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MODULE 1 Auto Manufacturing Industry

MODULE 1 Auto Manufacturing Industry. Mairin Talerico. Auto Manufacturing – At a Glance. Porter’s Five Forces of Influence . Key Determinants of Profitability Confront the companies and determine their competitive intensity Industry Competition Buying Power Supplier Power

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MODULE 1 Auto Manufacturing Industry

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  1. MODULE 1 Auto Manufacturing Industry Mairin Talerico

  2. Auto Manufacturing – At a Glance

  3. Porter’s Five Forces of Influence • Key Determinants of Profitability • Confront the companies and determine their competitive intensity • Industry Competition • Buying Power • Supplier Power • Product Substitutes • Threat of Entry

  4. Industry Competition The Big Three • Ford • GM • Chrysler DomesticInternational • Toyota • Nissan • Honda

  5. Buyer Power • Consumer Confidence Index • State of economy, employment, disposable income, inflation, etc. all affect a consumer’s ability to pay for a car • Predicted to increase next 5 years 72.5%  93.6% • More financing options decreases amount of interest charged by auto financing sector • Auto companies eager to sell will drop prices to skilled bargainer buyers

  6. Supplier Power • World price of crude oil • Volatile due to fluctuations in supply, demand, and market power • Manufacturing raw materials cost and supply • Strong-bargaining powered suppliers demand higher prices, decreasing profits and cash flow to auto manufacturers

  7. Product Substitutes • Public transportation • Similar product offerings from competitors • Too many product offerings per company • With more product substitutes, sellers have less power to raise prices and pass costs on to buyers… decreasing profits.

  8. Threat of Entry Mature industry +Medium level competition +Industry assistance +Contracting market for midsize cars +High technology change +Medium concentration +Medium regulation level +High revenue volatility +High capital intensity High Barriers to Entry

  9. Toyota Motor Corporation

  10. Snapshot of Toyota • Limited liability, joint-stock company incorporated under Commercial Code of Japan; started in 1930s • Primarily in automotive industry, but also financial services and others • Sold 8,871,000 vehicles in fiscal 2013 • Sell in 170 different countries and regions • Primary markets: Japan, North America, Europe and Asia

  11. SWOT Analysis • Research and Development initiatives • A leader in green cars development • Selling in Japan and North American markets • Geographically expansive manufacturing locations • Toyota Motor Credit Credit Corporation [49% US Sales had financing] • Develop environmentally friendly vehicles and technologies • Safe vehicles • Ability to increase market share in growing economies and markets • Sustainable growth and optimal supply of products globally • Finance more cars and increase profits • Growth through acquisitions Strengths Opportunities

  12. SWOT Analysis Cont. • Product recalls • Always staying abreast of new technology and financial offerings • Abiding by all gov’t regulations and legal proceedings • Declining sales in Europe • 51% US Sales don’t have financing • Weak presence in emerging markets • Brand reputation • Worldwide auto market is highly competitive, volatile + Financial services industry • Decrease profit • Risk losing a major market for sales • Highly competitive financial services industry Weaknesses Threats

  13. Life Cycle Stage *Interestingly, Toyota is in a growth life cycle stage, despite the industry being in a mature stage.

  14. Questions?

  15. Sources • Toyota 2013 Form 20-F • IBIS World Car and Automobile Manufacturing Industry Report • Google Images for photos

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