close

Tan Chong and Mitsubishi Fuso announce agreement
on truck production and distribution in Thailand

December 7, 2009


•  Tan Chong to acquire and operate Mitsubishi Fuso truck production plant near Bangkok
•  Mitsubishi Fuso also selects Tan Chong as wholesale distributor in Thailand
•  Companies combining strengths for growth, customer support and value chain efficiency in Thailand market

SINGAPORE/KAWASAKI [7] December 2009 – Tan Chong International Limited (“Tan Chong” or the “Group”)(SEHK Stock Code: 693), one of Asia’s largest listed motor distribution groups and Mitsubishi Fuso Truck and Bus Corporation (MFTBC), one of Asia’s leading commercial vehicle manufacturers, today announced agreements on truck production and distribution in Thailand.

Under terms of the agreements, Tan Chong will acquire the production operations of MFTBC’s subsidiary Mitsubishi Fuso Truck (Thailand) Co., Ltd. (MFTT) at Lardkrabang. The deal includes MFTT's 1,000,000 square feet truck production plant, tools and equipment as well as its some inventories.

Tan Chong will then assemble Fuso trucks for Thailand at the same site, which is located 40 kilometers east of Bangkok. There is sufficient capacity to be used to consolidate manufacturing of other Tan Chong truck assembly requirements in Thailand to enable savings from economies of scale.

At the same time, MFTBC will grant to Tan Chong local distribution rights for Fuso trucks in Thailand.

The agreements, to take effect by January 1, 2010, are intended to enhance growth, customer support and value chain efficiency in the Thailand market for both companies.

“This transaction strongly signals MFTBC’s confidence in our capabilities to continue delivering the high standards demanded of its products,” said Mr. Masatoshi Matsuo, Director Tan Chong International Limited. “We believe Tan Chong is a suitable partner that can strongly contribute to the success of the Mitsubishi Fuso truck business in Thailand.”

“We look forward to combining strengths with Tan Chong to further develop the Mitsubishi Fuso Thailand business in support of our customers,” said Mr. Takeshi Noguchi, MFTBC Head of Market Management ASEAN. “Tan Chong already has wide distribution and manufacturing experience in Thailand. Therefore, MFTBC will be positioned to achieve our dual objectives of growth in Thailand and greater efficiency in our manufacturing network.”

MFTBC currently conducts manufacturing and distribution through its wholly-owned subsidiary MFTT. With these agreements, the functions of MFTT will transfer to Tan Chong. The move is part of MFTBC’s realignment plan, previously announced on May 13. According to the plan, the company is realigning manufacturing operations for greater plant utilization.

Long-Term Development Plans

Thailand and Southeast Asia overall form an important part of both company’s long term development plans.

For Tan Chong, the Acquisition is a strategic move to strengthen the Group’s presence within Thailand, an automotive manufacturing heavyweight in Asia, and in the region. Leveraging on Thailand as its truck assembly and distribution hub, Tan Chong seeks to further scale up its capabilities in this business segment within Asia.

“We maintain a positive outlook on the market for heavy commercial vehicles, which is predominantly underpinned by demand from Asian industrials,” said Mr. Joseph Ong, Managing Director of Tan Chong International Limited. “Tan Chong, a home grown conglomerate steep in Asian culture and values, is well poised to benefit from such a demand, given its established position within the region. The Group will continue to pursue a highly targeted expansion plan, focusing on the developing markets of Asia.”

For MFTBC, the initiative will help build on the company’s leadership position in Southeast Asia, with greater manufacturing efficiency and expanded distribution in the key market Thailand.

MFTBC is already the commercial vehicle market leader in Southeast Asia. In the region’s largest market Indonesia, Mitsubishi Fuso holds a leading market share around 50 percent and also has strong positions in Singapore, Vietnam, Malaysia and the Philippines.

“Mitsubishi Fuso continues to see strong, long term growth prospects in Asia as a whole including our key markets in Southeast Asia,” said Mr. Kai-Uwe Seidenfuss, MFTBC Vice President, Sales & Service International. “Building on our strong position in the region, we plan to enhance our business in all aspects while focusing on delivering high quality, efficient commercial vehicles to our customers.”

Tan Chong’s Acquisition of MFTT’s Thailand factory assets, to be completed by January 2010, will be funded through a combination of internal resources and bank borrowings. It is expected to have no material impact on the Group’s financial performance for the year ending 31 December 2009.

About Tan Chong International Limited

Founded as a distribution business of passenger vehicles more than five decades ago, Tan Chong has continued to expand its geographical scope, as well as service and product offerings over the years. Today, the Group is highly-recognized for its manufacturing and distribution capabilities in heavy commercial vehicles and industry equipment in Asia.

Listed on the Stock Exchange of Hong Kong (“SEHK”) in 1998, Tan Chong International Limited (“Tan Chong” or the “Group”)(SEHK Stock Code: 693) is engaged in motor vehicle distribution, heavy commercial vehicle and industrial equipment manufacture and distribution, property investment, and other related businesses. The Group has an established presence in ten countries across Asia, and holds sole distributorships in major automotive brands in key markets within the region.

About Mitsubishi Fuso Truck and Bus Corporation

Based in Kawasaki, Japan, Mitsubishi Fuso Truck and Bus Corporation (MFTBC) is one of Asia's leading commercial vehicle manufacturers. In 2008, the company sold a total of about 197,700 vehicles including light-, medium- and heavy-duty trucks and buses. Daimler AG owns 85% of MFTBC shares and 15% of shares are held by various Mitsubishi group companies. MFTBC is an integral part of the Daimler Trucks Division of Daimler AG.




close