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LATEST CGANGES IN AUTOMOBILE INDUSTRY Presents Group No: 03

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Content  <ul><li>Evolution of automobile industry, briefly </li></ul><ul><li>Changes in economic environment </li></ul><ul...

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EVOLUTION  <ul><li>Motorized vehicle  </li></ul><ul><li>In February 1902, Mr. E.G Money of Boustead Ltd, imported a steam ...

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Automobile Industry Analysis
Automobile Industry Analysis
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automobile industry

  1. 1. LATEST CGANGES IN AUTOMOBILE INDUSTRY Presents Group No: 03
  2. 2. Content <ul><li>Evolution of automobile industry, briefly </li></ul><ul><li>Changes in economic environment </li></ul><ul><li>Changes in technological environment </li></ul><ul><li>Changes in political environment </li></ul><ul><li>Changes in cultural environment </li></ul><ul><li>Changes in natural environment </li></ul><ul><li>The four P’s of auto mobile industry </li></ul><ul><li>Four C’s of Automobile industry </li></ul><ul><li>Market segmentation and the industry </li></ul><ul><li>SWOT analysis for automobile industry </li></ul><ul><li>PEST analysis </li></ul><ul><li>Recommendations for the automobile industry </li></ul>
  3. 3. EVOLUTION <ul><li>Motorized vehicle </li></ul><ul><li>In February 1902, Mr. E.G Money of Boustead Ltd, imported a steam car. </li></ul><ul><li>Used kerosene, 20M.ph </li></ul><ul><li>It took 1 ½ days to reach to Nuwara Eliya May 02, 1902 </li></ul><ul><li>First motorcycle </li></ul><ul><li>arrived in the island on January 20, 1903 </li></ul><ul><li>Belt driven from the engine to the rear wheel, had one speed, paddle </li></ul><ul><li>start, first ride from Colombo to Kandy. </li></ul><ul><li>First petrol car </li></ul><ul><li>imported to the island on May 2, 1905. </li></ul><ul><li>In first ride Sri Lankan people called it as a </li></ul><ul><li>mechanical animal. </li></ul>
  4. 4. <ul><li>CHANGES IN ECONMIC ENVIRONMENT </li></ul><ul><li>Income level of the consumers </li></ul><ul><li>Has increased in few years, therefore purchasing power gone up. So vehicle buying rate increased. </li></ul><ul><li>With that after introducing English numbers, people tended to buy vehicles. </li></ul><ul><li>People tended to buy leasing & finance facilities </li></ul><ul><li>Interest rates have decreased. </li></ul><ul><li>For leasing :- 2.65% per month, for 5years. </li></ul><ul><li>For finance :- 3% per month, for 4 years. </li></ul><ul><li>Importing of vehicles increased . </li></ul><ul><li>Motorcycles :- 100,000 (50 cc - 250 cc). </li></ul><ul><li>Auto trishaws (petrol) :- 80,000 </li></ul><ul><li>Small passenger cars (< 1000 cc) :- 12,000 </li></ul><ul><li>vehicles for the transport of goods (<5 tones) :- gone up by480% </li></ul><ul><li>Tractors :- grown up 152% . </li></ul>
  5. 5. <ul><li>changes economical environment </li></ul><ul><li>Increase in vehicle prices. </li></ul><ul><li>Importing of SUV’s, cars and vans increased. </li></ul><ul><li>Importing of super luxury vehicles has increased in last few years. </li></ul><ul><li>Government tax income was increased. </li></ul>
  6. 6. <ul><li>Changes in technological environment </li></ul><ul><li>Having concern about fuel efficient vehicle production. </li></ul><ul><li>Produced Hybrid cars. </li></ul><ul><li>Reasons </li></ul><ul><li>Fuel prices increased. </li></ul><ul><li>Material prices increased. </li></ul><ul><li>Produced Sri Lankan own car (Micro) </li></ul><ul><li>Developed new attractive car designs with </li></ul><ul><li>Comfortable interior. </li></ul><ul><li>Included more options.( P/W,P/M , auto lock, </li></ul><ul><li>auto parking, reverse sensors, touch start.) </li></ul><ul><li>First produced Micro trend </li></ul><ul><li>Merged with Ssang yong car company Korea. </li></ul><ul><li>Merged with Mitsubishi motors and Mercedes Benz . </li></ul><ul><li>Manufactured first double Decker in SL. (2008 August 14) </li></ul>
  7. 7. Changes in technological environment Interior of a normal (old) vehicle Interior of a new vehicle Car interior of Micro vehicle
  8. 8. <ul><li>Other related businesses grown up </li></ul><ul><li>Service stations </li></ul><ul><li>Vehicle security system installing services. </li></ul><ul><li>Vehicle stereo system installation services. </li></ul><ul><li>TV,DVD facilities. </li></ul><ul><li>Issues </li></ul><ul><li>Lack of high technological service stations. </li></ul><ul><li>(specially for Hybrid cars) </li></ul><ul><li>High prices of spare parts. </li></ul>
  9. 9. <ul><li>Changes in Political environment </li></ul><ul><li>Increase in business legislation </li></ul><ul><li>Business legislation has here main purposes. </li></ul><ul><li>To protect companies from unfair competitions. </li></ul><ul><li>To protect consumers from unfair business practices. </li></ul><ul><li>To protect the interests of society from unbridled business behavior. </li></ul><ul><li>Growth of Special - interest groups </li></ul><ul><li>special interest groups have increased over the past three decades. </li></ul><ul><li>Many companies have established public affairs departments to deal with these groups and issues. </li></ul>
  10. 10. <ul><li>Tax related automobile industry. </li></ul><ul><li>At present vehicle imports are subject to six ‘fixed’ taxes – </li></ul><ul><li>Ports Authority Levy (PAL) of 5%, </li></ul><ul><li>Surcharge of 15%, </li></ul><ul><li>Nation Building Tax (NBT) of 3%, </li></ul><ul><li>Social Responsibility Levy (SRL) of 1.5%, </li></ul><ul><li>Road and Infrastructure Development Levy (RIDL) of 2.5%, </li></ul><ul><li>Value Added Tax (VAT) of 20% and three ‘varying’ taxes – Customs Import Duty (CID), </li></ul><ul><li>Cess, </li></ul><ul><li>Excise Duty. </li></ul>Taxes on engine capacity Engine capacity Tax rates Below 1000 cc 187% on CFI Between 1000CC-1600 CC 217% 1600cc-2000cc above 2000cc 290% Above 2000cc 299%
  11. 11. <ul><li>Motor vehicle insurance policy in Sri Lanka </li></ul><ul><li>legislation related insurance of motor vehicle. </li></ul><ul><li>The ‘Act Only’ Motor Insurance Policy </li></ul><ul><li>‘ Third Party Only’ Motor Insurance Policy </li></ul><ul><li>‘ Third Party, Fire and theft’ Motor Insurance Policy </li></ul><ul><li>Comprehensive’ Motor Insurance Policy </li></ul><ul><li>Trade and tariff policy related motor vehicles </li></ul><ul><li>Assisting Preferential Trade Policy Formulation and </li></ul><ul><li>Liaise with private sector and Trade and Tariff Cluster on tariff policy issues. </li></ul><ul><li>Review of import tariff policies and boarder measures periodically </li></ul><ul><li>Attending to public appeals on trade and tariff policy issues </li></ul><ul><li>Maintenance of continuous dialogue with departments & Ministries. </li></ul>
  12. 12. <ul><li>Advantages of political environment </li></ul><ul><li>Protect consumer business and society. </li></ul><ul><li>Govt. can control the industry . </li></ul><ul><li>Disadvantages of political environment </li></ul><ul><li>Govt. increase the taxes vehicle demand will reduce . </li></ul><ul><li>If political environment have lots of crisis ,it will affects to automobile industry. </li></ul><ul><li>World economic /political crisis affects to industry directly and indirectly. </li></ul><ul><li>regional trade agreements. </li></ul><ul><li>Govt. increase fuel rates it is strongly affect to decrease demand of motor vehicle. </li></ul>
  13. 13. <ul><li>Changes in Cultural environment </li></ul><ul><li>Mainly consider the automobile culture </li></ul><ul><li>Merged with other companies in the industry </li></ul><ul><li>Kyron vehicles are assembled in Sri Lanka by the Micro. </li></ul><ul><li>Collaborating with the Mercedes Benz, Mitsubishi Motors and Ssangyong Car Company in Korea </li></ul><ul><li>Arrival of new brands to the industry </li></ul><ul><li>Lexus GS450H, Honda Insight, Toyota Prius, and Hummer newly arrived into the Sri Lankan market. </li></ul><ul><li>Korean vehicles such as KIA, HYUNDAI are coming up in the local market. </li></ul>
  14. 14. <ul><li>Reduction of Overall global automobile production by 12.5% in 2009 </li></ul><ul><li>Sri Lanka imports new /second hand vehicles from the other countries viz; Japan, U.S.A., Korea and EU. </li></ul><ul><li>It influence to local market and the vehicles prices were increased. </li></ul><ul><li>Entering of low priced vehicles </li></ul><ul><li>motorcycles imported show exceptional growth of 97% </li></ul><ul><li>Trishaws (petrol)grew by 194% </li></ul><ul><li>diesel auto trishaws in 2010 , 427 percent % </li></ul><ul><li>Small cars such as Maruti, Alto import also increased. </li></ul>
  15. 15. <ul><li>Motorcycles imported show exceptional growth of 97% </li></ul><ul><li>Auto trishaws (petrol) importation grew by 194% </li></ul><ul><li>Auto trishaws importation (diesel) increased by 427%. </li></ul><ul><li>Cars importation (below the engine capacity of 1000 cc) exceeded 12,000 in 2010/2011 years. </li></ul><ul><li>Very hard to collect the money for the customer </li></ul><ul><li>Most of the people unable to pay lease installments . </li></ul><ul><li>Registration vehicle increase in the 2011 </li></ul><ul><li>The vehicle market in Sri Lanka went through a bad patch a few years ago due to a 300 percent import duty, highest in the world. But , </li></ul><ul><li>New registrations went up 75 percent to 284,991 from January to October last year. </li></ul>
  16. 16. Registration of imported new cars rose 61%in October. Trucks and other transport vehicles by around 57% from January to October 2010. VAT component on imported new vehicles was slashed to 12% from 20% in 2011 budget. The 70% duty on used cars was reduced to 55% In 2007 to 2009 reduced the importation of vehicles. Class of vehicles 2007 2008 2009 Motor cars 22,603 20,237 5,762 Motor tricycles 43,068 44,804 37,364 Motor cycles 182,508 155,952 135,421 Buses 2,637 1,180 739 Dual purpose vehicles 5,193 2,856 1,280 Lorries 18,408 14,038 8,225 Land vehicles-tractors 21,346 24,357 13,951 Land vehicles-trailers 2,129 1,775 1,333 Total 297,892 265,199 204,075
  17. 17. <ul><li>Changes in Natural environment </li></ul><ul><li>Due to the Tsunami in Japan we had a considerable impact on our industry as well as theirs. </li></ul><ul><li>Toyota motors, Honda motors, Nissan, Subaru and Mitsubishi close their plants. </li></ul><ul><li>People feared to buy Japan vehicles. </li></ul><ul><li>The fuel scarcity </li></ul><ul><li>If the fuel sources are limited there will be a shortage in petrol, diesel and other lubricants also. </li></ul>
  18. 18. <ul><li>The four P’s of auto mobile industry </li></ul><ul><li>Product </li></ul><ul><li>In 1990’s there were small number of vehicles models. </li></ul><ul><li>But now there are broad variety of vehicle models </li></ul><ul><li>Toyota: - Yaris, Camry, Premio, Prius, Passo, Axio, Vits, Vios, Belta etc. </li></ul><ul><li>Nissan: - Bluebird Sylphy, Tida, Navara cab, Dualis, </li></ul><ul><li>Mazda: - Mazda 3, Dimio, Exela </li></ul><ul><li>Micro: - Rexton, Kyron, Panda, Trend </li></ul><ul><li>TATA: - Indigo, Indica </li></ul><ul><li>KIA :- Rio, Sorrento, Carans </li></ul>
  19. 19. <ul><li>Price </li></ul><ul><li>Prices are varying in order to the vehicle color. </li></ul><ul><li>White (pearl white) and black colored vehicles. </li></ul><ul><li>And in same car model, price is varying from grade to grade </li></ul><ul><li>Brand name . </li></ul><ul><li>Used technology and country of manufacturing. </li></ul>
  20. 20. <ul><li>Second hand market for the vehicles. </li></ul><ul><li>Engine capacity </li></ul><ul><li>Ex: For the vehicles below 1000cc imposes a tax of 187% on CEI (before tax reduction) .After tax reduction 95% to 120% </li></ul><ul><li>For the vehicles above 2000 cc 299% (before tax reduction). After tax reduction 128% (for 1500 cc) </li></ul>Vehicle name Price in 2006 (Rs) Price in 2011 (Rs) Nissan sunny FB15 1,450,000 -1,500,000 2,175,000 - 2,200,000 Toyota town ace NOAH 1,775,000 -2,000,000 2,500,000 – 3,000,000 Nissan Vanette 1,450,000 -1,650,000 2,500,000 -3,000,000 Honda City 1,350,000 -1,450,000 1,875,000 -1,900,000
  21. 21. Place Car manufacturer Current Customer Car seller First owner Agent seller
  22. 22. Promotion <ul><li>Ways of promoting vehicles </li></ul><ul><li>Own showrooms. </li></ul><ul><li>Sponsoring for events. </li></ul><ul><li>Ex : Colombo Motor Show, Fox hill Super Cross </li></ul><ul><li>TV advertisements. </li></ul><ul><li>Ex. Micro panda </li></ul><ul><li>Automobile programs </li></ul><ul><li>Ex. Auto weekend, Auto vision </li></ul>
  23. 23. <ul><li>Four C’s of automobile industry </li></ul><ul><li>Customer solution </li></ul><ul><li>Solution for transportation </li></ul><ul><li>Solution for fuel scarcity </li></ul><ul><li>Ex. Hybrid cars </li></ul><ul><li>Solution for multi purpose vehicles. </li></ul><ul><li>Ex. Dual purpose vehicles. </li></ul>
  24. 24. Cost Cost is varying from model to model. Vehicle model Options Engine capacity Price (Rs.) Tata Nano A/C, Power steering, Radio 650 cc 925,000 Nissan march A/C, P/S, P/Shutter, P/Window (full option) 1000 cc 1,625,000 Toyota vitz Full option, auto gear, Air bags 1000cc,1300cc 2,900,000 Toyota corolla 141 (Axio) Full option, DVD player, A/C,2 air bags 1500 cc 4,300,000 Toyota HIACE KDH 200 Full option, dual A/C, R/camera 2500 cc 7,350,000 Mitsubishi lancer EX Full option, multi function, DVD player 1500 cc 4,900,000 Toyota Camry AGH 40 DA/C, Trip tonic, R/camera, R sensors, power seats, consol box 11,300,000
  25. 25. Vehicle model options Price (Rs.) Motor bicycle Bajaj CT 100 100 CC, 5 speed 108,000 Bajaj Platina 125 cc 142,000 Pulser 135 135 cc, 5 speed gear 172,000 Hero Honda passion Honda CBR 250 CC, body kit 255,000 Honda Honutt 250 cc, on light 350,000 Trishaws Bajaj 4 stroke, 5 speed gear 385,000
  26. 26. Convenience <ul><li>No showrooms in everywhere. </li></ul><ul><li>Agents have limited showrooms. </li></ul><ul><li>Mainly car sales are located in Wattala, welisara, Kohuwala and in the cities near to Colombo. </li></ul><ul><li>Ex. Toyota has two showrooms in Wattala and Kurunegala. </li></ul><ul><li>Communication </li></ul><ul><li>Mainly people get to know about new vehicles from </li></ul><ul><li>Television </li></ul><ul><li>Motor Shows </li></ul><ul><li>Advertising boards nearby roads </li></ul><ul><li>News paper advertisements </li></ul>
  27. 27. MARKET SEGMENTATION IN THE INDUSTRY <ul><li>Geographically </li></ul><ul><li>Up country - Four wheel drive vehicle. ( mainly double cabs, vans some of cars have high ground clearance) </li></ul><ul><li>Low country – normal vehicles (cars, vans) </li></ul><ul><li>Demographic </li></ul><ul><li>Age :- Young: Motor bicycles have more engine capacities. </li></ul><ul><li>Cars can speed up more. </li></ul><ul><li>elder people: vehicles can drive safely. </li></ul><ul><li>Gender :- males: vehicles such as cars(N16,corolla, vans) </li></ul><ul><li>Females: small cars (march) </li></ul><ul><li>Family size :- small ( bicycles, trishaws, small cars such as Maruti 800,Nissan march, Alto) </li></ul><ul><li>middle : ( corolla, Suzuki Every van, Nissan Serena, Toyota Town ace) </li></ul><ul><ul><li>wide: (Toyota Hiace, Nissan caravan and Nissan Vanette.) </li></ul></ul>
  28. 28. Swot analysis for automobile industry <ul><li>Strengths of automobile industry </li></ul><ul><li>Brand image </li></ul><ul><li>Online marketing capability. </li></ul><ul><li>More consumer choices. </li></ul><ul><li>Operations and distribution efficiency. </li></ul><ul><li>Relations with high profile companies. </li></ul><ul><li>Standardized factories with better technology. </li></ul><ul><li>Weaknesses of automobile industry </li></ul><ul><li>Low productivity </li></ul><ul><li>Lack of highly developed service stations. </li></ul>
  29. 29. <ul><li>Opportunities for automobile industry </li></ul><ul><li>Found out the fuel sources </li></ul><ul><li>Establishing the new warehouse for hybrid cars ( opportunity to vehicle importers.) </li></ul><ul><li>Threats for automobile industry </li></ul><ul><li>incense in row material prices. </li></ul><ul><li>Rapid growth of competitors. </li></ul><ul><li>Ex. Entering of new brands such as KIA, Perodua, Proton gradually. </li></ul><ul><li>Less Capital spending </li></ul>
  30. 30. PEST Analysis <ul><li>Political factors </li></ul><ul><li>Fluctuations of exchange rates & oil prices. </li></ul><ul><li>Foreign ownership regulations and technological cooperation’s with other governments. </li></ul><ul><li>Introduction of new business laws . </li></ul><ul><li>Economical factors </li></ul><ul><li>Target Market Size :- When GDP of the target market high consumers tend to buy </li></ul><ul><li>vehicles. </li></ul><ul><li>The oil fluctuations influence the sales of vehicles in Sri Lanka </li></ul><ul><li>If the oil prices are high it is difficult to sell premium & luxury cars. </li></ul>
  31. 31. Social Factors <ul><li>Consumer Attitude : In selecting car model and design. </li></ul><ul><li>If the consumers are cost and safety concerned them probably will choose a normal car. </li></ul><ul><li>Technological Factors </li></ul><ul><li>New technologies leads to growth in the sales figure. </li></ul><ul><li>Supply chain collaboration </li></ul><ul><li>Consumer satisfaction :- more comfortable and safety vehicles with the new technology </li></ul>
  32. 32. Recommendations for the automobile industry <ul><li>Automobile recycling </li></ul><ul><li>Develop international industry standards on limiting the number of plastics types. </li></ul><ul><li>Develop technologies which reduce the cost of disassembly. </li></ul><ul><li>Choose materials which are meeting other social objectives, such as safety, fuel economy </li></ul><ul><li>Replace to eco friendly world. </li></ul><ul><li>Political wise </li></ul><ul><li>government can exchange technologies with more powerful counties such as Japan, China </li></ul><ul><li>Develop technical education system for students </li></ul><ul><li>Give chance to employees to generate innovations </li></ul><ul><li>Develop training programs with technologically developed countries </li></ul>

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