Cambodia’s fundamentals makes Isuzu think big

Khmer Times
MAY KUNMAKARA

Akira Odagaki. KT/May Kunmakara

Isuzu is coming back big to Cambodia, with the Japanese car-maker convinced that it can corner at least 30 percent of the consumer market in about five years. Akira Odagaki, general manager of Isuzu’s representative office for Cambodia and Laos, recently spoke to Khmer Times' May Kunmakara about the company’s plans and challenges ahead.

Isuzu was one of the better known brands in Cambodia for SUVs and light commercial vehicles a decade ago. The brand name then faded away. Now, it seems to be making a comeback. Why is it so?

Mr. Odagaki: The reason is quite clear. We see a big potential in Cambodia and that’s why we are now coming in big-time. Isuzu has been in the region since 1957, when we started our business in Thailand. It’s now the top brand there for SUVs and light trucks.

Asean has now almost 600 million people – and this is a huge potential market for Isuzu to expand its sales. Cambodia’s economic growth, too, has been very impressive – and now, it’s one of the fastest growing economies in Asean. These are all the plus points, we tend to look at.

Isuzu Motors Limited’s sister company Tri Petch Isuzu Sales has agreed to oversee the Cambodian market and expand sales in the country.

There are several luxury auto brands in the country. So what’s going to be your market share?

Mr. Odagaki: It’s good for customers to have a variety of options. Our assumption, based on market research, is that most of the upper-middle class are in Phnom Penh – and that’s the consumer base we’re targeting.

However, we think the size of the luxury car market is not that large in the country. Considering the usage of vehicles and the country’s road conditions, we expect SUVs to sell well.

Though Cambodia’s economic performance and GDP growth has been impressive in Asean, it, however, still lags behind other Asean countries when it comes to developed markets. So how can that translate into increased sales for Isuzu?

Mr. Odagaki: Last year, Cambodia imported around 7,000 new cars. If we look at neighboring Laos, that country imported 27,000 new cars last year. And the population of Laos is smaller than Cambodia.

On the other hand, Cambodia imported 70,000 used cars last year. The small volume of imports for new cars is due to the fact that there is an unregulated used car market in the country. The Laos government imposed restrictions on the import of used cars several years ago. And that has worked. It also explains why Laos imports so many new cars.

The GDP of Cambodia is almost $1,000, and it is still far behind neighboring countries. However, the GDP of Phnom Penh is estimated to be over $4,000.

Phnom Penh City is built for cars and I believe the market for new cars will be better when the Cambodian government regulates the used car market.

Does your company provide after-sales services? Are spare parts available in the country?

Mr. Odagaki: We set up an Isuzu representative office in Phnom Penh last year but the office does not provide any maintenance service or deal in spare parts.
We have appointed a dealer called K. Cambodia, and this dealer has a showroom located in front of the Phnom Penh airport. Our dealer provides maintenance services and also has genuine Isuzu spare parts.

The gray market for illegal car imports is pretty large in Cambodia. How challenging is that for Isuzu?

Mr. Odagaki: It is challenging indeed. It is our hope that the Cambodian government will seriously look into this issue. We expect the government to continue strict monitoring and control.

Recently, the government increased tax on new cars. Do you think this will affect your business plans?

Mr. Odagaki: When the Asean Economic Community is implemented, there will be zero duties on vehicles produced in Asean countries. However, there is a special tax imposed by Cambodia which has increased by 10 percent. As a result of that, the prices of some of our models have increased by three to five percent. It’s not a serious impact on us.

What is your outlook for car sales in Cambodia in the future?

Mr. Odagaki: We forecast a stable growth for new automobiles in Cambodia. For us, at Isuzu, we expect an over 10 percent market growth overall in the country. In five years’ time, we hope to have a 30 percent market share of the light commercial vehicle market. We also anticipate to sell around 1,000 D-MAX and mu-X models a year, in five years’ time.