Union Auction Plc (AUCT), which listed on the Market for Alternative Investment (MAI) in August 2013, is Thailand’s largest automotive vehicle auction company, with coverage throughout the country. Deputy managing director Varunyoo Sila discusses the company’s strategy and outlook.
Please explain Union Auction’s history.
We began in August 1991 under the management of Thepthai Sila. He saw the potential of the automobile auction services business for Thailand, as the industry was still in its infancy compared with developed markets such as the US and Japan.
We were the first in Thailand to conduct open automobile auctions, and because we used a transparent auction process, the Financial Sector Restructuring Authority assigned us during the 1997 Asian financial crisis to conduct auctions for all types of properties of insolvent financial companies. We’re the only Thai firm, and only the second in Asia after one in Japan, to become a member of the US-based National Auto Auction Association. Over the years, we’ve expanded our locations and offerings to include other types of assets, in line with customer demand. We also listed on the MAI to enhance the company’s brand and transparency and fund our expansion.
Please explain Union Auction’s business.
We are an intermediary that conducts auctions of all types of properties as well as other auction-related services. The latter include transport of properties to be auctioned, helping bidders to seek funds by liaising with financial firms and consignment of properties for which bidding was not successful. Today we have more than a 50% market share with 15 bidding sites and 26 property storage facilities in 24 provinces, giving us the highest coverage in the business. Automobiles represent the largest portion of assets auctioned at nearly 90%, with the rest being motorcycles and other assets. Last year, we transacted more than 100,000 units.
Who are Union Auction’s customers?
Our customers are both the suppliers and the purchasers of assets. On the supply side we work closely with entities such as financial institutions and leasing companies that have seized automobiles, car rental companies with vehicles that have reached the end of their useful economic lives, general businesses with company cars, used-car “tents” or garages and individuals who wish to dispose of their vehicles. On the purchaser side, 70% of our customers are used-car “tents” or garages and 30% end-users. We’re also proud of the fact that 70% of our customers are repeat customers that know us and our services well.
What differentiates Union Auction from its competitors?
Loyalty and trust are the main factors, and this is achieved only through transparency, fair practices and the ability to service our customers’ needs. We also focus on the key details such as ensuring the vehicle is officially registered and that the purchaser will transfer the payment. We focus on acquiring a greater variety and quantity of properties, typically at 70% of our maximum capacity, in order to attract more bidding, thereby increasing the success rate of the auction and promoting fair price competition.
What are the biggest risks facing your business?
We have insurance for all potential risk factors such as fire, floods and theft. Also, we maintain a policy of not purchasing land for business. All the sites where we conduct business, totalling 300 rai, are rented, giving us the flexibility to shift locations and still have our customers follow us to any new location.
How will the Asean Economic Community affect your business?
We have studied international expansion and believe opportunities exist throughout the region and the world. However, we have to be confident that market conditions, demand-supply conditions and economic development are in the right stage for us to enter and be profitable.
Where do you see Union Auction in five years?
Our goal continues to be to expand the number of automobiles on offer, the customer base of bidders and the categories of auctioned assets. We began in 1991 with three employees, now have more than 200 and are confident we can double our transactions to 200,000 units annually in five years. The focus is also on how to use technology to ensure we can maintain our low-investment approach. We have already expanded into holding e-auctions with live streaming and would like to take this further to reach more customers. Finally, we intend to ensure we maintain our transparency, fair practices and high level of service quality to ensure the loyalty and trust of our customers.
Source: Bangkok Post