Industry & Competitive Analysis - Automotive Industry

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Slides for team presentation at MMUGM class of Industry and Competitive analysis

Text of Industry & Competitive Analysis - Automotive Industry

  • Industry & Competitive Analysis- Automotive Industry -Group 4 Danny Dharmawan Kosasih Ratih Damayanti Widyarini Utami

Presentation Flow

  • Introduction
  • Structure
    • Market structure.
    • Car Categories
    • Herfindahl-Hirschman index (HII)
    • Government Policies & Environment Issues
  • Conduct
    • Porters Five Forces
  • Performance
    • Sales
    • Profitability
  • Competitive Strategy
    • Business Strategy Recommendation

Introduction ASEAN Car Market

  • Biggest World Car Makers: Toyota, Mitsubishi, Suzuki, General Motor and Ford have been expanding to Asia region
  • They place production bases in ASEAN countries for efficiency and marketing deeds
  • Japanese Car dominates ASEAN market
  • New contenders: China and Malaysia
  • AFTA sharpened automotive competition in ASEAN in 2003

Indonesia: Where are we standing?

  • 4 wheelers population in Indonesia per 2005=14.471.750* or increased by 325% in the past 10 years
  • Indonesia is becoming production centre
  • ATPMs in Indonesia now only hold distribution
  • While manufacturing trend are operated by foreign car makers: i.e. Toyota and Suzuki
  • No clear policy to protect domestic competition
  • Next question, where are we heading to?

* Source: Direktorat Samapta Polri/ GIAMM notes: not included Ranmor ABRI and diplomatic corps - 2005 Indonesia: 2010 Vision

  • Automotive industry is one of accelerator industries to achieve 7% economic growth
    • Textile, Shoes & apparels
    • Electronics and its components
    • Automotive and its components
    • Shipping & docks
    • Source: Visi 2030 & Roadmap 2010 Industri Nasional KADIN 2007

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*

  • IDR / USD Y^Y (Rp)
  • Interest (%) Y^Y
  • Balance of Payment - % to GDP Growth
  • Budget Surplus (+) /Deficit (-)
  • Inflation (%)
  • GDP growth (%)

IIMS 15 th 19 - 28 July 07 Structure Market Structure:Monopolistic Competition

  • Astra International (AI)& Indomobil Niaga Internationalare two largest automotive companies in the country having affiliation with a number of foreign principals.
  • They become agents for the Indonesian market.

Vs 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

  • Other companies have been established by self.

Market Structure: ATPM Competition Countries of OriginBrands 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 Market Structure: Market Domination

  • Astra International dominates the total car market in Indonesia

Domestic Car Sales 2007 Domestic Car Sales 2006 - 2007 Source:www.astra.co.id 18 July 2007 Business Scheme

  • Taken example from Toyota Astra Motor (TAM) which shows manufacturer company with Supplier Production Buyer business scheme

TMMIN TAM TMMIN Source:www.astra.co.id 18 July 2007 TAM Car Categorization

  • Passengers cars consist of 3 types: sedan, MPV 4X2 & SUV 4X4 each with different types in engine capacity
  • Commercial cars consist of 3 types: bus, pick up/truck, double cabin 4X2/4X4 each with different weight (gross vehicle weight)

Categories of Commercial CarsSource: 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 Production Capacity

  • 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
  • Indomobil is the second largest in capacity of production 120,000 units a year

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 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 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 Market Concentration:Herfindahl-Hirschman Index (HII)

  • Herfindahl-Hirschman index (HII) equals the sum of the squared market shares of all the firms in the market. HHI = i(S i ) 2.
  • Indonesian Automotive Industry HHI =0.22 (low concentration market)

% 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 (%) Government Policy

  • 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
  • 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.
    • 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.
    • Same facil