replaced after 9 years, with
effect from 2006 (previously 12 years).
• Since February this year TR Bangkok Limousines can be registered as vehicles for
hire (“green plate”) which means they can now be sold to hotels, car hire companies,
etc.

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 TRU Future Strategy: Contract Assembly

• TRU is one of the very few Thai-owned fully integrated assembly facilities.

• TRU has experience in this field, e.g. in the past, many years assembling the Isuzu ‘Buddy’ van, and
currently, Komatsu excavator cabs.

• TRU is therefore well placed to win assembly contracts from newcomers to the Thai market.

• These newcomers are attracted partly by Thailand’s export potential, and by the benefits of AFTA and
various bilateral FTAs. TRU stands to gain from this.

• We are in discussions with such potential new foreign entrants.

• In any such agreement we would strive to develop a partnership where we could add value by utilizing
our experience and integrated facilities.

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 TRU Retail Vehicle Sales

• In 2005 TUC sold 180 vehicles.

• More than 130 (70%) were locally assembled Freelanders.
• Sales of Discovery and Range Rover, already expensive as CBU imports, suffered from the high
rates of excise tax applied to larger engine vehicles.
• Target for 2006 is 150 vehicles.

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 TRU’s Performance Prospects for 2006F

• In 2006F TRU will continue to derive a large proportion of its sales from modified vehicles
• Sales of the TR Bangkok Limousine will improve performance for 2006.
• The Company continues to strive to develop new models to meet consumer requirements.
• The PARTS DIVISION will again show strong growth in 2006F.
• Parts pressing and sub-assembly at Thai Auto Pressparts of Isuzu D-Max chassis frame parts, GM
Chevrolet Optra body parts, and various Toyota parts all continue to grow.
• We plan to develop new versions of the ‘flat deck’ currently made for Isuzu, for sale to other
makers.
• Komatsu, a long-valued customer, has embarked upon an interesting export expansion program in
which we are playing a meaningful part.
• Thanks to the sustained growth of the Thai auto industry, we have won additional stamping work
from other makers with capacity constraints, and continue to seek opportunities of this kind.
• We will continue to broaden our customer portfolio.
• We aim to boost OEM parts sales by a further 25%-30% in 2006
• As well pushing OEM parts, we are also moving into the field of ACCESSORIES, which offers
great potential, not only in Thailand but for export markets too.
• CONTRACT ASSEMBLY provides interesting opportunities which are being explored. 17