pakistan automobile industry industrial analysis biieng shred to help others

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2. Participants
• Hafiz Awais
• Rai Bilal Mushtaq
• Ali Javed
• Naveed Shoukat
• Abdul Rafah
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3. Automobile
Industry Analysis
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4. AUTOMOBILE INDUSTRY
An industry that produces automobiles and
other gasoline powered vehicles, such as
buses, trucks, and motorcycles.
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5. INTRODUCTION
• Started in Pakistan when the first automobile plant
was set up in May 1949 by General Motor & Sales
Co
• According to Ministry of Industries, Pakistan
produced its first vehicle in 1953, at the National
Motors Limited
• Manufacturers from the US collaborated with
Pakistani businessmen to set up; Ali Automobiles to
manufacture Ford Products in 1955
• The end of the seventies all automobile assembly in
Pakistan stopped, until 1983 when Pak Suzuki started
manufacturing their vehicles in Pakistan.
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6. INTRODUCTION(CONT.)
• The Industry highly regulated in early 1990’s
• Further Toyota Indus Motors was set up in 1990,
followed by Honda
• Key driving sector of the economy
• Motorcycle production hit the country's record
level of over 1.5 million units in 2010-2011.
• Car industry saw boom in 2006-2007 when sales
touched record peak of 180,834
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7. MARKET STRUCTURE
• The auto industry is considered to be an
oligopoly.
• Today there are 15 companies in production of
which 5 are automotive producers and 10 are
commercial vehicle producers.
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8. MAJOR ASSEMBLERS
• Toyota
• Indus Motors
• Pakistan Suzuki
• Honda Atlas
• Diwan Farooq Ltd
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9. Analysis Of the
Industry
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10. PEST ANALYSIS
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11. POLITICAL:
– Government imposes limit on the number of parts to be imported
– Legislations require locally made parts to be international
standards compliant
– Fluctuations of exchange rates & oil prices
– Foreign ownership regulations and technological cooperation’s
with other governments.
– Trade and tariff policy related motor vehicles
– Motor vehicle insurance policy
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PEST ANALYSIS

12. LEGAL:
– Business law protects companies from unfair competitions.
– Legislation protects the interests of society.
– Law To protect consumers from unfair business practices.
– At present vehicle imports are subject to six ‘fixed’ taxes
• Ports Authority Levy (PAL) of 5%,
• Nation Building Tax (NBT) of 3%,
• Social Responsibility Levy (SRL) of 1.5%,
• Road and Infrastructure Development Levy (RIDL) of 2.5%,
• Value Added Tax (VAT) of 20%
• Customs Import Duty (CID)
• Excise Duty.
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PEST ANALYSIS

13. ECONOMIC:
– Rise in inflation car manufacturers to increase their prices
– As parts are imported, the Exchange rate should effect
– High Rates of Oil & Gas
– Increase in income level
– Interest Rate also affects car prices
– Increase in Imports
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PEST ANALYSIS

14. SOCIAL:
– Car Culture
– Fashions and taste
– Increased desirability of Customized cars.
– Consumer Attitude
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PEST ANALYSIS

15. TECHNOLOGICAL:
– Electronically Controlled
– Gas-electric hybrid and Hydrogen-powered
fuel
– New technologies lead to growth in the
sales figure.
– Consumer satisfaction.
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PEST ANALYSIS

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Porter Five Forces

17. THREAT OF ENTRY (weak)
• Large amount of capital required
• Few legal barriers protect existing companies from new
entrants
• All automotive companies have established brand image
and reputation
• Products are mainly differentiated by design and
engineering quality
• It is very hard to achieve economies of scale for small
companies
• Governments often protect their home markets by
introducing high import taxes
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Porter Five Forces

18. BUYER POWER (Strong)
• There are many buyers
• Corporate or governments usually buy large
fleets and can bargain for lower prices
• It doesn’t cost much for buyers to switch to
another brand of vehicle or to start using
other type of transportation
• Buyers can easily choose alternative car
brand
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Porter Five Forces

19. SUPPLIER POWER (Weak)
• Large number of suppliers
• Some suppliers are large but the most of
them are pretty small
• Materials widely accessible
• Suppliers do not pose any threat of
forward integration
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Porter Five Forces

20. THREATS OF SUBSTITUTES (Weak)
• There are many alternative types of
transportation, such as bicycles, motorcycles,
trains, buses or planes
• Substitutes can rarely offer the same
convenience
• Alternative types of transportation almost
always cost less and sometimes are more
environment friendly
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Porter Five Forces

21. COMPETITIVE RIVALRY (Very Strong)
• Moderate number of competitors
• If a firm would decide to leave an industry it
would incur huge losses, so most of the time
it either bankrupts or stays in automotive
industry for the lifetime
• Industry is very large but matured
• Customers are loyal to their brands
• There is moderate threat of being acquired by
a competitor
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Porter Five Forces

22. Key Success Factors in the
Automotive Industry
• The key success f actors of any industry are indicators or
milestones that measure your business achievements and help
determine how well you are progressing towards your goals and
objectives.
Following are the KSFs f or the auto industry of Pakistan
• Positive Image
• Low Cost Provider
• Distribution Network
• Cash Flows
• Compliance
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23. Key Success Factors in the
Automotive Industry (Cont…)
• Flexibility
• Establishment of export markets
• Use of most efficient work practices
• Effective cost controls
• Access to the latest available and most efficient
technology and techniques
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24. TOYOTA
• Founded in 1937, Toyota Motor Corporation is a Japanese
company that engages in the design, manufacture,
assembly, and sale of passenger cars, minivans,
commercial vehicles, and related parts and accessories
primarily in Japan, North America, Europe, and Asia.
• Current brands include Toyota, Lexus, Daihatsu and Hino.
• Toyota Motor Corporation is the leading auto manufacturer
and the eighth largest company in the world.
• As of March 31, 2013, Toyota Motor Corporation’s annual
revenue was $213 billion and it employed 333,498 people.
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25. SWOT ANALYSIS OF
TOYOTA
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26. Strengths
• Strong market position and brand recognition
– ) Market Share
• 45.5% in Japan
• 12.2% in North America
• 13.4% market share in Asia (excluding Japan and China)
• 4.3% market share in Europe
• Strong focus on R&D
– Improved
• the functionality,
• Quality
• Safety
• environmental compatibility
• Extensive production and distribution network
– 50 manufacturing companies
– 27 countries and regions besides Japan
– produced 3,940,000 vehicles in Japan
– 3,495,000 vehicles across other manufacturing locations

27. Weaknesses
• Product recalls could affect brand image
– In 2011, Toyota recalled 111,000 models of Toyota and Lexus
brands’ vehicles due to shutdown of the hybrid system
– Toyota recalled 181,000 vehicles in Japan in relation to
abnormal noise and oil leakage
– In addition, the company was involved in government
investigations related to product recalls.
• Declining sales in key geographic segments
– North America, Asia, Europe and other geographic region, which
together accounted for 60.8% of the total revenues of the
company
• Poor allocation of resources as compared to peers
– Honda Motor's ROE was 4.8%, while Nissan Motor's ROE was
8%
– In contrast, Toyota's ROE was 2.7%

28. Opportunities
• Growing global automotive industry
– Downturn in 2008-2009
– Rebound in 2011-2012
– Global automotive manufacturing industry grew by
8.9% in 2012 to reach a value of $1,563.9 billion
• Toyota poised to benefit from growing partnership
with BMW
– Strategic collaboration on technological fields i.e
• Fuel cell system,
• Joint development of architecture
• Lightweight technologies
• Strong outlook for the global new car market

29. Threats
• Intense competition
– Intensifying in light of continuing globalization
• Appreciating Japanese Yen a major concern
– More export charges
– More transaction and transportation cost
• Natural disasters could impact production
structure
– Earthquake
– Flood

30. MARKETING MIX
Products PRICE
Place Promotion
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31. MARKETING MIX
Products
1. Cars (Corolla, vitz, camry, etc.)
2. Trucks/SUV’s (Land Cruser, prado,
Highlander, etc.)
3. Lexus cars & SUV’s (Mark x, LX,
GX)
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32. Price
1. Prices are varying in order to the vehicle
and color.
• White (pearl white) and black colored vehicles.
• And in same car model, price is varying from grade
to grade
• Brand name.
• Used technology and country of manufacturing.
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33. Place
1. Dealership
2. Placement through Banks
3. Dealers in Lahore i.e Walton Moters, ravi moters.
4. Dealers in Karachi i.e Eastern Moters, Westren Moters ,etc.
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34. Promotion
Toyota also taking advantage through advancement of technology
• Indus Motors Company has been applying promotion strategies in
many ways
• By ads
• Giant Billboards at Bypass and super highway
• Sponsors in Games
• Participation in exhibitions
• Display centers
• Display in big Public market
• Brochures, name cards, etc
• Via emails
• web banners on famous and expensive sites of internet
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35. RECOMENDATIONS
• Toyota should continue to do efforts to strengthen its
management platform and raise corporate value and
sales.
• Toyota should promote business and cost structure
reforms to realize a solid management platform so that
it can respond quickly to the changing market
circumstances.
• To support consolidated management on a global scale,
Toyota should enhance the power of the workplace and
diversity in the use of human resources.
• Toyota should maintain a streamlined structure through
the reduction of fixed costs. 35

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