Tan Chong International's profit for the first half of 2024 decreased by nearly 90% due to Subaru's losses

Tan Chong International Limited (TCIL) - the owner of Motor Image, the Subaru distributor in Asia - recently sent their financial report for the first half of 2024 to shareholders. One of the concerning and alarming issues highlighted in the report is the 86.6% decrease in net profit after tax compared to the same period last year.

The main reason for this challenging situation of TCIL is the decline in sales, especially the failure in CKD (completely knocked down) markets like Malaysia and Thailand, as well as in CBU (completely built-up) markets including Taiwan, Singapore (where TCIL is also the Nissan distributor), and the Philippines.

TCIL and Subaru plan to close down multiple CKD plants in Southeast Asia next year (Photo: Paultan).

The decrease in sales is considered a major factor leading Subaru to decide to close down several CKD plants in Southeast Asia such as Thailand and Malaysia. This directly affects neighboring markets like Vietnam, which import cars from these countries.

In Subaru Vietnam's product lineup, the Forester is the only model imported from Thailand. The Japanese automaker's representative stated that authorized dealers in Vietnam will continue to sell the Forester imported from Thailand until the new generation imported from Japan is officially launched.

Subaru's sales in Thailand did not meet the distributor's expectations, despite the CKD plant being operational since 2019 (Photo: Autolifethailand).

Prior to 2019, the Subaru Forester in Vietnam was also imported fully built from Japan, with a high price of up to 1.4 billion VND. After switching to Thai imports, the price of the car decreased by nearly 400 million VND, helping to improve sales figures.

Currently, the Forester has a starting price of 949 million VND and a highest price of 1.199 billion VND, but often requires discounts of up to 200 million VND to stimulate demand. In the C-SUV segment, Vietnamese customers are still interested in products with competitive prices, given the ongoing economic difficulties.

For example, the best-selling Mazda CX-5 in this segment has a starting price of 749 million VND, equal to the high-end version of some B-segment SUV models. To compete with competitors, TC Motor adjusted the price of the Tucson from early April; in which, the standard version is now priced at 769 million VND.

The Subaru Forester is not selling well due to interior/exterior designs not appealing to the majority of Vietnamese customers. However, this is still the flagship model of the Japanese automaker in Vietnam due to its most accessible pricing (Photo: Gia An).

In addition to the Forester, Subaru Vietnam's product lineup also includes the Outback, WRX, and BRZ, all imported fully built from Japan. When shifting to imports from the land of the rising sun, the selling price of the Forester may increase significantly, returning to the challenging period before 2019.