Phraram 3 Honda Cars Co, Thailand's largest Honda distributor, is beefing up its car rental business to offset tepid domestic car sales.
The company plans to have 1,000 fleet cars and add 13 more branches nationwide with a three-year business plan projecting revenue of 200 million baht by 2018.
Managing director Kiat Tangtrongsakdi said its affiliated firm Chic Car Rent operated 300 fleet cars and four branches in Bangkok, Chiang Mai, Pattaya and Phuket airports. It plans to increase its fleet to 500 vehicles and add two more branches by year-end.
The new branches will be in Suvarnabhumi airport and in Udon Thani province.
"Despite sluggish new sales in the automobile industry the past two years, the car rental business still boasts potential growth of about 10% a year, driven by demand from corporate firms and tourists," Mr Kiat said.
Founded in 2005, Chic Car Rent kept a low profile, as the parent firm focused on distributing new and used cars.
Mr Kiat said Chic Car Rent expected revenue would grow to 120 million baht next year from 90 million this year, with corporate clients accounting for half.
"Phraram 3 does not have any plans for a new outlet, as we'll wait for a recovery in a few years," he said. "We must diversify risk by focusing on other potential business."
Mr Kiat predicts new car sales will decline to between 800,000 and 850,000 vehicles this year from 881,832 in 2014, citing a 15.9% dip in the first five months to 308,784.
Phraram 3 delivered 2,826 vehicles to customers in the first five months, up by 54.2%. Mr Kiat expects the company will sell 7,500 vehicles this year, up by 39%, as Honda forecast sales growth of 10% to 120,000 vehicles.
Last year, Phraram 3 sold 5,400 vehicles, down 50% year-on-year, similar to Honda in Thailand. For the first five months this year, Honda's sales rose 22.7% to 46,875 cars.
Phraram 3's revenue from new car sales is expected to rise to 7 billion baht this year from 6 billion last year.