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INTRODUCTION:
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company
Limited Japan, and the Atlas Group of Companies, Pakistan.
The company was incorporated on November, 1992 and joint venture agreement was
signed on August, 1993. The ground breaking ceremony was held on April 17, 1993 and
within a record time of 11 months, construction and erection of machinery was
completed. The first car rolled off the assembly line on May 26, 1994. Official
inauguration was done by President of Pakistan, Sardar Farooq Ahmad Khan Leghari.
Mr. Kawamoto, President of Honda Motor Company Limited Japan was also present to
grace the occasion. The company is listed on Karachi, Lahore and Islamabad Stock
Exchanges.
On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and
Islamabad. Since then the Dealerships Network has expanded and now the company
has sixteen 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare
Parts) Pitstops network in all major cities of Pakistan. Since the commencement of
production in 1994, the company has produced and sold more than 150,000 cars till
Oct, 2008.All dealerships are constructed in accordance with the standards defined by
Honda World over.
Percentage of local parts conforms to the government's policy. Local vendors are
continuously patronized to develop parts locally. The quality of local parts is thoroughly
checked to meet stringent international standards.
We always strive to give outstanding service to our valued customers. In addition to
providing regular service to customers, the company also regularly conducts Service
Campaigns, to facilitate customer's need for service. This has given our customers
absolute confidence in our cars, clearly evident from the ever increasing sale volumes.
It is the constant endeavor of Honda Atlas Cars (Pakistan) Limited to achieve No .1
Customer satisfaction. Honda Atlas Cars (Pakistan) Limited is committed to meet
customer expectations, and to provide good value for money. Currently we are offering
8 different models of Honda CIVIC and CITY cars in wide range of colors with unique
technological and other features.
Slogan:
“VISION”
“To be the first preference at every level of car lovers, and be the market leader”
“MISSION”
A dynamic growth oriented company through excellence in quality, dedication to provide
greater fuel efficiency at competitive prices, and service ensuring attractive returns to
equity holders, rewarding associates according to their ability and performance,
fostering a network of engineers and researchers ensuing unique contribution to the
development of the industry, customer safety, satisfaction and protection of the
environment by producing emission friendly green products as a good corporate citizen
fulfilling its social responsibilities in all respects.
COMPETITORS
1. PAK SUZUKI
In pursuance of the terms and conditions of the Joint Venture Agreement executed
between Suzuki Motor Corporation of Japan (SMC) and Pakistan Automobile
Corporation (PACO), Pak Suzuki Motor Company Limited (PSMCL) was incorporated
as a public limited company in August 1983.The new company took over the assets
which included production facilities of Awami Autos Limited. PSMCL started commercial
operations in January 1984 with the primary objective of passenger cars, pickups, vans
and 4x4 vehicles.
The foundation stone laying ceremony of the company’s green field automobile plant at
Bin Qasim was performed by the then prime Minister of Pakistan in early 1989.On
completion of first phase of this plant in early 1990, in-house assembly of all types of
Suzuki engines started. The new plant was completed in 1992, on its completion all
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Suzuki products were transferred to new plant and three box 1300cc Margalla car was
also added to its range of production. In September 1992 the company was privatized
and placed directly under the Japanese Management. At the time of privatization SMC
increased its equity from 25% to 40% subsequently; SMC progressively increased its
equity to 73.09% by December 31, 2001. The Bin Qasim Plant further expanded its
production capacity to 50,000 vehicles per year in July 1994 and 300,000 vehicles had
been manufactured at this plant by December 2003.The most modern automobile
manufacturing plant in the country distinguishes Pak Suzuki from other automobile
plants.
Pak Suzuki always endeavors to go aggressively for the sound development of the
society by increasing motorization industrialization, creating job opportunities thus
improving the people’s living standards with the combined efforts of all the dealers,
vendors and Pak Suzuki employees.
2. INDUS MOTOR COMPANY (IMC)
Indus Motor Company (IMC) is a joint venture between the House of Habib , Toyota
Motor Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC) for
assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan
since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu
Motor Company Ltd. Vehicles in Pakistan through its dealership network.
The company was incorporated in Pakistan as a public limited company in December
1989 and started commercial production in May 1993. The shares of company are
quoted on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota
Tsusho Corporation have 25 % stake in the company equity. The majority shareholder
is the House of Habib. IMC's production facilities are located at Port Bin Qasim
Industrial Zone near Karachi in an area measuring over 105 acres.
Indus Motor Company’s plant is the only manufacturing site in the world where both
Toyota and Daihatsu brands are being manufactured. Heavy investment was made to
build its production facilities based on state of art technologies. To ensure highest level
of productivity world-renowned Toyota Production Systems are implemented. IMC's
Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux
Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of
imported vehicles.
Economic forces
Social, cultural, demographic and environmental forces
Political forces
Technological forces
Competitive forces
Economic forces:
Overall economic conditions are not very sound. The country risk of Pakistan goes to 3
which is alarming situation for Pakistan. Due to mistrust in the Pakistan environment the
foreign direct investment has been declined.
Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal
political disputes and low levels of foreign investment. Between 2001-07, however, poverty
levels decreased by 10%, as Islamabad steadily raised development spending. Between 2004-
07, GDP growth in the 5-8% range was spurred by gains in the industrial and service sectors -
despite severe electricity shortfalls - but growth slowed in 2008-09 and unemployment rose.
a) Pakistan did not face a major setback from the global crisis.
b) The economic hardship by the country has mostly been the result of domestic
issues - internal strife, political instability and poor governance has slowed down
an otherwise a viable economy.
c) Overall economic activity weakened despite growth in agriculture, while declining
imports and slowing domestic demand resulted in lower tax revenue.
•
The ongoing global economic crisis, negative security developments and
continued power shortages slowed Pakistan’s real GDP growth to 2% for 2008-
09 compared to 5.8% achieved in the prior year.
• The Unemployment rate is going up and up from 13.6% in 2008 to 15.2% in 2009
with the increase of level of poverty that is reducing the buying power of the
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people that is threat for Honda cars
• The GDP growth rate for the year 2008-09 initially projected at 5.5 percent has
now been revised downward to 2.5 percent compared to 5.8 percent of last year.
• The major pressure in the economy has stemmed from inflation.
• The SBP has projected inflation to slow down in the final quarter of FY08-09.
Controlled inflation may usher in lower interest rate and improved liquidity, so
necessary for growth of industry.
• Inflation remains the top concern among the public, jumping from 7.7% in 2007 to
20.8% in 2008, and 14.2% in 2009.
• The performance of the car assemblers remained lackluster during 2009 owing to
the economic meltdown in the country. In the wake of rising steel prices,
appreciation of yen against rupee and imposition of 5% FED in the budget of
2009, the car assemblers passed on the increase in cost to the consumers. This
brought the decrease in demand of the automobiles.
• The stock market has exhibited a growth of 36 percent post March 16. Foreign
exchange reserves have crossed US $11 billion. The commodity prices are
reflective of an inherent demand in the economy. A bumper wheat crop is being
projected and it will provide a boost to demand.
• The market value of stocks decreased from 70.26 billion in 2008 to $23.49 billion
2008
$70.26 billion.
• The Pakistani rupee has depreciated since 2008 as a result of political and
economic instability from Rs. 70.64 in 2008 to Rs. 81.21 in 2009.
• The government agreed to an International Monetary Fund Standby Arrangement
in November 2008 in response to a balance of payments crisis.
Political forces
Liberal Policies:
e) According to the analysts, the current policies on used cars in Pakistan
are still extremely liberal when compared to India, Thailand and other countries
and are often misused by importers under transfer of baggage scheme.
Tax imposition and duties:
f) The imposition of additional levies and taxes in the Federal Budget 2008-
09 which included the 5% Federal Excise Duty on cars with engine capacity in
excess of 850cc and application of fixed slabs of withholding tax at the
registration stage.
g) This compounded the situation resulting in a sharp increase in automobile
prices and dampening of demand. Post budget imposition of 35% cash margin
on letters of credit further aggravated the liquidity situation for the auto sector
before it was withdrawn several months later.
High interest rates and reduction in car financing facility offered by banks
further depressed the demand for cars.
Thus, the industry car sales went down by 50% from 147,441 units sold in
FY08 to 74,180 units in FY09.
Sales went down mainly in the 800cc and 1000cc categories, which
contribute 60% to the total auto sales. The car sales of Honda Atlas slumped by
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28% from 15,487 units sold in FY08 to 11,144 units in FY09.
The tightened monetary policies not only hampered the sales of the
company, but also increased the cost of debt that it had taken for the expansion
purpose.
Technological Forces:
• Social status
The automobile signifies much more to many than simply a mode of
transportation. Henri Lefebvre called the automobile "the epitome of
possessions". In the early years, the car served as a mark of distinction above all
others. The automobile rapidly became a symbol of social status, and in some
cases, a fashion item. The automobile, more than any other possessions,
allowed people to show off wealth. Not only was the ownership of an automobile
demonstrative of a certain level of income and prestige (and still is, especially in
poorer nations), it is also highly visible.
• Safety
Automobile accidents caused many deaths and injuries, especially before
automobile safety laws were implemented. To this date, automobiles remain a
major cause of accidental death and injury, not to mention emotional stress.
The impact of outdoor air pollution on public health and lost productivity should
be seriously taken as toxicity and ambient concentrations are the most damaging
health impacts. The particulate matter causing serious respiratory illnesses and
premature deaths throughout South Asia, and airborne lead, which retards
intellectual development of children in Pakistan and Sri Lanka is a common
phenomenon, where leaded gasoline is still used.
Competitive forces
Honda faces competition in the international markets from a number of brands such as
• Toyota
• Mitsubishi
• Mercedes
• BMW
However, Honda cars in Pakistan that had started its operations in Pakistan 1994 under a joint
venture with Atlas has been is enjoying the key position in 1300 c.c and above.
Indus Motors:
Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota
Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC) for
assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan
since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu
Motor Company Ltd. Vehicles in Pakistan through its dealership network.
IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in
an area measuring over 105 acres.
Indus Motor Company’s plant is the only manufacturing site in the world where both
Toyota and Daihatsu brands are being manufactured.
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Suzuki:
Suzuki is the leading name in small commercial vehicles and passenger cars. Suzuki
commenced its operation by assembling small 800 cc cars. Suzuki has so far a sole
leader in 800cc and 1000cc passenger cars as well as 1000cc jeep Potohar. But the
emergence of so many competitors in the market will definitely trigger a very hard time
to Pak Suzuki. Suzuki has launched Mehran 800cc, Cultus 1000cc, Baleno 1.3 & 1.6 Eli
and Gxi, Bolan van & Ravi pickup 800cc and Potohar jeep. The total production
capacity of Suzuki Motors is about 50000 units and the total actual production in 1999 is
32,805. The sales volume of Suzuki is highest among the competitors with 31,296 cars
as per June 30, 2000. According to Pakistan Association of Automotive Parts and
Accessories Manufacturers (PAAPAM) , Suzuki has achieved the 60 per cent deletion
status in 800cc Mehran car. Localization in other products like 1000cc Khyber 42 per
cent, 1300cc Margalla/Baleno 32 per cent, 800cc pickup 50 per cent 10 passenger
pickup 47 per cent and 1000cc Potohar jeep 40 percent.
Dewan Farooque Motors:
It is the major competitor which has commenced its operation with a wide range of
products in domestic automobile market. Dewan Motors is basically a collaboration with
Hyundai and Kia, two Korean auto manufacturers. The initial response to Dewan's
offering in the market with record company booking of its Santro Plus. It has launched
its Kia classic 1300 cc car with sophisticated features. In future wide range of models
like Kia Shuma 1500-1800cc car, Kia Sportage 2000 cc sports utility are expected to
launch in the market. Dewan has also launched its 1.5 tons Shehzore, the assembly of
Hyundai light commercial vehicle has already started at the Sindh Engineering Plant in
Karachi under contractual agreement.
Daihatsu:
Daihatsu, another new player in the market with its Cuore 850 cc, increased the
competition in the market. Daihatsu and Indus Motor signed an agreement to launch the
Coure in market. The project worth Rs 750 million was developed at Port Qasim
between Daihatsu and Indus Motor to produce Coure. Daihatsu also heated up the
competition in small car segments.
Economies of scale:
Economies of scale no doubt reduces the cost of manufacturing but now days
Customers are Saving Oriented Rather Consumption Oriented low price in this period of
recession will not attract customer the best way is to go for fuel efficient cars.
Honda motors have the First Mover advantage in case of Fuel efficient Cars. Honda
R&D Department already achieved so much in this field depleting oil sources is a major
problem for every country now Toyota is looking for different options such as: Bio Fuels,
Hydro Electric power Cars, Electric powered cars & Cow Dung.
Honda motor has the advantage of customer satisfaction and distribution channels.
Honda motor conducts workshops and seminar for Dealer Staff so that the interaction
with the customers shall be a pleasant one. This Customer care leads to Customer
Loyalty.
America is the biggest victim of economic Rescission and the biggest car consumption
country is America. American People has taken a Saving Stance now the American car
manufactures have their eyes on India, China, and Pakistan as a dumping sites so
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some time in upcoming years Honda motor can face fierce Competition and have to
step up for the competition because Pakistani people have a lot of options.
Buyers are price sensitive because products are little differentiated and switching cost is
lower. The buyers hence have greater power to bargain on the finished good, i.e.
vehicle. The switching cost is very low for the customers. However the automobile
industry remains marginally strong due to the large buyers to producer ratio
Honda motors almost produces 98% of car in Pakistan but Most of the Raw material is
imported through Toyota Japan so Suppliers is the parent company that is why
importing material is not a big issue for Honda.
The automotive industry is a dynamic place. With the forces above at play, and with
history as a guide, it is safe to say that the automotive industry will continue to change,
evolve, and adapt.
2. Customer desire for hybrid and fuel efficient vehicles 0.08 3 0.24
Threats
2. WTO (World trade Order) opening local markets for global 0.02 1 0.02
competition
3. Entry of reconditions cars 0.13 2 0.26
Total 1 2.49
From the above matrix calculation, we can see that the total weighted score for Honda Motors is
2.49 which is 0.01 points lower than 2.50 i.e. the midpoint a and is below the average. This
Critical success factor Weight Rating Score Rating Score Rating Score
From the above matrix we can observe that the most important factor for the automobile
industry is the product quality, followed by price competitiveness and then the
dealership networks and the availability of the spare parts. Suzuki is the strongest of all
the three companies as it is proven from the matrix and also from its market share in
MARKETING OF HONDA:
Honda Atlas Marketing Objective:
Honda Atlas Pakistan Limited as well established automobile companies in Pakistan
they always keep focus on that mission and vision in the same direction HACPL does
target of goal achievement. The standard of the HACPL according to marketing is very
high. HAPL existence and central point of Honda Atlas to sell dream Car because in
Honda point of view “Power of Dreams” itself attracting the customer for that need to
build unique product.
HACPL marketing objective has been targeting in terms of provide satisfied customer
service, make possible to keep in reach the product, and strive to give outstanding
service to valued customers. In addition to providing regular service to customers, the
company also regularly conducts Service Campaigns, to facilitate customer's need for
service. This has given company customers’ absolute confidence in their cars.
In the constant endeavor of Honda Atlas company to achieve No .1 Customer
satisfactions with respect to loyalty of brand. Honda Atlas Company has been
committed to meet customer expectations, and to provide good value for money.
Honda Atlas Marketing Mix:
Marketing mix elements or 4p’s strategy of marketing is the essence of any business
same like this strategy of marketing mix apply in top listed automobile company overall
the world Honda atlas these key elements of marketing mix make the difference
between Honda atlas and other automobile companies, Honda atlas also comes up with
a strategy to figure out which strategy is best for them given the objectives and
resources. They must also consider the strengths and weaknesses of the company as
well as opportunities and threats. To enhance the aptitude of the companies, a
marketing mix strategy is introduced. The marketing strategy will create lucrative
marketing mixes for defined target markets. Honda atlas has been enhancing their
outcomes and marketing value by implementing the right combination of the four P’s.
Product:
Honda Atlas has competitive edge to other automobile Companies in term of product
quality.
Accord:
Witness the debut of the astonishing new Honda Accord: the outcome of our all-out
pursuit of sedan excellence, successfully uniting all contradictory elements. A bold
exterior presence with a luxury air, yet a sporty youthful feeling. An expansive upper-
class cabin with comfortable travel space for five adults and panoramic visibility. A
larger body with sportier performance than ever before and powerful I-VTEC engines
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designed for high fuel economy. A renowned global car with all advanced Honda
technologies for driving command, plus eco-performance for increased recyclability.
And, Honda's world-leading safety protection, which even extends to pedestrians and
those in other vehicles. Experience its overall quality, riding comfort, and details for
yourself, and you'll know why the new Accord represents a distinct "status upgrade" for
the sedan.
Civic:
What moves you? What drives you? What excites you? Honda seeks the pinnacle of
technology in pursuit of answers. Now, we present a bold way to stir the body and soul,
designed to quicken the pulse at first glimpse, and stimulate the senses with each and
every encounter. The sporty new Honda Civic possesses rare spirit, and so do you.
See, touch, feel, drive and discover.
City:
See it coming, like an arrow. Striking good looks, cutting-edge design, sharply focused
tension. See it shoot straight ahead. What is it? Discover the compact sedan
breakthrough with strength to open a new era and outlast fleeting trends. Sleek styling
and strong performance, with swift, gutsy response to the driver's pedal action. Class-
leading* spaciousness and relaxing ride for outstanding comfort. Imagine the pride of
driving and owning this distinctive new-generation standard. Get ahead in the new City.
People will be watching.
CR-V:
Dynamic styling appeal. Elevated SUV outlook. Premium driving refinement. And an
exhilarating yet stable feeling. The new Honda CR-V has all you want, and more. A
spacious cabin and utilities, due to packaging innovation. Plus superb i-VTEC response,
quietness, and safety. Discover delightful CR-V driving. Now, all roads are exciting.
Price:
BRAND MODEL PRICES
CR-V 2.4 Litre Rs: 5,299,000
CIVIC I-VETIC MANUAL Rs: 1,619,000
I-VETIC AUTOMATIC Rs: 1,739,000
VTI-ORIAL MANUAL Rs: 1,794,000
VTI-ORIAL AUTOMATIC Rs: 1,869,000
ACCORD I-VTEC Rs: 5,699,000
CITY MANUAL Rs: 1,249,000
AUTOMATIC Rs: 1,379,000
Promotion:
Honda Atlas (Pakistan) always strives to give outstanding service to valued customers.
In addition to providing regular service to customers, HONDA also regularly conducts
Service Campaigns, to facilitate customer's need for service. This has given to
customers’ absolute confidence in Honda cars. Honda also participates in promotion of
Machinery:
A brief list of machinery used in HACPL is given below:
Boilers
Compressors
Water treatment plant
Ovens (for backing the body of cars)
Spot welding guns.
Two-post lifts
Transportation Mode:
HACPL has a habit of using only one mode if transportation (i.e. Highway) for the both
inputs and outputs. The logic behind this mode is low cast and flexibility of shipping to
almost any location in Pakistan.
Currently, HACPL has no transportation fleet of its own. Nearly five transportation
companies are performing this function on contract basis. NLC is also included in these
companies.
Total Quality Management: (T.Q.M.)
T.Q.M. stresses three principles:
Customer Satisfaction
Employee Involvement
Continuous Improvement
Attaining quality in all areas of a business is a difficult task. It is necessary for an
organization to provide its customers with best or even consistent quality products in
order to survive in the environment. The success of any business depends upon how
accurately the company perceives the expectations of Customers plus its ability to
bridge the gap between consumer expectations & operating capabilities. In HACPL the
concept of T.Q.M. is more common. This can be explained as follow:
Customer Satisfaction:
HACPL’s employees try at their level best in satisfying the customers & hence stepping
forwards the objective of the company. The contribution of Marketing & Production
department is very important in this regard. These departments continuously go for the
ways to improve the features of existing HACPL’s products and hence satisfying the
customers.
Employee Involvement:
HACPL’s management considers its employees a great asset. The employees along
with sales dealers are part of the large “Honda Family” and they form an integral part of
policies and decisions that help shape the future of the company.
The management of HACPL considers the proposals/Suggestions of its employees up
to a great extent. It appreciates the employees in this regard through Monetary or Non
Monetary benefits. Management of HACPL put great emphasis on creating and
maintaining an enterprise environment in the company that maximizes the interest and
motivations of its employees which is very vital to enhance labor productivity and
efficiency.
Training of Personnel:
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HACPL puts great emphasis on training and development of employees to help them
realize their full potential. Employees from all departments especially form production;
finance and marketing attend training courses in their respective fields. This has greatly
contributed in improving employee’s performance and efficiency at all level.
Continuous Improvement:
The Management of HACPL has a view of continuous improvement in order for the
better Utilization of resources and improving Honda brand image in the market. HACPL
is trying at its level best to introduce and implement better quality control procedures,
redesigning the production process, automating the whole plant etc. Employee’s
involvement is playing vital role in this regard.
11. Recession in the economy 1. Utilize research and 1. Localization of supplies and
12. WTO (World trade Order) development to minimize spare raw material (W9, W4, T1,
opening local markets for parts price.(S18, T1) T7).
global competition 2. Downsizing ( W9, W8, T1)
13. Entry of reconditions cars 3. Strict employee policies to
14. Political instability contain overhead and
15. Tightening monitoring unfavorable economic
Policy conditions
16. Energy crises 4. Mass Production
17. Depreciation of rupee 5. Influence and coordinate
against dollar government institutes to
18. Increase in Petroleum and ensure consistent power
steel prices. supply and minimum break
19. Inflation down time. (T6,W7)
20. Declining quality of the
infrastructure in the country.
QSPM uses input from stage 1 and matching results from stage 2 analyses to decide
among alternative strategies. Like other strategy formulation analytical tools, QSMP
requires good intuitive judgment.
In the stage 3 of Honda Atlas Cars, there were three alternative strategies that we found
very attractive. The data collected from the external and internal audit, and the matching
done from the opportunities, threats, weaknesses and strengths brought us to
consensus of selecting these alternative strategies. We selected three strategies in
total;
2. Product Diversification
The increase in the number of dealership network was chosen because; Honda had a
smallest dealership network against his competitors Indus motors and Pak Suzuki.
Honda is unable to access a number of potential customers due to a small dealer ship
network.
The next alternative strategy that was built with a consensus was to do product
diversification. Honda has a small market share as compared to Indus motors and Pak
Suzuki. One of the major reasons was the product diversification by its competitors. If
Honda is able to do product diversification, it can increase its sales; capture the market
share on the bases of strong brand image and customer loyalty.
Attaining the economies of scales was another highly preferred alternative strategy that
could help the company to increase its income and improve its performance. Honda has
done expansion of its company, but it has not been using its plants up to its required
optimal capacity. Due to this the company is facing high cost as well. So if the company
mass produces the cars and use the plants to its maximum capacity, it will be able to
Ratio Analysis:
Gross Profit Margin Ratio:
Company Honda Indus motors Suzuki Industrial average
Year
2004 8.1 11.96 9.9 9.98
2005 1.7 9.80 10.1 7.2
2006 4.6 11.77 11.8 9.39
2007 1.0 11.37 9.4 7.25
2008 4.3 9.29 1.5 5.03
Analysis:
Return on equity:
Company Honda Indus motors Suzuki Industrial average
Year
2004 22.5 39.1 28.96 30.18
2005 8.1 33.2 33.63 24.98
2006 30 42.3 35.27 35.86
2007 -10.3 34.1 22.04 15.28
2008 2.6 24.3 4.4 10.43
Return on Assets
In fig 3.3 we can see that there has been a downward trend in the automobile industry
after 2006. This downward trend in the industry was due to the imposition of the liberal
government policies for the import of new and used cars in the budget of 2005-06. The
growth of the automobile industry further decreased from 23% to just 9% in the year
2007. Then unfortunately, there occurred a series of events in Pakistan that was a bad
news for all the industries including the
automobile industry. There was political
unrest in the country along with the
national security issues. Furthermore the
instability the economic environment
resulting from the rising interest rate,
limited credit availability for auto
financing, depreciation of the Pak Rupee
against all the major currencies,
unprecedented rise in the prices of oil,
steel and other inputs caused severe
volatility in the market place, leading to
high inflation and loss of consumer
confidence. Further more in the budget
2008-09 the government had imposed higher levies and taxes which resulted in further
increase in automobile prices to the customers and dampened the demand.
From the above calculations we can see that Honda atlas motors has been facing
difficulties to manage its assets to generate earnings as compared to its competitors.
Indus and Suzuki motors have high returns on assets because they have higher sales
and lower costs and expenses as compared to Honda motors, hence letting them enjoy
higher returns. Honda on the other hand has lower sales than its competitors along with
higher costs and expenses.
The only years that has lead to higher return on assets is 2004 and 2006. It was not
only because of higher sales but also due to the lower cost and expenses in the
respective years. In 2005 the company had undergone expansion plans that raised its
costs and financial expenses. In 2007 the growth of the economy had slowed down due
to which the sales of the company fell. In 2008 the country’s condition was very
unstable that had affected the over all growth of the industry.
• HACL should go for related diversification, that they have to launch different type
of models in contrast with Pakistani economy, they have to produce 1000cc and
below cars, Introduction of flexible fuel vehicle. In order to increase their market
share and profitability.
• HACL should go for local vendors and reduce the size of imports as imports are
major burden on the company as Pakistani rupee is continuously depreciating
against Dollar and other major currencies.
• The company has to change its capital structure, in order to reduce its cost of
capital as cost of debt is more as compare to cost of equity so they have to inject
fresh new equity in order to gain the lender trust.
Interview analysis
According to research, brand loyalty of Toyota Corolla and Honda City are existing between
customers’ perception and fulfillment of perception, the fulfillment of perception is the
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responsibility or obligation of associative companies. Regarding this I have taken an interview
session with Mr. Syed Nadeem Ahmed, Manager Sales marketing of Indus Motors’ authorized
dealer (Toyota Southern Motors). And second interview was taken from Honda Atlas
Company’s Dealer Tariq Mohi-ud-din Butt, General Manager of Honda City sales motors.
A. My name Mr. Syed Nadeem Ahmed Manager Sales marketing of Southern Motors (IMC).
A. We have dealership of Indus Motors Company which we have been dealing Toyota vehicles
range comprises of TOYOTA COROLLA, CAMRY, COURE and HILUX They are having
capacity of 225,000 units. We have good growth since last 5 to6 years now there is a decline in
sales. There are some reasons behind it, the main reason is the increase of interest rate, control of
SBP monetary policy. Now the sales are stagnant after so many years of good growth. Anyways
the highest level of sales in 1300cc cars is Toyota Corolla and in 850cc car is Coure is top of the
list.
A. According to requirements of customers they perceive that money in term of benefits like
superior quality, reliability, performance and its cost. We assure to provide them Toyota Corolla
in customers point of view because Indus Motors Company is very conscious to provide its
product at the level of brand loyalty for its customers.
Q4. How much of you spent your time on customer to briefing about the Toyota Corolla?
Regarding Toyota Corolla, this 1300cc brand has well worth and well known overall in Pakistan.
Mostly we do not need to briefing about Toyota Corolla, customers just came to dealer and
purchase its loyal Toyota Corolla car in either cases they have word-of-mouth information and
personal experience. Off course, we just provide information regarding new addition or
technological enhancement in the car.
COMSATS Institute of Information Technology, Lahore Campus.
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Q5. From year 2005, the ban was lifted from imported cars. So the sales of Suzuki cars got
affected?
A. Not changed because the main reason was that we cannot produce more as well as we
continued our other imported car i.e. PRADO.
Q6. There is a concern about the quality of Toyota Corolla cars. What do you say about it?
A. I’ll not accept it with as far as any car is concern of Toyota. The reason is that our customers
are very sensitive. Our customers are middle and upper class persons who are very conscious
about that vehicle. So for our vehicle segment they are very much focused and mostly customers
are well known about the Toyota Corolla related concern. If you talk about quality our record is
world over. But sometimes something happens .We have market share of around 62% so lots of
people are talking obviously! The car comes to the dealer and is being repaired there and
customer doesn’t know what happens with it.
This is really critical part of our customers because if any customer get clue regarding its
satisfaction so the result will go opponent to us for that we have to very careful to deal and
maintain our Brand (Toyota Corolla) positioning in customers mind. For that instance, we
provide them 3S (Sales, Service and Spare Parts) very effectively and efficiently. Our aim is to
get close more and more to customer.
Q8. How do you compare that Toyota Corolla is better than Honda City?
Usually customers are not well aware regarding identify difference between Toyota Corolla and
Honda City for that instance, we also provide them technical specification information which
customer may come to understand easily.
Q9. For improve/maintain brand loyalty of Toyota Corolla, what does Indus Motors
Company?
A. My name is Tariq Mohi-ud-din Butt and I am General Manager of Honda City sales motors.
A. The Honda Atlas Company Pakistan limited (HACPL) is third largest automobile company in
Pakistan and we are authorized dealer of it. Which we are dealing wide range of Honda brands
that comprises of HONDA CITY, CIVIC, ACCORD and CR-V. They are having capacity of
150000 units. HACPL deal in other wide range of product line which we have good growth since
last 25 years and in car category 8 to 10 years, in automobile market we also affected in
recession to go through decline in sales where there are some reasons behind it, the main reason
is the increase of interest rate, control of SBP monetary policy. Anyways the highest level of
sales of Indus Motors Company in 1300cc cars is Honda City and Honda Civic are top of the list.
Q3. What most of buyers require or demand to you about Honda City?
A. our customers are economically very curious, majority of customers perceived about Honda
City is reliability, performance quality and they are highly demanding economically affordable
with respect to fuel consumption so Honda City fulfilling those need in term of our customers’
expectation. We have an honor that Honda City is successfully perceived our customers’
requirement and assure to provide them Honda City in customers point of view.
Q4. How much of you spent your time on customer to briefing about the Honda City?
Our customers are very sensible about Honda City, this 1300cc brand has provide them briefing
and information itself and we makes it possible to provide them information with presence of
Q5. From year 2005, the ban was lifted from imported cars. So the sales of Honda City cars
got affected?
A. it is not much affected by ban’s lifted from imported cars because we also imported cars in
which our most famous brand introduced i.e. Honda Accord, CR-V.
Q6. There is a concern about the quality of Honda City cars. What do you say about it?
A. I will not accept it because some time something or anything could be happen but for
instance, most of the time we surveyed about Honda City’s reputation in the market and our
surveyed report tell us that those customers’ who do not have experience about Honda City they
just go through word of mouth but our experienced customers are much loyal to quality of Honda
City. Our customers are middle and upper class persons who are very conscious about that
vehicle.
One of the issues about brand loyalty is maintain brand position in customers’ mind in which we
provide them more and more satisfaction. We follow just in time strategy and provide 3S and 2S
services to facilitate our customers. Because before buying, customers may think about sales
location, appropriate location of service and availability of Spare Parts. For our customers we
facilitate them with additional Service and spare parts which our customers may easily reach
those target requirement.
Q8. How do you compare that Honda City is better than Toyota Corolla?
As I told you in last question that our customer are highly appreciated Honda City because of its
fuel consumption and more over this, some of technical specification are makes difference that
which factors Honda City is better than Toyota Corolla. in technical aspect, usually customers
are not well aware and they do not have sufficient technical information about Honda City
which they identify difference and betterment of Honda City.
HACPL is very conscious about its customer, in brand loyalty aspect, company makes it possible
as those slogan “Power of Dreams” for achievement brand loyalty (Honda City). In this instance,
Honda Atlas Company directly involved and all its authorized dealers follow its standard. We
maintain our brand loyalty through given more importance to our customer because we are not
selling the Honda car, instead that, we focused on develop and maintain long term customer
relationship.
Analysis:
Mr. Mazhar Ghauri of Indus Motors Company and Mr. Jamil of Honda Atlas Company are very
experienced candidates and they have over 15 years experience in respective companies. They
provided very handful information for me. Although they did not speak against associated
companies, but they tried to prove those point. According to associated persons, the sale actually
has gone up mainly due to the fact of brand positioning in customers’ mind as they perceived if
any of factor that incurred in affected sales that reason surely economy has been shattered and
the de valuation of currency had increased the prices of cars. They inclined that the quality of the
cars are going up as he told us that the vendor’ are the same and the quality of parts are been
standardized and maintained. They said more about associated 1300cc cars (Toyota Corolla and
Honda City) that it is having the expected result as they still have achieved the goals of it. Due to
time constrained they might have provided a great knowledge more. But still, those interviews
provided good information regarding brand loyalty.