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WHAT STARTEGIES HAVE CAR MANUFACTURERS IN INDONESIA ADOPTED TO AVOID FALLING DEMAND DUE TO HIGH OIL PRICES AND SOARING COMPETITION

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Introduction

EXTENDED ESSAY BUSINESS AND MANAGEMENT RESEARCH QUESTION: "WHAT STARTEGIES HAVE CAR MANUFACTURERS IN INDONESIA ADOPTED TO AVOID FALLING DEMAND DUE TO HIGH OIL PRICES AND SOARING COMPETITION" INTRODUCTION; High global crude oil prices has led an increase of nearly 30% in fuel prices in June, this would have triggered a downturn in domestic automobile sales, but instead forecasts reveal that "vehicle sales in Indonesia are expected to reach 580,000 units this year" compared to the "434,449 units in 2007" and "318,904 units in 2006". This growth in the automobile industry despite the high global oil prices interested me to take a deeper insight on how they have achieved this, along with my hobby and interest for the automotive sector. Indonesia is a major car market as it is the third-largest in Southeast Asia after Thailand and Malaysia, and the second highest sales growth rate after China. Increased demand could see sales reach 1.3 Million cars a year by 2010. After reading and examining quality automotive magazines and articles, I observe the strategies and tactics these International players (which control 90% of the market)like: TOYOTA/SUZUKI/HONDA etc , USE by ways of marketing: modifying/introducing newer products, pricing , promotion, and expanding in newer places /cities outside the capital. Even though the government has used up all necessary forces to reduce car sales-by means of hiking prices of subsidized fuel and increasing progressive car tax due to the dreadful traffic and pollution, this combined with the poor infrastructure. ...read more.

Middle

Carriage.,these are some of the awards achieved by Toyota: Best Compact MPV versi Majalah Mobilmotor 2006 JD Power Asia Pasific 2006 ICSA (Indonesian Customer Satisfaction Award) IBBA ( Indonesian Best Brand Award) IMAC (Indonesian Most Admired Company) "One of the main reason Toyota has achieved such great heights is because of its production system which follows Japanese standards,keeping quality in mind, as the key to their success is that they follow JIT(JUST IN TIME),built in quality , standardization of work and kaizen(continous improvement)" Another reason contributing to this success would be because they follow COST LEADERSHIP STRATEGY(refer to porter's generic strategies (in page.) as they target a broad scope(industry wide) with a low cost advantage given the level of quality, as they sell below the average industry prices to gain market share. Porter's five forces analysis Intesnsity of rivalry(strong): * As more than 70% of the market is controlled by the top 3 brand's like Toyota,Honda,and Daihatsu,there is intense competition in the Indonesian automobile industry, and all of them have similar technology, similar car design/products "similarity of players",manufacturing processes ,distribution systems and supplier relationship. * Companies are becoming more globalized ,increasing production ,putting pressures on everyone to keep costs low with increasing raw material costs. * A trend can also be observed of companies merging(chery and Suzuki) to compete with larger companies like Toyota/Honda and easy to expand in this industry. ...read more.

Conclusion

This sept.,sales(55,000) dropped 6% compared to august(58,489) cause? Many holidays during Islamic fasting month(fewer working days). However, we can still see that demand is still high, as long as demand stays over 50,000 units a month. The main question is - How have they maintained this high demand? The answer to this is because they know just the right product being demanded by (whom? At what price range is demand the highest? Method of payment? Brand and car type? City?age group?...etc) this can be achieved through intensive research,whether it be primary or secondary. I would conduct such a survey to see trends in potential customers, in which companies to base their strategy and adopt it on their advertising,product innovation, and the four P's(pricing and product especially.) Survey questionnaire on the automotive market in Indonesia 1.) Name? ____________________ 2.) Gender and age group? Male female No answer 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 3.)Are you planning on buying a car?(I yes, state whether it would be brand new(BN),second hand(SH),or don't know(-) YES NO CONDITION-(BN/SH/-) (____) IF YES, PLEASE PRECEDE TO THE FOLOWING QUESTIONS! 4.) Function of buying a car? Replacement of an older car an addition to the cars owned To buy your first car 5.) Method of purchase? Credit from a leasing company credit from bank cash 6.) Which brand are you considering to purchase? (And type if applicable) Toyota Honda Nissan Suzuki Daihatsu others __________ Honda Jazz Toyota Avanza Toyota Yaris Toyota Fortuner 7.) Budget? (In millions) <rp 100 100-150 150-200 200-300 300-500 >500 ?? ?? ?? ?? ...read more.

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