Automobile Production Difference of Suzuki and Honda in. Pakistan

Transcription

1 Automobile Production Difference of Suzuki and Honda in Pakistan Safi Ahmed Mushtaq*, Asim Irshad**, Nadeem Ehsan*** and Ebtisam Mirza**** This Research paper shows a difference between Suzuki and Honda car demands in Pakistan, their sales and profit margin, their productivity difference and their marketing strategy. How the policy of banks and government policies affect the automobile industry, how the different political scenarios affect the business and the productivity of the industry? How the inflation factor affects and how the poverty affects this industry? How this factor draws an impact on the GDP of the country. Imported cars also affect the local automobile industry. This research also highlights the difference of Suzuki and Honda cars in different countries but main focus of this research is Pakistan. Field of Research: Marketing of Automobile Industry 1. Introduction: This paper shows a sales and performance comparison between Suzuki and Honda Motors in Pakistan. Pakistan is a developing country. Being a developing and a third world country owning a wheeled transport is a luxurious thought by majority of people in Pakistan. Due to poverty, Inflation and low income most of the population cannot afford a car of their own. According to the PAMA survey, only 8 of 1000 people in Pakistan own a car. Suzuki is the joint venture of PAK and SUZUKI arrangement by AWAMI AUTO LTD. The Suzuki assembles a wide range of cars in Pakistan, like Mehran, Alto, Baleno, Khyber, and Cultus. The company Honda Atlas Cars Pakistan Limited is a joint venture of two different companies Atlas group Pakistan and Honda Company limited JAPAN. Honda assembles different cars like Honda City, Honda Accord and Honda Civic. Every car has some unique and catching features in it. *Safi Ahmed Mushtaq, Center for Advanced Studies in Engineering (CASE), Islamabad, Pakistan. safi_mushtaq@hotmail.com **Asim Irshad, Center for Advanced Studies in Engineering (CASE), Islamabad, Pakistan. asim_i043@hotmail.com ***Dr. Nadeem Ehsan, Center for Advanced Studies in Engineering, Islamabad, Pakistan. m4nadeem@yahoo.com ****Ebtisam Mirza, Center for Advanced Studies in Engineering (CASE), Islamabad, Pakistan. ibtisam.m@gmail.com

2 Since by 1993, HONDA assembles their cars at domestic level. 2. Profit and Sales Margin Of Suzuki & Honda A. Honda Honda had 40% decline in the profit margin due to the expansion. The market segment of Honda in and above 1300cc class is about 47% in 2006 it decline to 30% in 2007 and has increase to 35% in 2008 they are expecting more increase in sales as their new models of civic and city come in market. Honda declines its profits in the year 2007 due to expansion problems. But they are sustaining their profits rather than increasing the profit margin. Turn Over Of Honda: Honda had a good track record of payout but due to expansion and losses situation of since last two years company is facing much trouble due to economical, social and disturbing the law and order situation in Pakistan. B.Suzuki Pak Suzuki motors has production less than 50,000 units in the year 2000, they raised their capacity to 50,000 units and until now they are increasing their capacity they produced more than 150,000 units per annum until So after fulfill local demand company start exporting their cars to Bangladesh. Pak Suzuki dominates in 1000cc segment market share of about 94%; also in 800cc segment it has a market share of 74%.

3 Suzuki gains a market share of about 56% which is more than the market share of Honda almost five times. As Suzuki emphasize more on production to meet with market demand they produce small 800cc and 100cc cars which fulfill.honda lack in gaining this market share so they are behind in production by about 500%. Suzuki lack behind Honda in 1300cc or above cars.but difference is not too much Suzuki joins Honda by Baleno and then liana. But these models don t compete with the latest models of civic and city. Suzuki gains a market share of about 56% which is more than the market share of Honda almost five times. As Suzuki emphasize more on production to meet with market demand they produce small 800cc and 100cc cars which fulfill.honda lack in gaining this market share so they are behind in production by about 500%. Suzuki lack behind Honda in 1300cc or above cars.but difference is not too much Suzuki joins Honda by Baleno and then liana. But these models don t compete with the latest models of civic and city. The deletion level program is replaced by tariff based program from year 2006 to encourage local automobile part manufacturers to enhance their productivity and decrease in the price as there are incentives in terms of using local parts. But as far as this is helpful in declining the price of the car this cause serious problems interms of quality. Suzuki has greater advantage then Honda in this policy because the Suzuki has an image of low cost normal quality car by using local auto parts they did not have serious decline in terms of quality but if Honda uses local part their image of high quality may decline and their market share must decrease. So as this policy decline the prices of cars this must destroy the quality and customers must shift their focus on the imported cars. Both big players in automobile industry shift their focus on exploring new markets for moderate price cars. Market Share of Honda and Suzuki in Pakistan

4 So by this graph it must notice that the number of users of Suzuki as compare to Honda is almost 3 times. Although the HONDA has more suitable than SUZUKI but due to low level income of population, people try to buy a low price car. Production of Suzuki in Pakistan was a state run company, but now SUZUKI enjoys as automobile market share of more than 50% in the country, so it looks the country as a strategically overseas automobile production and its marketing as compare to other neighboring countries like INDIA and CHINA and other countries like HUNGRY, INDONESIA and TURKEY is so good.in a survey which is conducted by a SUZUKI users almost 60% of the Suzuki users are satisfied with the performance of the Suzuki motors. The major thing which the users satisfied due to it s after sale service and their spare parts easily available in the market. Analysis for car demand in different companies. So Pak Suzuki and Honda Pakistan also explore foreign market for local assemble cars due to the economic situation both companies increase their market to different developing and poor countries. The Concept of CNG in PAKISTAN also raise the demand of automobiles in the country because CNG (Compressed Natural Gas) is cheaper then Petrol. PAKISTAN now becomes the 1st country in the world who consumes CNG in automobiles. The usage of cars in PAKISTAN is can easily judge by this fact that the Karachi who is most populated city in the country has the population of almost 150 million but the only 16 lacks people have their own cars. The Cars sales per thousand people in different countries are shown in graph.

5 So as this policy decline the prices of cars this must destroy the quality and customers must shift their focus on the imported cars. These are the figures of imported car ratios. 3. Problem Faced Although HONDA and SUZUKI have reputable companies but from last two years companies have stopped new assembles is PAKISTAN. It contains many reasons poverty growth in the country, Inflation factor, Political and mainly energy crises in PAKISTAN suffers automobile industry also. People becomes very conscious to buy the cars even invest in the car market. Robust growth in the consumer financing from banks and other companies and rise the per capita income of acceleration in GDP growth, The cost of automobiles is highly related to the steel the raw material leaves much effect in the prices of the car, therefore if steel prices and yen appreciates then it will have a significant impact on the earnings and car cost and other market issues. The auto had experienced growth mainly because of boom in consumer financing and interest rate. The Government applies some new taxes so it affects the performance and cost of the automobile. 4. Marketing Plan Of Suzuki & Honda In 2003, HONDA released Cog advertisement in the EUROPIAN countries and on the internet. The Marketing of HONDA by the Commercial advertisement and by the news paper. The show rooms of HONDA cars are more in numbers as compare to SUZUKI motors. In 2006, HONDA released its Choir advertisement for the UK only and internet.

6 HONDA spends more money on advertisement Honda has an agreement with different news channels and Honda has a main sponsor of the CBS game show. In these shows Honda car makes an appearance, Honda as a prize as well as the showcases. Honda per Year Expenditure As compare to Honda, Suzuki does not spend too much money in advertisement, especially in PAKISTAN Suzuki advertisement in news paper and commercial advertisement are not so much as compare to HONDA, but people prefer to buy Suzuki cars due to many reasons. SUZUKI ALTO is a car in which company spend too much money for its advertisement. 5. Automobile Production Of Suzuki & Honda The automobile production of HONDA Company at the end of the year 2008 is shown in graph

7 The automobile production of Suzuki Company at the end of the year 2008 is 6. Conclusion After the detailed research it can be concluded that in PAKISTAN the number of SUZUKI users are too much as compare to HONDA, but it does not mean that people don t buy HONDA cars. People also love to buy it but it is a more expensive thought. SUZUKI rules in the automobile industry in PAKISTAN. Middle class and lower class who is more than half of the total population of the country easily buy SUZUKI cars.

8 Upper class usually buys and prefers HONDA and other big brands. Both companies are trying to improve their business in Pakistan and expanding their business by trying a different marketing strategy, and by opening new franchises in the country. both companies are trying to look towards big cities like KARACHI, ISLAMABAD. LAHORE, & PESHWAR to improve the business. References Annual Report of Suzuki Motors 2008 Annual Report of Honda Motors 2008 Honda Financial Report Analysis (View as HTML) Juxiang Wang, Lijuan Ren, Changju, Guozheng Li, Influence of Different Forecasting Modes on Automobile Manufacturing Supply Chain IEEE conference June 2006 Kunio Shirahada, Kiyoshi Niwa, Implementation of Focused People-Management in a Large Japanese Automobile Company, PICMET August Portland, Oregon USA@2007. Multiline Securities (Pvt) Ltd, Annual Report Honda Atlas Cars 7 th, August United Composite Islamic Fund (UCIF) by UBL car finance Scheme Annual Report 2007.