In 57 paragraph please provide an Industry Analysis of Honda

In 5-7 paragraph please provide an Industry Analysis of Honda Motor Company and the automotive industry?

Solution

Automotive Industry: It comprises of the production of commercial vehicles(light, medium and heavy), two wheelers(motorcycles, geared and ungeared scooters and mopdes), passenger cars, utility vehicles, tractors and three wheeler.The automobile industry in India is the world\'s third largest, with the country currently being the world\'s seventh largest commercial vehicle manufacturer. India automotive industry is expected to reach 16-18 trillion by 2026.Two wheelers dominate the industry and had a 79 perecnt share in the automobile production in financial year in 2017.

According to Porter\'s five forces, the Indian automative industry has some amount of excessive capacity to supply the vehicles.The demand is largely cyclical in nature and dependent on economic growth and per capita income. Seasonality is also a vital factor when it comes to demand of automobiles.High capital cost, distribution network, technology and availability of auto components are the major barrier factors for entry in the industry.The bargaining power of suppliers is low due to stiff competition in this industry where various automobile companies sustain with a competitive advantage.The bargaining power of the buyers is very high due to availability of options since a customer can avail different brands such as Hyundai, Honda, Ferrari, Audi, BMW, Mercedez, Maruti,Toyota and so on.The competition between the rivalries is very high.

In order to keep up the growing demand, several auto makers have started investing heavily in various segments of this industry.The automative industry have attracted Foreign Direct Investment worth 17.91 billion.The only electric automaker in India, Mahindra and Mahindra Ltd, has partnered with Uber for deploying its electric sedan e-Verito and hatchback e2o Plus on Uber platforms in New Delhi and Hyderabad.Vedanta Resources Plc is planning to invest around US$ 9 billion in India and create more than a million direct or indirect jobs in the country.

The automotive industry in India is supported by several factors such as availability of skilled labour at lower cost, robust R&D centres and low cost steel production. The industry provides great opportunities for investments and direct and indirect employment to skilled and unskilled labour.

Background of Honda Motor company Ltd. It is a Japanese motoring company, headquarted in US which is renowned in manufacturing, developing and distribution of automobile and automobile parts all over the world.It mainly concentrates on producing products of transportation sector, focussing on customer satisfaction and eco friendly product.Its assembly plants are located in various South Asian countries like China,Pakistan,Japan,Indonesia,India, Thailand,Turkey,also European countries like Belgium,Peru and American countries like Canada, England New Zealand, Brazil.

Now let us discuss the industry analysis through Porter\'s five forces :

The Threat of Entry: In the case of producing new car product, with new features and accessories, what will be the cost, low or high?

There can be chance that the competitors retaliate to the new car products in an agressive way.

Government policies of all the exporter and importer countries that have a direct impact on the revenues and the profit margins.

Bargaining Power of Buyers: The power of the buyers is higher for Honda since there are large competitive players available in South Asian market. The buyer can easily switch to another brand if his expectations are not met.

Switching costs between various suppliers is very low since Honda have their own private service provided for every individual customer.

It provides a customised feature to its buyers which makes it easy for Honda to grab a good portion of the segment since the buyers feel it a very flexible feature of the car product.

Bargaining power of suppliers: Power of suppliers is lies in high sitching costs eg: switching the mantainence supplier for the new car.

Customers of Honda are fragmented in such a way that they have low bargaining power of car related accessories.

The Threat of Substitutes: Where there is product-for-product substitution, e.g. Honda new car is better replacement for its previous model in the area of South East Asian Environment without need, making that car compatible environment.

Market position is tight because of others cars products are of high rates.

Competitive Rivalry: Honda car has the competitors such as Toyota, Hyundai, Mahindra and some local automobile manufactures. Thus, Competitive rivalry is high for this new Honda car corporation.

SWOT analysis: Strengths:

The company have a lot of expertise in quality and well performed engines.Its engines are praised for their durability, easiness to start, quietness, fuel efficiency and reliability.

Diversified product portfolio

Dominance in motorcycle and engine industries leading to a high brand awareness

Strong position in Asia’s motorcycle markets

Weaknesses:Dependence on North America to generate most of the revenue. Low investments in research and development (R&D) leading to innovative products.

Timing and frequency of new model releases

Low fuel prices are increasing the demand for pickup trucks and SUVs.

Rising Japanese Yen exchange rates

Natural disasters