Thaco acquires South Korean auto plant

Truong Hai Auto Joint Stock Co., or Thaco, has spent US$3.5 million taking over a 51% stake in the specialized vehicle manufacturing company Soosung of South Korea.

With this acquisition, Thaco has officially added specialized automobile manufacturing and trading to its business fields, after having developed production and assembly of trucks, buses and sedans.

Thaco has sent 22 engineers to the specialized automobile factory of Soosung. The factory will produce almost all specialized vehicle lines, such as tank trucks, waste compaction vehicles, concrete mixers, stair cars and crane cars, for domestic consumption and export to ASEAN countries.

Nguyen Mot, communication director of Thaco, said with the major stake in Soosung’s factory, Thaco will receive technology and key components transferred from Soosung to serve production of specialized vehicles in the factory in Vietnam.

Currently, most specialized vehicles in use in Vietnam are imported or remodeled from other vehicles.

Thaco is finalizing the procedures to develop a Hyundai auto engine plant in Quang Nam. The automaker has received the technology of Hyundai Group to invest in the plant with an annual output of 20,000 four-liter diesel engines in the first phase, worth US$104 million in investment capital.

Leaders of Thaco and Hyundai signed a cooperation agreement on this project in November last year. Under the agreement, Hyundai will transfer manufacturing technology of its engines to Thaco.

In the first phase, the factory will produce engines with capacity of 68-155 HP and localization rate of 40%, meeting the Euro 3 emissions standards applicable to trucks, buses, ships, agricultural machines and other industrial uses.

The total investment for the auto engine plant is US$200 million, including US$400,000 for technology transfer and US$50 for every engine produced in Vietnam.

At the annual shareholder meeting last Friday, Thaco reported the company had sold over 32,400 vehicles in 2011, equal to a 29% market share, making Thaco the leading auto firm in Vietnam last year.

The auto firm earned VND11.6 trillion in revenue last year, with after-tax profit of VND669 billion, and paid dividends at 18% in cash.

Thaco has set a target to sell some 31,700 vehicles this year, fetching VND12.3 trillion in revenue. In the first quarter, the company sold over 5,500 vehicles, remaining in the top position of the members under the Vietnam Automobile Manufacturers Association (VAMA).

Also at the shareholder meeting last Friday, Thaco said the Truong Hai Star shipwreck caused a loss of more than US$3.25 million, including 64 vehicles on board the sunken ship worth some US$841,300, and the ship itself and other damages worth over US$2.4 million.

However, as the ship and the vehicles on board are covered by insurance, the accident leaves no impact on the company’s business plan. After receiving indemnity from the insurance firms, Thaco will publicly treat the vehicles sunk together with the ship, not bringing them into its sales network.