Caltex expanding in Thailand, Bridgestone also investing

 

The Thai unit of United States-based oil company Caltex is planning on adding 30 new service stations in Thailand this year in a bid to gain ground on local market leaders, while Japanese firm Bridgestone has won Board of Investment approval to expand its aircraft tire factory in the Kingdom.

Caltex said it would invest $18.4 million to build new stations and renovate existing stations. The investment, however, would be made after the company completes a feasibility study on what ownership model would best suit its goals.

Caltex currently has 375 service stations around Thailand with over 95 percent of them under the retailer-owned, retailer-operated, or RORO, model.  The study would determine whether or not Caltex should switch to a more direct ownership model.

“We want to know if we increase the number of stations we own and run ourselves to be equal to the number of our RORO stations, this will improve our business margin, corporate image and market share,” said Boonyarit Srionkong, manager for policy and public affairs at Caltex.

His statement suggests that if the study supports direct ownership, or company-owned and operated, known as the CORO model, Caltex could be investing in a major expansion in Thailand in coming years.

The service station business has been getting tougher over the past decade, Boonyarit said, forcing all players to continually modify their strategies. Most companies in the sector are using both models even though the CORO model allows the oil company full control of the business.

The direct ownership model requires a major injection of capital for expansion, however, while the RORO model facilitates a more rapid increase in a network.

“We have to admit the investors who run their petrol stations are doing a good job, and as they are local people, they know what their clients need. But we have to keep looking for ways to improve our business,” Boonyarit said.

The Bangkok Post reported that state-owned PTT is the market leader with a 40 percent share, followed by Esso and Bangchak at 15 percent each. Third place is a close battle between PT, Shell and Caltex, with their market shares ranging between 12 percent and 13 percent.

Meanwhile, Bridgestone Corporation of Japan has won Board of Investment (BoI) approval to invest $180 million to expand its factory in Thailand that produces tires for aircraft.

Once completed, the factory will be capable of rolling out 109,000 tires each year and serve as the company’s hub for tire production in the region. It will complement the government’s plan to make Thailand the center for aircraft maintenance, repair and overhaul in the region under the Thailand 4.0 national development strategy to achieve a more advanced economy.

“The expansion plans of Bridgestone reflects Japanese investors’ confidence in Thailand,” said BoI secretary-general Hirunya Suchinai.

Photo courtesy of Caltex