ANNUAL REPORT 2007 รายงานประจำปี - IR Plus

Risk associated with competition within car industry
With free trade and low barrier to entry within car industry in Thailand, importing cars for domestic distribution
attracts a lot of player into the market. However, most imported cars are high priced ones, hence, consumers
who look for these type of cars are those with large purchasing power, and those who prefer reliable dealers
with excellent after sale service. Accordingly, the Company, with more than 16 years experience in this
industry, has more advantage which can complete to other domestic dealers within grey market. The quality
and standard of both pre- and after sale service network that have been set up in the similar standard to all
showrooms and service centers.
Apart from the competition among domestic grey market dealers, the business of the Company may adversely
and materially be affected if major car manufacturers, with large capital fund, decide to play parts in the
market the Company is concentrated on. However, there is a very small chance that those car manufacturers
will jump in and compete with niche market dealers on the same type of car, due to large marketing and
operation cost required for the sales of one additional type of car.
Furthermore, the Company may be affected from the participation of the Company’s existing suppliers in the
retail market as those suppliers have advantages in supply availability and access and have larger capital
fund. However, the chance of such suppliers to jump into retail business is very small due to the huge capital
investment for establishing full functions of showroom, car services center, marketing, and operating
expenses. The expertise in retail market is the critical requirement for competition, thus, the probability that
such suppliers whose experience are in the wholesale market will enter into the retail sales in considered low.
Inventory risk
For business operation as a car dealer, the Company requires to purchase some of cars for display at all
showrooms for demonstrating to customers and for trading stock which can be promptly sold to customers.
With this, the Company is liable to risk associated with non-popular inventories, especially new model that the
Company never previously orders for sales. In such cases, the Company may have to sell those cars at the
lowered values to eliminate outdated stock which may affect the Company’s operational performance.
However, the Company, with careful consideration in importing the leading and luxurious cars, has an
experience working teams to track the domestic and foreign auto market movement and always conduct
market research to select the cars that suit customers’ preference of lifestyle. For the new model of cars that
the Company has never imported for sale, the purchased volume is small for market testing. If the products
have passed the market testing process and match the customers’ demand, the Company will order such
products to match the customers’ demand.
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