Following his success in Thailand, Mitsuji Konoshita is getting motorcycle finance moving in Cambodia
By Philip Heijmans
It goes without saying that motorbikes are the lifeblood of many people in Southeast Asia. Affordable and easy to maintain, motorbikes have for decades carried millions of people to and from their homes, making commerce and efficient transportation possible in places where it once didn’t exist.
They also represent an industry worth tens of billions of dollars. The global motorcycle manufacturing sector generated $74 billion from the sale of some 53m units in 2011, $45.2 billion of which came from the Asia-Pacific region, according to UK-based research firm MarketLine.
Where global revenue growth for motorbikes averaged just 5.7% a year from 2007 to 2011, positive economic forecasts in Southeast Asia will help accelerate that number to 12.9% by 2016.
That is where chief executive of Japanese investment firm Asia Partnership Fund Group (APF Group), Mitsuji Konoshita, comes in. Managing hundreds of millions of dollars in assets across a range of sectors including property, restaurants and even tennis schools, Konoshita turned his attention to motorbike financing in 2007, when his firm acquired a majority stake in Thailand’s struggling Group Lease (GL) Finance. It was a move that would years later result in the company expanding to become Cambodia’s first ever motorcycle leasing firm.
Offering loans for the purchase of motorbikes, Konoshita said that the acquisition seemed astute because of the steady sales of motorbikes in Thailand, and because the reconditioning and sale of reclaimed bikes bears virtually no cost and happens overnight. Finally, he said that the nature of the small loans issued to finance bikes would make the business resilient in the case of an economic downturn. He was right.
Thailand endured a series of economic setbacks stemming from domestic political disputes and the global crisis in 2009. Nevertheless, GL Finance endured, growing from about 30,000 customers in 2007 to 140,000 today.
Through the first nine months of 2012, GL Finance posted a profit of $8.25m by financing Yamaha, Suzuki and Honda motorbikes. The growth represents a year-on-year increase of 70%, according to a financial statement.
“After the takeover, I wanted to run the company conservatively because even though it would be easy to sell and finance the product, the return of the money would be slow,” Konoshita said.
“People pay for it because they don’t want to lose their motorcycle, even in times of crisis. They may not be able to pay off expensive housing loans, but for a moto they can pay it and still hang on to an important [mode of] transportation.
“Part of the appeal for us is not just the [collateral] we hold on the bike, but the liquidity of the mortgage as well,” he added. “When we resell a motorcycle [at reduced rates], we can sell it immediately. House or land mortgages on the other hand are very difficult to sell and can take years.”
With its success in Thailand, GL Finance launched operations in Cambodia in October last year after signing a seven-year exclusivity agreement with automotive giant Honda to offer financing on its line of motorbikes.
Honda currently sells 180,000 motorbikes each year in Cambodia, a figure they are planning on increasing to 350,000 to 400,000 by 2015, Konoshita said, adding that he wishes to finance half of those purchases.
“Our goal now between Cambodia and Thailand is to have expanded our client base to one million customers by 2015… While we have the contract to expand into Laos maybe next year,” he said.
Such a lofty goal does not come without problems. Konoshita said that only one in eight Cambodians over the age of 14 currently have a motorbike, while most of his 130 customers tend to pay with cash in order to avoid accumulating debt.
“This is the first time for them to use financing and they don’t have experience with it. The culture has to change,” he said. “However, Thailand was like this 20 years ago and now everybody uses [financing]. In this time here, things are moving quickly and in one or two years things will change.”
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