Automobile Retail Industry

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  • 8/19/2019 Automobile Retail Industry



    School of Management

    Unie!"it# of A"ia an$ the %acific

    An Analysis of Automobile Retail Industry

    S&'mitte$ in %a!tial F&lfillment of the Re(&i!ement" fo! 

    MGT))*+ In$&"t!# an$ Region Ma!,et Anal#"i"

    S&'mitte$ '#+

     Amoncio- Ma!tin T. E"colin- JC C.

    Ilagan- Ja"on B.

    Melen$!e"- Raff# H.

    Ti!a/ona-I# N.

    S&'mitte$ to+

    M!. %at!ic, S. 0eta


    Ma!ch )2*3

    Table of Contents

  • 8/19/2019 Automobile Retail Industry


    Chapter 1:Industry Proposal

    Definition of the Industry

    Industry’s Products and Services

    Identification of Major Players

    Linkages in other sectors in the economy

    Relationship of Industry to Macro economy

    Chapter 2: Basic Demand and Supply Conditions

    Supply Conditions

    Production Process

    Major Investment Requirements

    Raw Materials Sourcing

    Sensitivity to Major Supply Factors

    Capacity Utilization

    Bargaining Power of Suppliers

    Demand Conditions Domestic and Export Market

    Demand Determinants

    Bargaining Power of Buyers

    Chapter 3: Competition

    Industry Structure

    Major Players in the Industry

    Competition from Substitutes

    Entry/Exit Barriers

    Chapter 4: The Regulatory Environment

    Degree of Government Regulation Government Regulations Affecting the Industry

    Effect of Regulations on the Industry

    ASEAN Integration

    Chapter 5: Industry Performance

    Summary of Five Forces

    Analysis of Financial Performance

    Critical Success Factors

    Key Risk Areas

    Chapter6: Industry Prospects for the Next Three Years

    Growth Projections

    Changes in the Market Share and Industry Structure

    Significant Changes in the Five Forces

    Chapter 7: Conclusion and Recommendation

    Summary and Conclusion



  • 8/19/2019 Automobile Retail Industry


    Chapter I: Industry Background

     A. In$&"t!# Bac,g!o&n$

    Definition of the In$&"t!#

     Acco!$ing to the %hili44ine Stan$a!$ In$&"t!ial Cla""ification 5%SIC6 of )227- the

     A&tomo'ile In$&"t!# i" incl&$e$ in the Section G of %SIC Co$e. Thi" "ection incl&$e" 8hole"ale

    an$ !etail "ale 5i.e. "ale 8itho&t t!an"fo!mation6 of an# t#4e of goo$" an$ the !en$e!ing "e!ice"

    inci$ental to the "ale of the"e goo$. 9hole"aling an$ !etailing a!e the final "te4" in the

    $i"t!i'&tion of goo$". Goo$" 'o&ght an$ "ol$ a!e al"o !efe!!e$ to a" me!chan$i"e. Al"o incl&$e$ in thi" "ection i" the !e4ai! of moto! ehicle" an$ moto!c#cle".


    %SIC CODE Section G 9hole"ale an$ Retail T!a$e: !e4ai! of moto! ehicle" an$ moto!c#cle" G!o&4 ; incl&$e all othe! "ale actiitie". The Di"tinction

    'et8een Dii"ion ;3 58hole"ale6 an$ Dii"ion ;> 5!etail "ale6 i" 'a"e$ on 4!e$ominant c&"tome!.

    The A&tomo'ile In$&"t!# i" al"o incl&$e$ 8ithin Dii"ion ;

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    4oli"hing of ehicle"- etc. Thi" $ii"ion $oe" not incl&$e the !etail "ale of the a&tomotie f&el an$

    l&'!icating cooling 4!o$&ct" o! the !enting of moto! ehicle" o! moto!c#cle".

    The A&tomo'ile in$&"t!# i" incl&$e$ in the cla"" ;

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    Se!ice" incl&$e$ a!e $e4en$" on the con$ition of the ca! afte! the 4&!cha"e. If the ca! i"

    le"" than th!ee #ea!" ol$ an$ ha" fe8e! than 3-222 mile" 5o! 8hatee! the te!m" of 8a!!ant#

    a!e6- mechanical 4!o'lem" 8ill 'e fi=e$ &n$e! the '&m4e!1to1'&m4e! 8a!!ant# fo! no cha!ge.

    Ho8ee!- thi" $oe"nt coe! 8ea! item" li,e '!a,e 4a$"- an$ "ince the ca! i" "till coe! &n$e! the

    !o&tine maintenance of the $eale!"hi4 fo! 8hich the c&"tome! !e(&i!e" to 4a#. Ro&tine

    maintenance i" mo"t often oil an$ filte! change"- ti!e !otation" an$ a!io&" in"4ection". Afte! 

    a'o&t the length of #o&! 8a!!ant#- the !o&tine maintenance often 'ecome" mo!e inole$ an$

    mo!e e=4en"ie- fo! e=am4le- the change of oil ee!# -222 mile"- filte! change- ti!e" !otation-

    maintenance !e4ai!"- etc. Bing a ne8 ca! 8ill me!it a co"t of a'o&t %)-

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    Inc.- To#ota Moto! Co!4o!ation- an$ Mit"&i  Com4an# Limite$. In the #ea! *77 o&tlet" nation8i$e. To#ota" mo$el" incl&$e

    @io"- Innoa- Fo!t&ne!- Ra;- Cam!# an$ man# mo!e mo$el". To#ota i" the $i"t!i'&to! of Le=&"

    '!an$ in the %hili44ine" an$ al"o incl&$e" a $eale!"hi4 in Met!o Manila 5GT Ca4ital- n.$.6.



    Moto!" Co!4o!ation i" the longe"t "ta#ing a&tomotie com4an# in the %hili44ine"- an$ it

    offe!" 8o!l$1cla"" 4!o$&ct" an$ "e!ice". Mit"&'i"hi ma!,et" *3 mo$el" of ehicle"- 8hich

    incl&$e Lance! E=- Monte!o- Mi!age- an$ man# mo!e mo$el". Hi,o"a'&!o Shi'ata i" the hea$ of 

    the Mit"&'i"hi Moto! Com4an#. The com4an# ma,e" tho&"an$ of ehicle" a #ea!. It ha" *72-));

    "(&a!e mete!" in O!tiga" aen&e e=ten"ion. M!. Shi'ata foc&"e" on fo&! mao! conce!n" namel#

    Man&fact&!ing- Ma!,eting- La'o! an$ Comm&nit# Inolement. Mit"&'i"hi Moto!" Co!4o!ation

    contin&o&" to 4!oi$e c&"tome!" 8ith the 'e"t 4!o$&ct" an$ "e!ice" 5CAM%I- )2*;6.



    H#&n$ai 8a" !an,e$ the fifth1la!ge"t a&toma,e!" in the #ea! )22> an$ it incl&$e" t8o

    a&to1!elate$ "&'"i$ia!ie". It e=4o!te$ it" fi!"t ma$e ca! calle$ the ?%on#K in *7>3. No8- H#&n$ai

    e=4o!t" a million high (&alitie" of ehicle". In )2*)- H#&n$ai "ol$ oe! .3 million ca!"

    8o!l$8i$e- an$ &4 to *3. 4e!cent in the #ea! )227. Since it i" em4lo#ing >-222 nation8i$e- it

    foc&"e" on im4lementing a ne8 glo'al 4olic# that incl&$e" 4!o$&ct $eelo4ment- $e"ign- "ale"-

    ma!,eting- an$ con"&me! "e!ice" to "ati"f# it" c&"tome!" 5H#&n$ai Moto! Com4an#- n.$.6.


    Fo!$ %hili44ine" ha" a fo&! 'illion Lag&na %lant locate$ in G!eenfiel$ a&tomotie 4a!, in

    Sta. Ro"a Lag&na. It ha" a ca4acit# of )

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    La"tl#- Fo!$ %hili44ine" i" the "econ$ la!ge"t a&tomotie com4an# in the 8o!l$ 5Fo!$

    %hili44ine"- )2*

  • 8/19/2019 Automobile Retail Industry



    Relation"hi4 of In$&"t!# to the Mac!oeconom#

    The a&tomo'ile !etail ma!,et i" infl&ence$ '# a a!iet# of in$ii$&al feat&!e" an$

    mac!oeconomic con$ition". Thi" incl&$e" ne8 ca! $eman$- fi!"t ca! e!"&" !e4lacement ca! 

    $eman$- &"e$ ca! $eman$- &"e$ an$ ne8 ca! "ale" !atio- ca! 4a!c $en"it# an$ income leel"

    5%MG- )2*6

    Ee!# a&tomotie !etail ma!,et goe" th!o&gh ce!tain mat&!it# "tage"+ fi!"tl# an ea"#

    "elling 4e!io$- it i" cha!acte!i/e$ '# "t!ong ne8 ca! $eman$ lea$ing to the $eelo4ment of a

    la!ge an$ !eo!gani/e$ !etail net8o!, "t!&ct&!e- follo8e$ '# a ha!$ "elling 4e!io$- lea$ing to a

    con"oli$ation an$ cent!ali/ation of the !etail net8o!,- $&e to $ec!ea"ing fi!"t1ca! $eman$. Each

    mat&!it# "tage !e(&i!e" a &ni(&e !etail "t!ateg# an$ $i"tinct "et of management com4etencie"

    an$ %I". The"e hae to 'e !e1eal&ate$ a" "oon a" a !etail ma!,et "ho8" "ign" of changing

    f!om ea"# to ha!$ "elling mo$e 5%MG- )2*6

    %a!t" !etaile!" a!e al"o affecte$ '# the no!mal mac!oeconomic eni!onment- '&t to a

    le""e! 4!o4o!tion. Thei! o8n me!chan$i"ing an$ !emo$eling initiatie" an$ &nit $eelo4ment

    "t!ategie" infl&ence the"e &"&all# le""1mat&!e- fa"te!1g!o8ing o&tfit". An$ al"o- the# a!e "&'ect to "ec&la! long1te!m t!en$"- incl&$ing fl&ct&ation" in the ol$e!1ehicle 4o4&lation an$ the

    n&m'e! of licen"e$ $!ie!". Beca&"e of thei! mo!e att!actie g!o8th 4!ofile"- 4a!t" com4an#

    "toc,"- '# an$ la!ge- t!a$e at highe! 4!iceea!ning" m&lti4le" than $eale! i""&e". Nota'l#- a'o&t

    >2 of all 4a!t" 4&!cha"e" ma$e '# con"&me!" an$ comme!cial c&"tome!" a!e nee$1'a"e$-

    !athe! than $i"c!etiona!#. Thi" hel4" to "hiel$ afte!ma!,et 4a!t" !etaile!" f!om &n8elcome

    economic hea$8in$" [email protected]&e line Co!4.- )2*

  • 8/19/2019 Automobile Retail Industry


    Partnering with Automaker


    Managing Inventory

    Distributing Invetory

    Operating Stores


    g Demonstration

    Negotiating the Sale

    Chapter II: Basic Demand and Supply Conditions

     A. S&44l# Con$ition"

    %!o$&ction %!oce""

    Figure 1: Production Process of Autoobi!e "ndustry

     A&tomo'ile Retail In$&"t!# i" the '&"ine"" of "elling ne8 an$ &"e$ ca!". The 4!oce""

    inole$ in "elling ca!". Deale!"hi4 a$e!ti"e" a&tomo'ile" the