Industry & Competitive Analysis  - Automotive Industry -  Group 4 Danny Dharmawan Kosasih Ratih Damayanti Widyarini Utami
Presentation Flow <ul><li>Introduction </li></ul><ul><li>Structure   </li></ul><ul><ul><li>Market structure. </li></ul></u...
Introduction
ASEAN Car Market <ul><li>Biggest World Car Makers: Toyota, Mitsubishi, Suzuki, General Motor and Ford have been expanding ...
Indonesia: Where are we standing? <ul><li>4 wheelers population in Indonesia per 2005  =  14.471.750* or increased by 325%...
Indonesia: 2010 Vision <ul><li>Automotive industry is one of accelerator industries to achieve 7% economic growth </li></u...
Indonesia Economic Indicator Forecast Source: Economist Intelligence Unit. Country Forecast: Indonesia, September 2006 9.7...
IIMS 15 th 19 - 28 July ‘07
Structure
Market Structure:  Monopolistic Competition <ul><li>Astra International (AI)  &   Indomobil Niaga International  are two l...
Market Structure: ATPM Competition Source: Gaikindo – Q1 2007 China Chery Unicor Prima Motor, PT France Renault Auto Euro ...
<ul><li>Other companies have been established by self. </li></ul>Market Structure: ATPM Competition Countries of Origin  B...
Market Structure: Market Domination <ul><li>Astra International dominates the total car market in Indonesia </li></ul>Dome...
Business Scheme <ul><li>Taken example from Toyota Astra Motor (TAM) which shows manufacturer company with Supplier – Produ...
Car Categorization <ul><li>Passengers cars consist of 3 types: sedan, MPV 4X2 & SUV 4X4 each with different types in engin...
Production Capacity  <ul><li>Toyota Motor Manufacturing Indonesia (TMMIN) has the largest production capacity among car as...
Assembling Companies & Capacity   Source: Gaikindo – Q1 2007 51,000 Isuzu PMA 1974 Pantja Motor, PT 170,000 Toyota PMA 197...
Largest Brands Sales in Indonesia 2005-2006 Source: Gaikindo  – 2007 100 318,904 Total Domestic Sales 100 533,917 Total Do...
Market Concentration:  Herfindahl-Hirschman Index (HII)  <ul><li>Herfindahl-Hirschman index (HII) equals the sum of the sq...
Government Policy  <ul><li>Auto industry in Indonesia began to expand the operatioin of brand holding sole agent (ATPM) th...
Luxury sales tax (PPnBM) effective after the revocation of PP No. 41 Source: Gaikindo  – Q1 2007 5% 25% 20% GVW < 5 ton  D...
The Environmental Issues  <ul><li>The  emission standard of Euro 2  is a standard used to reduce waste gas emission of mot...
Conduct
Automotive Industry in  Porter’s Five Forces Competition among Rivalry Buyers (Buyer Power) Suppliers (Suppliers Power) Th...
<ul><li>Bargaining leverage </li></ul><ul><li>Buyer concentration </li></ul><ul><li>vs. firm concentration </li></ul><ul><...
Rivalry among the competition: Car maker companies Source: Gaikindo  – 2007 PT. Honda Prospect Motor PT. Tjahja Sakti Moto...
Rivalry among the competition: New Brand/Model (1)   BMW 740i       BMW 620i BMW X3     BMW 320i Honda New City     BMW 12...
Rivalry among the competition: New Brand/Model (2)   Mercedes B170       Mercedes E280       Mercedes C280       Mercedes ...
Rivalry among the competition: New Brand/Model (3) <ul><li>Effect of new types on sales </li></ul><ul><li>The appearance o...
Entry Barriers        X X X X X  <ul><li>Expected retaliation </li></ul><ul><li>Access to distribution </li></ul><u...
Suppliers <ul><li>Astra  Group owns  28  supplier companies Vs Indomobil  18  companies </li></ul># of suppliers Component...
Buyers (1) : Sole Distributor Source: Gaikindo  – 2007 124 PT Astra International Daihatsu Sales Operation PT Astra Daihat...
Buyers (2) : Main Dealers Source: Gaikindo  – 2007 54 Honda Jakarta Centre Honda Bandung Centre Honda Semarang Centre Hond...
Buyers (3) : Official & Independent Dealers Source: Gaikindo  – 2007 46 PT. General Motor Indonesia General Motor Corporat...
Buyers : Customer Purchasing Power <ul><li>+/- 32 Car Financing companies – not including Banks </li></ul>Source: Gaikindo...
New Entrant – Threat From Chinese Car
Substitute <ul><li>2 Wheelers – population in 2005 = 33.193.076* </li></ul><ul><li>Mass / Public Transportation </li></ul>...
Summary High Industry Attractiveness Low Buyer power Medium Supplier power Medium to High Substitutes/Complements Low to M...
Performance
Car Sales - Domestic Market, 1999-2006 <ul><li>469% Increase in the 1999-2005 period </li></ul><ul><li>In 2000, sales surg...
Car Sales By Categories 2006 <ul><li>Sales on the domestic market in 2005 and 2006 were dominated by MPV and SUV, with sal...
Car Sales By Categories 2005 - 2006 Source : Gaikindo Q1 2007 318,904 40,738 56,921 203,342 17,903 2006 533,917 66,401 103...
Sales in 2007 Increasing  Source: Gaikindo  – 2007
Profitability  Sources: Financial Statement each company 0.11 0.14 0.13 0.13 0.14 ROE 0.04 0.05 0.05 0.05 0.05 ROA        ...
Competitive Strategy
Business Strength Matrix <ul><li>Strategic Options for Toyota : Grow, Seek Dominance, Maximize, Investment* </li></ul>Sour...
Capacity Per Year / Sales 2006 <ul><li>Toyota sales overlapping its production capacity – this shortage is fulfilled by Da...
Business Strategy Recommendation <ul><li>Maintain & launching new type model  </li></ul><ul><ul><li>MPV </li></ul></ul><ul...
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Industry & Competitive Analysis - Automotive Industry

  1. 1. Industry & Competitive Analysis - Automotive Industry - Group 4 Danny Dharmawan Kosasih Ratih Damayanti Widyarini Utami
  2. 2. Presentation Flow <ul><li>Introduction </li></ul><ul><li>Structure </li></ul><ul><ul><li>Market structure. </li></ul></ul><ul><ul><li>Car Categories </li></ul></ul><ul><ul><li>Herfindahl-Hirschman index (HII) </li></ul></ul><ul><ul><li>Government Policies & Environment Issues </li></ul></ul><ul><li>Conduct </li></ul><ul><ul><li>Porter’s Five Forces </li></ul></ul><ul><li>Performance </li></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Profitability </li></ul></ul><ul><li>Competitive Strategy </li></ul><ul><ul><li>Business Strategy Recommendation </li></ul></ul>
  3. 3. Introduction
  4. 4. ASEAN Car Market <ul><li>Biggest World Car Makers: Toyota, Mitsubishi, Suzuki, General Motor and Ford have been expanding to Asia region </li></ul><ul><li>They place production bases in ASEAN countries – for efficiency and marketing deeds </li></ul><ul><li>Japanese Car dominates ASEAN market </li></ul><ul><li>New contenders: China and Malaysia </li></ul><ul><li>AFTA sharpened automotive competition in ASEAN – in 2003 </li></ul>
  5. 5. Indonesia: Where are we standing? <ul><li>4 wheelers population in Indonesia per 2005 = 14.471.750* or increased by 325% in the past 10 years </li></ul><ul><li>Indonesia is becoming production centre </li></ul><ul><li>ATPMs in Indonesia now only hold distribution </li></ul><ul><li>While manufacturing trend are operated by foreign car makers: i.e. Toyota and Suzuki </li></ul><ul><li>No clear policy to protect domestic competition </li></ul><ul><li>Next question, where are we heading to? </li></ul>* Source: Direktorat Samapta Polri/ GIAMM – notes: not included Ranmor ABRI and diplomatic corps - 2005
  6. 6. Indonesia: 2010 Vision <ul><li>Automotive industry is one of accelerator industries to achieve 7% economic growth </li></ul><ul><ul><li>Textile, Shoes & apparels </li></ul></ul><ul><ul><li>Electronics and its components </li></ul></ul><ul><ul><li>Automotive and its components </li></ul></ul><ul><ul><li>Shipping & docks </li></ul></ul><ul><ul><li>Source: Visi 2030 & Roadmap 2010 Industri Nasional – KADIN 2007 </li></ul></ul>
  7. 7. Indonesia Economic Indicator Forecast Source: Economist Intelligence Unit. Country Forecast: Indonesia, September 2006 9.759 5.7 0,5 -0.3 3.6 6.2 2010* 9.310 6.0 0.9 -0.7 4.6 6.5 2008* 9.116 8.5 0.4 -0.8 7.0 6.0 2007* 9,166 11.3 0.4 -1.1 13.2 5.3 2006 9.528 5.9 0.7 -0.4 4.0 6.3 2009* <ul><li>IDR / USD – Y^Y (Rp) </li></ul><ul><li>Interest (%) – Y^Y </li></ul><ul><li>Balance of Payment - % to GDP Growth </li></ul><ul><li>Budget Surplus (+) /Deficit (-) </li></ul><ul><li>Inflation (%) </li></ul><ul><li>GDP growth (%) </li></ul>
  8. 8. IIMS 15 th 19 - 28 July ‘07
  9. 9. Structure
  10. 10. Market Structure: Monopolistic Competition <ul><li>Astra International (AI) & Indomobil Niaga International are two largest automotive companies in the country having affiliation with a number of foreign principals. </li></ul><ul><li>They become agents for the Indonesian market. </li></ul>Vs
  11. 11. Market Structure: ATPM Competition Source: Gaikindo – Q1 2007 China Chery Unicor Prima Motor, PT France Renault Auto Euro Indonesia, PT Japan Hino Hino Motor Sales Indonesia, PT South Korea Ssangyong Indobuana Auto Raya, PT Japan Nissan Nissan Motor Indonesia, PT Germany Audi, VW Caravelle Garuda Mataram Motor Sweden Volvo Central Sole Agency, PT Japan Suzuki Indomobil Suzuki International, PT Indomobil Group Germany BMW Tjahja Sakti Motor, PT France Peugeot Astra France Motor, PT Japan Daihatsu Astra Daihatsu Motor, PT Japan Nissan Diesel Astra Nissan Diesel Indonesia, PT Japan Isuzu Pantja Motor Japan Toyota Toyota Astra Motor, PT Astra Group : Countries of Origin Brands Name of company ATPM by groups and brands
  12. 12. <ul><li>Other companies have been established by self. </li></ul>Market Structure: ATPM Competition Countries of Origin Brands Name of company Source : Gaikindo – Q1 2007 Japan Mazda Mazda Motor Indonesia, PT Japan Subaru TC Subaru, PT Malaysia Proton Proton Edar Indonesia, PT Germany Porche Eurokars Chrisdeco Utama, PT Germany VW Car & Cars Indonesia, PT South Korea Daewo Starauto Dinamika, PT Britain Land Rover Java Motors, PT United States Ford Ford Motor Indonesia, PT South Korea KIA KIA Mobil Indonesia, PT South Korea Hyundai Hyundai Indonesia Motor, PT Britain Bentley, Daimler, Jaguar, Roll Royce Grandauto Dinamika, PT United States Chevrolet General Motors Indonesia, PT   Germany Mercedes-Benz,Chrysler, Jeep Daimler Chrysler Indonesia, PT Others Japan Honda Honda Prospect Motor, PT Imora Group Japan Mitsubishi Krama Yudha Tiga Berlian Motors Krama Yudha Group
  13. 13. Market Structure: Market Domination <ul><li>Astra International dominates the total car market in Indonesia </li></ul>Domestic Car Sales 2007 Domestic Car Sales 2006 - 2007 Source: www.astra.co.id – 18 July 2007
  14. 14. Business Scheme <ul><li>Taken example from Toyota Astra Motor (TAM) which shows manufacturer company with Supplier – Production – Buyer business scheme </li></ul>TMMIN TAM TMMIN Source: www.astra.co.id – 18 July 2007 TAM
  15. 15. Car Categorization <ul><li>Passengers cars consist of 3 types: sedan, MPV 4X2 & SUV 4X4 each with different types in engine capacity </li></ul><ul><li>Commercial cars consist of 3 types: bus, pick up/truck, double cabin 4X2/4X4 each with different weight (gross vehicle weight) </li></ul>Categories of Commercial Cars Source: Gaikindo – Q1 2007 For all cc   GVW < 5 ton (G/D) Double Cabin 4 x 2 / 4 x 4 GVW > 24 ton (G/D)   GVW 10 - 24 ton (G/D)   GVW 5 - 10 ton (G/D)   GVW < 5 ton (G/D) Pick Up / Truck GVW > 24 ton (G/D)   GVW 10 - 24 ton (G/D)   GVW 5 - 10 ton (G/D) Bus Cc > 3,0 lt (G) / 2,5 (D)   1,5 lt < cc < 3,0 lt (G) / 2,5 (D)   CC < 1,5 lt (G/D) SUV 4 x 4 Cc > 3,0 lt (G) / 2,5 (D)   2,5 lt < cc < 3,0 lt (G)   1,5 lt cc < 2,5 lt (G/D)   CC < 1,5 lt (G/D) MPV 4 x 2 Cc > 3,0 lt (G) / 2,5 (D)   1,5 lt cc < 3,0 lt (G) / 2,5 (D)   CC < 1,5 lt (G/D) Sedan Categories of Passenger Cars
  16. 16. Production Capacity <ul><li>Toyota Motor Manufacturing Indonesia (TMMIN) has the largest production capacity among car assembling companies in the country with a total capacity of 170,000 units a year </li></ul><ul><li>Indomobil is the second largest in capacity of production 120,000 units a year </li></ul>170,000 Toyota PMA 1971 Toyota Astra Motor, PT Source: Gaikindo – Q1 2007 120,000 Suzuki PMA 1976 Indomobil Suzuki International, PT Prod. Cap. (unit/year) Brand Status Year of Estblsh Name of assembling Company Car assembling companies and production capacity
  17. 17. Assembling Companies & Capacity Source: Gaikindo – Q1 2007 51,000 Isuzu PMA 1974 Pantja Motor, PT 170,000 Toyota PMA 1971 Toyota Astra Motor, PT 1,440 Mitsubishi Bus PMDN 1986 Trijaya Union, PT 21,000 Suzuki, Mazda, KIA PMDN 1971 National Assemblers, PT   100,000 Mitsubishi Colt 120SS, Colt L300, Colt Diesel FE, Fuso PMDN 1975 Krama Yudha Ratu Motors,PT 12,000 Audi, VW, Ssangyong, Volvo, Nissan PMA  1995 Nissan Motor Indonesia, PT 42,000 Honda PMA 1976 Honda Prospect Motor, PT 10,000 Hino PMA 1982 Hino Indonesia Manufacturing, PT 120,000 Suzuki PMA 1976 Indomobil Suzuki International, PT 30,400 Chevrolet PMA 1993 General Motor Indonesia, PT   60,000 BMW, Isuzu, Peugeot, Daihatsu, Nissan, Diesel PMDN 1969 Gaya Motor, PT   8,000 Chrysler, Dodge, Jeep PMA 1970 PT (Mercedes Benz Ind, PT)   Mercedes Benz,     Daimler Chrysler Indonesia, 6,500 Nissan Diesel (Truck) PMA 1984 Astra Nissan Diesel Ind, PT 105,000 Daihatsu PMA 1978 Astra Daihatsu Motor, PT Prod. Cap. (unit/year) Brand Status Year of Estblsh Name of assembling Company
  18. 18. Largest Brands Sales in Indonesia 2005-2006 Source: Gaikindo – 2007 100 318,904 Total Domestic Sales 100 533,917 Total Domestic sales 73,4 234,101 Sub total 71,1 379,465 Sub total 3,4 10,722 Mitsubishi L 300 3,5 18,846 Isuzu Panther 10 3,6 11,615 Isuzu Panther 3,6 19,431 Mitsubishi L 300 9 3,9 12,283 Suzuki APV 4,2 22,187 Mitsubishi T-120 SS 8 4,2 13,479 Toyota Dyna 5,2 27,505 Daihatsu Xenia 7 5,8 18,581 Honda Jazz 5,2 27,882 Suzuki APV 6 6,8 21,740 Mitsubishi Colt Diesel FE 6,0 32,241 Honda Jazz 5 7,3 23,301 Suzuki Carry/ Futura 6,6 35,470 Mitsubishi Colt Diesel FE 4 7,4 23,555 Daihatsu Xenia 9,9 47,896 Suzuki Carry/ Futura 3 14,6 46,565 Toyota Kijang 10,3 54,893 Toyota Avanza 2 16,4 52,260 Toyota Avanza 17,4 93,114 Toyota Kijang 1 % Units Brand/model % Units Brand/model Year 2006 Year 2005 Ranks
  19. 19. Market Concentration: Herfindahl-Hirschman Index (HII) <ul><li>Herfindahl-Hirschman index (HII) equals the sum of the squared market shares of all the firms in the market. HHI = Σ i (S i ) 2. </li></ul><ul><li>Indonesian Automotive Industry HHI = 0.22 (low concentration market) </li></ul>% Source: Gaikindo – 2007 0.22 100   Total 0.00 0.4 Peugeot & Nissan Diesel 0.00 5.2 Isuzu 0.01 7.1 others 0.01 9.4 Honda 0.01 10.4 Daihatsu 0.02 14.0 Suzuki 0.02 14.7 Mitsubishi 0.15 38.8 Toyota (Si)^2 Market Share 2006 (%)  
  20. 20. Government Policy <ul><li>Auto industry in Indonesia began to expand the operatioin of brand holding sole agent (ATPM) through the decision of Industry Minister No.295/1982 and No.428/1987 </li></ul><ul><li>The regulation measure of 1999 constituted a fundamental change in the country automotive policy, allowing imports of cars in the form of CBU cause change in market competition and competition became sharper after that year. Thus the import duties were reduced to 25%-50% on CKD and 40%-80% on CBU cars. </li></ul><ul><ul><li>Provided import duty facility to PT Astra Daihatsu Motor with a decision of the finance minister No. 195/KMK.10/2006 on 11 April 2006. </li></ul></ul><ul><ul><li>Same facility was given to PT Proton Edar Indonesia base on a decision of the finance minister No. 530/MK.10/2005 to import 1,300 units of CBU car. </li></ul></ul><ul><li>The reduction of the import duties is also in line with the AFTA Scheme, which was first implemented in 2003. </li></ul><ul><li>On October 2005, government raised the sales taxes on luxurious goods. Later, however, the government regulation PP No.41/2005 was cancelled on public protest especially by auto industrialists. </li></ul>
  21. 21. Luxury sales tax (PPnBM) effective after the revocation of PP No. 41 Source: Gaikindo – Q1 2007 5% 25% 20% GVW < 5 ton Double Cabin, All CC Double Cabin 4X2/4X4 Commercial Car 0% 75% 75% CC > 3,0 lt 10% 50% 40% 1,5 lt < CC = 3,0 lt 0% 30% 30% CC < 1,5 lt SUV (4X4) 0% 75% 75% CC > 3,0 lt 10% 50% 40% 2,5 lt < CC = 3,0 lt 5% 25% 20% 1,5 lt < CC = 2,5 lt 0% 10% 10% CC < 1,5 lt MPV (4X2) 0% 75% 75% CC < 3.0 lt 10% 50% 40% 1,5 lt < CC <3,0 lt 0% 30% 30% CC < 1,5 lt Sedan Passenger Car Increase 2005 (cancelled) 2003 (effective) PPnBM Engine Capacity Category
  22. 22. The Environmental Issues <ul><li>The emission standard of Euro 2 is a standard used to reduce waste gas emission of motor vehicles efective all over the world </li></ul><ul><li>In Indonesia the Euro 2 standard is legalized a decision of the state minister of the environment No. 141/2003 but its implementation was delayed as automotive industry was not immediately ready to implement it. However, almost all over automotive factories agred to comply with the regulation to adopt the Euro 2 standard. </li></ul><ul><li>The regulation became effective on January 2007 for new motor vehicles </li></ul><ul><li>TAM has started with Vios & Limo cars. Suzuki products using the standard including Carry, Karimun, Katana , APV with Catalytic Converter (CC). Daihatsu will upgrade Zebra by adopting the Electronic Fuel Injector (EFI) and addition of CC. Honda have been produced with the engine technology friendly with the environment, even Jazz, CR-V, Accord and Odyssey already meet the standard of Euro 4. </li></ul>
  23. 23. Conduct
  24. 24. Automotive Industry in Porter’s Five Forces Competition among Rivalry Buyers (Buyer Power) Suppliers (Suppliers Power) Threat of New Entrant Substitutes Source: Michael E. Porter - Competitive Strategy
  25. 25. <ul><li>Bargaining leverage </li></ul><ul><li>Buyer concentration </li></ul><ul><li>vs. firm concentration </li></ul><ul><li>Buyer volume </li></ul><ul><li>Buyer information </li></ul><ul><li>Buyer switching costs </li></ul><ul><li>relative to firm </li></ul><ul><li>switching costs </li></ul><ul><li>Pull-through </li></ul><ul><li>Substitute products </li></ul><ul><li>Ability to backward </li></ul><ul><li>integrate </li></ul><ul><li>Price sensitivity </li></ul><ul><li>Price/total purchases </li></ul><ul><li>Impact on quality/ </li></ul><ul><li>performance </li></ul><ul><li>Product differences </li></ul><ul><li>Brand identity </li></ul><ul><li>Buyer profits </li></ul><ul><li>Decision makers’ </li></ul><ul><li>incentives </li></ul>BUYER POWER <ul><li>THE THREAT OF </li></ul><ul><li>SUBSTITUTES </li></ul><ul><li>Relative price performance of </li></ul><ul><li>substitutes </li></ul><ul><li>Switching costs </li></ul><ul><li>Buyer propensity to substitute </li></ul>ELEMENTS OF INDUSTRY STRUCTURE – PORTER’S FIVE FORCES Industry Competitors <ul><li>SUPPLIER POWER </li></ul><ul><li>Supplier concentration </li></ul><ul><li>Importance of volume to supplier </li></ul><ul><li>Differentiation of inputs </li></ul><ul><li>Impact of inputs on cost or differentiation </li></ul><ul><li>Switching costs of supliers and firms in industry </li></ul><ul><li>Presence of substitute inputs </li></ul><ul><li>Threat of forward integration relative to threat of backward integration by firms in industry </li></ul><ul><li>Cost relative to total purchases in industry </li></ul><ul><li>THE DEGREE OF RIVALRY </li></ul><ul><li>Concentration and balance </li></ul><ul><li>Fixed (or storage) costs/value added </li></ul><ul><li>Intermittent overcapacity </li></ul><ul><li>Industry growth </li></ul><ul><li>Product differences </li></ul><ul><li>Brand identity </li></ul><ul><li>Switching costs -> </li></ul><ul><li>Informational complexity </li></ul><ul><li>Diversity of competitors </li></ul><ul><li>Corporate stakes </li></ul><ul><li>Exit barriers </li></ul><ul><li>THE THREAT OF ENTRY </li></ul><ul><li>(Entry Barriers) </li></ul><ul><li>Absolute cost advantages </li></ul><ul><li>Proprietary learning curve </li></ul><ul><li>Access to necessary inputs </li></ul><ul><li>Proprietary low-cost product design </li></ul><ul><li>Government policy </li></ul><ul><li>Economies of scale </li></ul><ul><li>Capital requirements </li></ul><ul><li>Proprietary product differences </li></ul><ul><li>Brand identity </li></ul><ul><li>Switching costs </li></ul><ul><li>Access to distribution </li></ul><ul><li>Expected retaliation </li></ul>
  26. 26. Rivalry among the competition: Car maker companies Source: Gaikindo – 2007 PT. Honda Prospect Motor PT. Tjahja Sakti Motor PT. Hino Indonesia Manufacturing PT. Indomobil Suzuki PT. Astra Daihatsu Motor PT.Toyota Astra Motor Name of companies Honda Motor Co. Ltd 51% Honda Prospect Motor 49% Honda Motor Co. Ltd 49% Honda Prospect Motor 51 % 1,602 bio PT. Tjahja Sakti Motor (manufacturing) - Astra International 100% PT BMW Indonesia (Sales / Distribution) - BMW AG 100% BMW AG 50% Astra International 50% n/a Hino Manufacturing 90% Indomobil Sukses Int'l 10%- Hino Manufacturing 60% Indomobil Sukses 20% Sumitomo Corp. 10% 557 bio Suzuki Motor Corp. 90% Indomobil Sukses Int'l 10% Suzuki Motor Corp 40% Indomobil Sukses Int'l 51% n/a Daihatsu Motor Corp 61.75% Toyota Tsusho Corp. 6.38% Astra International 31.87% Daihatsu Motor Corp. 40% Nichimen Corp. 10% Astra Int'l 50% 2,174 bio Toyota Motor Manufacturing Indonesia (TMMIN) - (manufacturing) - Toyota Motor Corp. 95% - Astra International 5% Toyota Astra Motor (TAM) - (distribution) - Toyota Motor Corp. 49% - Astra International 51% Toyota Motor Corp. 49 /o Astra International 51% 4,065 bio Shareholders and share split after restructuring Shareholders and share split before restructuring Total Assets (Rp)
  27. 27. Rivalry among the competition: New Brand/Model (1)   BMW 740i       BMW 620i BMW X3     BMW 320i Honda New City     BMW 120i Suzuki Carabian   Toyota Hi Lux Hyundai New Atoz Toyota Camry June   Mercy A-150 BMW 760 Li May     Chevrolet Zafira     KIA Big Up KIA Picanto     KIA Carens SE Plus Toyota Limo April Peugeot 407   Mercedes CLS 500       Mercedes CLS 350 Audi A8     Daihatsu Taruna OXXY KIA Sorento March   Nissan Murano       Nissan TiiDa Honda Jazz     Mitsubishi Grandis Suzuki Every February   Honda New CRV Mazda RX 8     Honda Odyssey Daihatsu Xenia   Toyota Yaris Toyota Kijang Innova Toyota Avanza January Year 2006 Year 2005 Year 2004   New products Month  
  28. 28. Rivalry among the competition: New Brand/Model (2)   Mercedes B170       Mercedes E280       Mercedes C280       Mercedes C230 VW Touareg October   KIA Pride Ford Ranger DC     Ford Focus Nissan Teana   Chery QQ Suzuki Swift Toyota Kijang Innova September     VW New Caravelle   Mercedes R350L   Chevrolet Spark   Nissan Latio Peugeot 407 2,9 Nissan New Serena   Chevrolet Kalos BMW 750 Li Daihatsu New Taruna   Daihatsu Xenia VVTi BMW 523 Daihatsu New Zebra   Toyota Avanza VVTi Mitsubishi Maven Suzuki APV August   Nissan X-Trail STT Renault Megane   Hyundai Azera Hyundai Tucson Chevrolet Aveo   Suzuki Grand Vitara Toyota Fortuner Nissan New Cedric July Year 2006 Year 2005 Year 2004   New products Month  
  29. 29. Rivalry among the competition: New Brand/Model (3) <ul><li>Effect of new types on sales </li></ul><ul><li>The appearance of new types of cars has its effects on sales on the domestic market, but effects are not always significant in increasing sales. </li></ul><ul><li>In 2004, there were a number of new models and some of them succeeded to become market leader until 2006 such as Toyota Avanza, Daihatsu Xenia, Honda jazz, Toyota Innova and Suzuki APV. </li></ul>Toyota Rush BMW 735i Nissan Murano December Toyota Dyna 110, 130 Chevrolet Estate     Hino Dutro       Lexus LS 460       Peugeot 607       Mazda 6           Mercedes SL 350       Mercedes C240 Wgn       Mitsubishi T120ss 1,5     BMW M5 Mitsubishi L200 November Year 2006 Year 2005 Year 2004   New products Month  
  30. 30. Entry Barriers       X X X X X  <ul><li>Expected retaliation </li></ul><ul><li>Access to distribution </li></ul><ul><li>Switching costs </li></ul><ul><li>Brand identity </li></ul><ul><li>Proprietary product differences </li></ul><ul><li>Capital requirements </li></ul><ul><li>Economies of scale </li></ul><ul><li>Government policy </li></ul><ul><li>Proprietary low-cost product design </li></ul><ul><li>Access to necessary inputs </li></ul><ul><li>Proprietary learning curve </li></ul><ul><li>Absolute cost advantages </li></ul>
  31. 31. Suppliers <ul><li>Astra Group owns 28 supplier companies Vs Indomobil 18 companies </li></ul># of suppliers Components name 6 Wheel Rim / Alloy 8 Rubber parts 14 Body/ Press part & component 4 Exhaust Pipe & Muffler 5 Gasket 8 Filters 3 Clutch & Clutch Facing 14 Engine Part/ Assembly 2 Safety belt 2 AC, Compressor, Evaporator 12 Brake system 3 Leaf & coil spring 3 Shock Absorber 3 Axle 2 Frame/ Chasis 6 Dies, Jig & Stamping # of suppliers Components name Source: GIAMM/ Gaikindo 2007 8 Others 6 Battery 2 Safety glass 5 Steering system 11 Plastic parts / accessories 6 Sit & interior component 9 Electrical component 4 Wiring harness 2 Transmission 4 Radiator 3 Spark plug 1 Speedometer
  32. 32. Buyers (1) : Sole Distributor Source: Gaikindo – 2007 124 PT Astra International Daihatsu Sales Operation PT Astra Daihatsu Motor Daihatsu Motor Co. Daihatsu 25 PT Astra International Peugeot Sales Operation PT Astra France Motor Peugeot Motor Co. Peugeot 30 PT Hino Motor Sales Indonesia PT Hino Motor Manufacturing Indonesia Hino Motor Ltd Hino 22 PT Daimler Chrysler Distribution Indonesia PT Daimler Chrysler Indonesia Daimler Chrysler Mercedes 23 PT BMW Indonesia PT Tjahja Sakti Motor BMW AG BMW 98 PT Astra Intl. - Isuzu Sales Operation PT Pantja Motor Isuzu Motor Ltd Isuzu 202 PT Indomobil Niaga International PT Indomobil Suzuki International Suzuki Motor Corporation Suzuki Number of Dealers Sole distributors ATPM Principals Brands
  33. 33. Buyers (2) : Main Dealers Source: Gaikindo – 2007 54 Honda Jakarta Centre Honda Bandung Centre Honda Semarang Centre Honda Surabaya Centre Honda Cikarang Centre PT. Honda Prospect Motor Honda Motor Co. Ltd Honda 142 Auto 2000 PT. New Ratna Motor PT. Hadji Kalla Trading Company PT. Hasrat Abadi PT. Agung Automall Toyota Astra Motor Toyota Motor Corporation Toyota Number of Dealers Main Dealers ATPM Principals Brands
  34. 34. Buyers (3) : Official & Independent Dealers Source: Gaikindo – 2007 46 PT. General Motor Indonesia General Motor Corporation Chevrolet 6 PT. Ford Motor Indonesia Ford Motor Company Ford 77 PT. KIA Mobil Indonesia KIA Motor Corporation KIA 36 PT. Hyundai Indonesia Motor Hyundai Motor Company Hyundai 140 PT. KTB Mitsubishi Motor Company Mitsubishi Number of Dealers ATPM Principals Brands
  35. 35. Buyers : Customer Purchasing Power <ul><li>+/- 32 Car Financing companies – not including Banks </li></ul>Source: Gaikindo – 2007 Buyers : Financing Companies Source: Gaikindo – 2007 > Rp. 200 million Rp. 150 – 200 million +/- Rp. 100 million Price around Brisk with many players High Sharp in competition Middle Lead in Market Share Low Competition Intensity Brands 32,528 54,214 170 318,904 2006 52,858 88,096 165 533,917 2005 46,382 28,858 21,448 Financing Value (Rp. Billion) 77,304 54,967 47,662 Total Value 483,148 354,629 317,748 Volume of Sales (unit) 160 155 150 Price (Rp million/unit) 2004 2003 2002 Year
  36. 36. New Entrant – Threat From Chinese Car
  37. 37. Substitute <ul><li>2 Wheelers – population in 2005 = 33.193.076* </li></ul><ul><li>Mass / Public Transportation </li></ul>* Source: Direktorat Samapta Polri/ GIAMM – notes: not included Ranmor, ABRI and diplomatic corps - 2005
  38. 38. Summary High Industry Attractiveness Low Buyer power Medium Supplier power Medium to High Substitutes/Complements Low to Medium Entry High Internal rivalry Threat to profits Force
  39. 39. Performance
  40. 40. Car Sales - Domestic Market, 1999-2006 <ul><li>469% Increase in the 1999-2005 period </li></ul><ul><li>In 2000, sales surged to 300,965 units from only 98,813 units in 1999, due to deregulation in importing duties </li></ul><ul><li>After 2001, sales grew steadily until peaking at 533,917 units in 2005. </li></ul><ul><li>In 2006, sales dropped to 318,904 units as a result of drastic hikes in the oil fuel price late 2005. The fuel price hike weakened the buying power of the people. </li></ul>469% Source: Gaikindo – Q1 2007
  41. 41. Car Sales By Categories 2006 <ul><li>Sales on the domestic market in 2005 and 2006 were dominated by MPV and SUV, with sales totaling 328,272 units in 2005 and 203,342 units in 2006. </li></ul><ul><li>The market share of MPV and SUV rose because of sharper fall in the sales of other types of cars. </li></ul>%
  42. 42. Car Sales By Categories 2005 - 2006 Source : Gaikindo Q1 2007 318,904 40,738 56,921 203,342 17,903 2006 533,917 66,401 103,731 328,272 35,513 2005 Truck Pick Up MPV-SUV Sedan   Total   Category of comm. Cars Category of pass. Cars Year
  43. 43. Sales in 2007 Increasing Source: Gaikindo – 2007
  44. 44. Profitability Sources: Financial Statement each company 0.11 0.14 0.13 0.13 0.14 ROE 0.04 0.05 0.05 0.05 0.05 ROA           Toyota 0.16 0.16 0.15 0.14 0.13 ROE 0.06 0.06 0.05 0.06 0.05 ROA           Honda  2003 2004 2005 2006 2007 – Q1  
  45. 45. Competitive Strategy
  46. 46. Business Strength Matrix <ul><li>Strategic Options for Toyota : Grow, Seek Dominance, Maximize, Investment* </li></ul>Source: Business Growth Strategies For Asia Pacific Relative Competitive Strength Industry Attractiveness Hi Lo Hi Med Med
  47. 47. Capacity Per Year / Sales 2006 <ul><li>Toyota sales overlapping its production capacity – this shortage is fulfilled by Daihatsu production which also made Toyota Avanza and Toyota Rush </li></ul>
  48. 48. Business Strategy Recommendation <ul><li>Maintain & launching new type model </li></ul><ul><ul><li>MPV </li></ul></ul><ul><ul><li>SUV </li></ul></ul><ul><li>Acquire consumer purchasing power segment </li></ul><ul><ul><li>Around Rp. 100 – 150 million </li></ul></ul><ul><li>Innovate fuel efficient car </li></ul><ul><li>Maintain increase Brand Image </li></ul><ul><li>Strategic alliance with Insurance and Financing companies </li></ul><ul><li>Increase amount of Dealer & improve After Sales Service </li></ul>
  49. 49. Thank You
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