Indus Motor Company

Ltd.
An in-depth
analysis
Muhammad Anas Siddiqui - 08664
Zunera Qureshi - 08665
Sibtain Ahmed Khan - 08652
Maheba Nasim - 09295
Adina Ismail - 08672
Contents
Abstract ........................................................................................................................................... 2
Introduction ..................................................................................................................................... 3
External Analysis of Automotive Industry ..................................................................................... 4
Overview and Analysis ............................................................................................................... 5
Industry Life Cycle ..................................................................................................................... 5
Industry Demand and its Determinants....................................................................................... 5
Government Regulations and Current Trend .............................................................................. 6
Micro Analysis ............................................................................................................................ 8
Internal Analysis ........................................................................................................................... 10
Financial Analysis ..................................................................................................................... 10
Marketing Analysis ................................................................................................................... 14
Operational Analysis ................................................................................................................. 20
Business Strategy .......................................................................................................................... 25
SWOT ANALYSIS .................................................................................................................. 25
TOWS ....................................................................................................................................... 30
Corporate Strategy ........................................................................................................................ 32
Directional Strategy .................................................................................................................. 32
Portfolio Analysis ..................................................................................................................... 33
Recommendation .......................................................................................................................... 35
Conclusion .................................................................................................................................... 36
References ..................................................................................................................................... 38
Appendix ………………………………………………………………………………………...40

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Abstract

The following report contains a detailed analysis on the automobile industry of Pakistan,

Keeping Indus Motor Company as the focus. For comparative analysis Atlas Honda has been

used. The report discusses the position of Indus Motor Company in the industry, macro and

micro economic factors that impact the automobile industry. An in-depth analysis of IMC’s

financial ratios has been incorporated against those of Honda and the general industry average to

showcase IMC’s performance in the industry. The report also includes strategic analysis of Indus

Motor Company- SWOT, TOWS, BCG Matrix along with the operational dynamics of Indus

Motor Company and how it gives IMC an edge over other competitors

Methodology

A mix of primary and secondary resources have been utilized for the report preparation. For

primary research our contact person was Mr. Syed Shabiruddin, Manager Corporate Strategy and

Regulatory Affairs. Whereas our secondary resources included annual reports, journal articles,

news articles and case studies.

Purpose

The purpose of this project is to do strategic analysis/comparison of Indus Motor Company and

Atlas Honda with in the automobile industry of Pakistan.

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Introduction

Toyota Motor Corporation is a Japanese multinational manufacturer of automobiles. It was

founded by Mr. Kiichiro Toyoda in 1937 and is currently headed by Akio Toyoda. The company’s

headquarter is located in Toyota, Aichi, Japan. They currently have approximately 365,000

employees globally and the fifth largest company in the world according to revenues. In

automotive sector, they are the world’s largest manufacturer. They were the first in the world to

produce more than 10 million vehicles per year in 2012.

Toyota came to Pakistan in 1989 in the form of a joint venture between Toyota Motors,

House of Habib, and Toyota Tsusho. The joint venture was called Indus Motors Company Limited

and operates as Toyota Indus in the country. They were declared as a public limited company in

1989 with their shares listed on the Karachi Stock Exchange (now Pakistan Stock Exchange). Indus

Motors is the sole authorized assembler and manufacturer of Toyota and Daihatsu vehicles and

their parts/accessories. They have a 105 acre plant at Port Bin Qasim and a nationwide network of

45 independent 3S dealerships to complete their supply chain. Up till now, they have sold over

750,000 vehicles in Pakistan and possess capability of producing 240 units daily. Indus Motors

employs 2,800 workers consisting of technical workforce and management employees.

Currently, their offerings include ‘Hilux’ in light commercial vehicle category, ‘Fortuner’

in the Sports Utility Vehicle, and their flagship ‘Corolla’ in passenger sedan category. This year,

Corolla became the largest selling automotive brand in Pakistan while also having the distinction

of 1st position in Toyota’s Asian market. (Indus Motor Company, 2017)

In the annual report, Toyota Indus describes their vision as “To be the most respected and

successful enterprise, delighting customers with a wide range of products and solutions in the

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automobile industry with the best people and the best technology”. (Indus Motor Company, 2017)

This statement perfectly describes the desired future position of the company. Producing the

largest automotive brand (i.e. Corolla), they are one of the most successful companies in Pakistan.

They aim to target all sectors in the industry by providing high quality vehicles for each category

of consumer. Their Mission is reflected in their slogan “Action, Commitment and Teamwork to

become #1 in Pakistan”. (Indus Motor Company, 2017) The approach to reach this position lies in

the following five core values:

1. World class production quality

2. Achieving the ultimate goal of complete customer satisfaction

3. Being seen as the best employer

4. Fostering the spirit of teamwork

5. Inculcating ethical and honest practices (Indus Motor Company, 2017)

External Analysis of Automotive Industry

Pakistan’s Automobile Industry has proved to be an emerging market for automobiles

companies, it is one of the 40 automobile producing countries.

In Pakistan we have plants of 4 out of 10 global car makers. (MALIK, 2013) These include Pak

Suzuki Motor Company Limited, Indus Motor Company Ltd., Honda Atlas Cars Ltd., and

Ghandhara Nissan Ltd.

The automobile sector not only contributes towards the manufacturing sectors in increasing the

economic growth by providing investment opportunities, but it also represents and controls

mobility, communication and transportation of the country.

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Overview and Analysis

The development of industry in Pakistan is quiet hopeful, as the industry can leverage on the

factors of low cost labor and easy access to whole of Central Asia.

The industry has demonstrated a revival journey in the last few years and rising consumer

demand has been one factor contributing towards this revival. Original Equipment Manufacturers

(OMEs) have predicted that the production in the country will reach up to 500,000 units annually

by year 2022. (Ahmed, 2017) Furthermore, continuous growth trend has been observed from

2015-16 to 2016-17; according to the data released by Pakistan Automotive Manufacturers

Association (PAMA) the total car sales of the country have reached 155, 960 units, which

accounts for 2.39% increase as compared to 2015-16. (Alvi, 2017)

One of the innovations that is being predicted in the industry is of hybrid and electrical cars. As

mentioned by the interviewee, multiple companies are planning on introducing electrical

vehicles. These are being imported from China. Hybrids vehicles already exist in Pakistan,

Deewan motor charging station is present outside the dolmen city mall.

Industry Life Cycle

The market structure of automobile industry in Pakistan is concentrated and it is in the growth

stage of the industry life cycle.

Industry Demand and its Determinants

The basic determinants of automotive industry are fuel prices, product innovations, per capita

disposable income and vehicle prices.

The demand in the country has been growing at the pace of 6% to 8% annually. The demand is

surplus in Pakistan, and existing companies in the industries are not able to fulfill the demand.

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This supply demand gap mainly arose in year 2003- 2005 due to unparalleled growth of demand

as investors moved towards investing in car booking services. (Akhtar, 2004). Though this issue

of investors has been addressed by Toyota at a very serious level, and as stated by the

interviewee 1,288 bookings were cancelled last year because of discrepancies spotted in them.

Entry of foreign players in the market, import of used car, and increased consumer demand have

pushed the companies to investment in capacity expansion plans.

Toyota has worked on its capacity enhancement program, currently its production capacity is

estimated to be 54,800 units per annum which is predicted to increase to 75,000 unit per annum

under this capacity expansion strategy to meet surplus demand of the market. Toyota invested

approximately 40 million on the capacity enhancement program. (Ahmed, 2017) Whereas if we

compare this to Honda we find out that it has not been able to enhance the production level to the

extent that it comes at par with the demand.

Government Regulations and Current Trend

In the prior year, the share of existing automobile companies declined because of increased

import of used cars from Japan and other countries. Toyota share dropped from 29% to 25%;

government has regulated tariffs on imported car to tackle this situation and help local

automobile industries to regain their declined market shares.

The Auto Associations regulating the automobile industry in Pakistan are Automotive

Manufacturers Association (PAMA) and Pakistan Auto Parts Manufacturers Associations

(PAPAAM), these associations help different companies in the industry to voice their concerns

and communicate their problems to the government.

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For the further growth of this sector it is essential for government to encourage research and

development by providing incentives to the companies such as giving exemption in sales tax on

new products or implementing cost sharing with new firms through technology development

funds.

In 2016 a new policy named Auto Industry Development Policy (AIDP) was introduced, barely a

year has passed and now in 2017 we can see the positive results of this policy. This policy was

aimed towards increasing the foreign investment in the country which in return enhanced the

competition in the industry as companies started to lower the prices. This also helped to increase

the employment opportunities in the industry because of the incentives that were offered to the

new entrants in the market. (Ikram)

According to the news floating in the industry and newspapers, around three new carmaker

companies plan to enter the Pakistan automobile industry. Renault has announced to invest

$100m in Ghandhara Nissan plant. News that grabbed most attention is the interest of German

Audi in the local market. It is said to have approached Board of Investment to invest in Original

Equipment Manufacturer (OEM) here in Pakistan. (Jamal, DAWN, 2017) (Bhutta, 2017)

Interviewee from Toyota Indus also mentioned that BMW, Volkswagen, and Italian automobile

manufacturers are also planning to invest in Pakistan automobile industry.

The benefits of these auto mobile polices will impose the positive affect on the industry only if

the policies sustain in long run and are not affected by any political instability. Moreover, it is

becoming highly necessary for Pakistan to expand its automobile industry as neighboring

countries such as India and Iran are far ahead in the industry.

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Micro Analysis

There are certain external factors in the environment that impact the automobile industry and the

companies in the industry immensely. For efficient functioning of the companies in the industry

it is necessary to continuously manage and counter these external factors. These external factors

can be better explained under the heading of “Porter Five Forces.”

Porter Five Forces

Following are the Porter five forces explaining the complete in-depth structure and impact of

external environmental factors and forces on the industry and related business. (FERGUSON,

2017)

Threats of new entry

The industry is as such that it requires large amount of capital and investment for entry.

Moreover, the market of the industry is less driven by new products and more driven by brand

name. Hence, established brands have their clear positioning in the mind of the consumers.

Government tend to protect local players in the market by applying increased import tariffs.

Hence, the chance of threat of new entry is not highly possible rather it is more towards moderate

in current situation of Pakistan automobile industry.

When discussed with Toyota about the threat of new entrants in the industry as predicted, we

found out that their main focus is on regaining their lost market share and acquiring highest

market share in the industry by working on capacity enhancement strategy.

Supplier Power (weak)

The bargaining power of supplier in the automobile industry is weak, as there are large number

of suppliers’ present around the globe. Moreover, when we are talking about global companies

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like Toyota or Honda, suppliers in this case do not have any forward integration power and are

only involved in distribution of the parts.

Toyota provides incentives to its suppliers to keep them happy so that they work efficiently and

do not shift to any other company, specifically Honda. As discussed in the interview, the major

things that Toyota does for them is constant training, professional development, and technology

transfer agreements. These agreements are done between local and foreigner supplier. This

enhance skills, knowledge transfer and creates a linkage. Hence, technical assessment agreement

or technology transfer agreements differentiate Toyota from other companies.

Buyer Power (strong)

The consumers in automobile industry are in bulk and price elastic. We can divide these

customers into two segments: bulk buying consumer (government) and single car consumer.

With the new entrants coming to Pakistan’s automobile industry the bargaining power of buyer is

increasing as they might switch to effective price options with features that they require. There is

no switching cost for the consumers.

Toyota is not affected much by price elasticity as it cashes on its brand image and loyalty; hence,

the bargaining strength of Toyota is because of technological and design innovation.

Threat of Substitutes (moderate)

The threat of substitute in this industry is moderate. Though it is easy for the consumers to shift

to substitutes such as public transport, bicycle, etc. but the switching trend is low as it does not

provide same level of convenience.

Moreover, another threat is of switching to low cost brand, but Toyota has managed to counter

this threat by releasing car models that are low on fuel consumption and less costly.

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Competition of Rivalry (strong)

The industry is currently facing strong threat of competition within as new players are about to

enter the industry. Toyota plans to manage strong competition in Pakistan because of its

innovativeness, exceptional after sales services, brand image, marketing power, distribution

network, and supplier network.

As discussed above, it has already implemented its capacity enhancement program for this

purpose and is working on other departments such as customer service, cross checking of

bookings, etc. to differentiate itself and make its brand image stronger.

Internal Analysis

Financial Analysis

In this section, we will be comparing the financial performance of Indus Motors with Honda, their

key competitor in Pakistan. There are only three major automotive manufacturers in Pakistan i.e.

Toyota, Honda, and Suzuki. Suzuki is known for producing affordable and compact cars as

compared to the other two. As Toyota doesn’t produce in that vehicle segment, therefore, Toyota

and Honda have been chosen for accurate comparison.

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Units produced, sold, and revenue analysis

Some key figures for consideration:

2017 2016
Production Units
TOYOTA 59,945 64,096
HONDA 34,560 25,985
Sales Units
TOYOTA 60,586 64,584
HONDA 35,381 25,826
Sales Revenue (Rs. In millions)
TOYOTA 112,300 108,800
HONDA 62,803 40,002

Production Units: We can see that Honda has increased production in Pakistan in the last year by

33%, while units produced has declined for Toyota by 6.5%.

Sales Units: A similar situation as production is seen here where Honda has increased unit sales

by 37%, while Toyota has reduced their unit sales by 6.2%.

Sales Revenue (Rs. In million): Honda’s sales revenue has increased by 57% over the last year

while Toyota’s sales revenue has increased by 3.2% only.

Important conclusions can be drawn with the data above. We can see that Honda has performed

considerably better than Toyota in the last financial year where their revenue growth percent is

17.8 times than that of Toyota. Moreover, instead of an increase in units sold and produced, that

figure has actually declined for Toyota. Its reason can be explained by deducing an interesting

calculation of Revenue per Unit Sold for Toyota which comes out to be Rs. 1,684,627 in 2016 and

Rs. 1,853,564 in 2017. The average price of a Toyota has increased by nearly Rs.200,000 in a

year. This shows that Toyota aims to produce more expensive units but lesser in quantity to achieve

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a net effect of an increase in Sales Revenue. They are taking advantage of their brand loyalty and

are sure that their product is price in-elastic (i.e. their unit sales are not closely related to the price).

In such a situation, the advantage gained from price increase is greater than lost sales due to that

increase. Moreover, Honda’s success can also be attributed to the introduction of the new Civic.

To compete against Corolla, Honda completely revamped their model to give a sportier and more

premium look while Toyota only introduced minor changes in the Corolla. From the number of

units sold, we can see that Toyota has almost double the market share as compared to Honda. This

shows that Honda is still in its high growth stage of the business cycle while Toyota has passed

that phase and heading towards maturity.

Profitability and dividend analysis

Key figures for consideration:

2017 2016
Profit after tax (Rs. Millions)
TOYOTA 13,000 11,500
HONDA 6,135 3,546
Earning per share
TOYOTA 165.40 145.70
HONDA 42.96 24.98
Dividend per share
TOYOTA 115 100
HONDA 13 7

Profit after tax: Toyota has seen a growth of 13% while Honda’s profits have grown by 73% in

the last financial year.

Earnings per share: Toyota’s growth is EPS has been 13.5% while the same for Honda was 72%

last year.

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Dividend per share: Toyota’s DPS has seen a 15% increase while Honda has increased it by 86%

in the last financial year.

The most important point to notice here is that nearly all statistics show Honda growing

much faster than Toyota. However when it comes to quantity figures, Toyota is far ahead. Toyota’s

Net profits are a staggering 212% (more than twice) of Honda while their DPS is an astounding

885% (almost 9 times) of that of Honda. Toyota’s higher net profits can be explained through

their portfolio which is larger than Honda in Pakistan. Toyota is involved in large passenger

vehicles like Coaster and HiAce while Honda doesn’t offer products in this category. It seems like

Toyota is nearing its maturity stage while Honda is in its growth stage of the business cycle in

Pakistan. In order to sustain their competitive advantage over Honda, Toyota should rapidly

innovate and try capturing market share belonging to Suzuki’s mid-range vehicles.

Ratio analysis

Key ratios considered are:

2017 2016 2015 2014

Current Ratio (times)
TOYOTA 1.76 1.58 1.53 3.35
HONDA 1.20 1.50 1.20 0.90
Net Profit Margin (%)
TOYOTA 11.58 10.53 9.44 6.79
HONDA 9.80 8.90 8.40 2.70
Return on Equity (%)
TOYOTA 41.67 41.46 37.90 19.45
HONDA 58.40 54.50 84.20 57.20

Current Ratio: Toyota has always been doing better at liquidity as compared to Honda. They have

a current ratio higher than that of Honda in the last 4 years. They can effectively pay out all their

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liabilities using their assets. This ratio is important to maintain for Toyota as they emphasize on a

just in time inventory management system.

Net Profit Margin: Toyota has a higher NP Margin historically. A strong reason for that is their

effective management of overheads using lean management and production system. Moreover,

having more experience and share in the industry than Honda, they have developed strategic

partnerships along their value chain to keep their costs minimized.

Return on Equity: Honda beats Toyota at this ratio by a large margin. A reason for Toyota’s low

ROE is that they have invested extensively in their production plants to increase their capacity.

According to our interview, they produce at near full capacity. This can also be seen in first

comparison of quantity produced where Toyota is producing almost twice the number of units than

Honda.

Marketing Analysis

Competitive Landscape

Previous year was a success for the automobile industry of Pakistan because of new entrants in

the market and the new car models being introduced by the existing players. The industry

experienced a 19% increase in sales and a total of 180,000 units were sold. (A fast and furious

Competition , 2017 )

Furthermore, another major reason for the sales curve to incline was the introduction of the

Automotive Development Policy which encouraged new entrants to enter the market by

nullifying some of the barriers of entry. The policy reduced duty on imported parts by 10% and

25% on localized parts; this reduction attracted FDI in the country.

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With such policies being introduced in the country, competition is increasing for the dominant

players in the market. Low end models are launched by BMW already in the market to

experiment and understand the behavior and demand of a Pakistani consumer. Moreover,

Volkswagen has setup their research and development department to devise their international

strategic plan for Pakistan, specifically. Lastly, Audi is willing to set up an Original Equipment

Manufacturer Plant in Pakistan and has contacted the Board of Investment already, for this

purpose.

Considering the potential growth prospects of the industry, it’s of no surprise that most of the

wealthy and giant companies of Pakistan including Nishat Mills and Lucky Cement, are planning

to invest in this market by starting a joint venture with Hyundai Motor Company and Kia Motors

Corporation of approximately $150-200 million and $12 billion, respectively.

Thus, even the very small local manufacturers in the country are investing capital to keep their

market shares stagnant, if not growing, to remain competitive in the market.

The dynamics of the industry will definitely take new turns in near future, but currently, a large

proportion of the sales is concentrated within three major players of the market, namely, Suzuki,

Toyota and Honda.

The three players are continuously involved in aggressive marketing tactics to strengthen their

roots in the country, before any new player enters the market. Marketing strategies are devised

strategically while formulating TVCs, Digital campaigns, OOH, BTL activities, Print ads, etc.

Among these three players, Suzuki is the market leader with respect to volume, as it is preferred

more by the masses because of its cheap rates and has an extensive product line which caters to

the needs of the general public more than the niche one. (Local car sales rise to 167,507 units,

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2016) PSMC currently has a market share of 58% in the small cars category (A fast and furious

Competition , 2017 ).

Toyota is the leader in terms of value, as it targets the higher end of the society. It keeps the

market price competitive and expands accordingly in terms of production.

Out of all the cars that Toyota is currently offering, Toyota Corolla has remained the most selling

car in the year 2016. The company was able to sell 53,410 units of Corolla as compared to a

combined sale of 23,800 units of Honda Civic and City. It is important to note that Toyota was

able to achieve such targets because of its better production capabilities as compared to any other

player in the market.

Customer Analysis
Toyota

Toyota strictly follows a customer centric approach; hence it abides to the principle of “Customer

First”. It has a systematic value delivery network and a pricing strategy that is positioned according

to the market.

Globally, the company operates in the following car segments:

Car Segments Also Known As Presence in Pakistan

A City Car/ Mini Car No

B Small Car No

C Small Family Car Yes

D Large Family Car/ Compact Executive Car Yes

E Executive Car Yes

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 F Luxury Car Yes

M Multi Utility Vehicle Yes

J Sports Utility Vehicle Yes

Through a vast product portfolio, which comprises of Cars & MPV (Multi-purpose vehicle), SUVs

(Sport Utility Vehicle) & Pickups and Buses & Vans, the company is targeting mainly the upper

middle class and elites of Pakistan, generally.

The needs of the middle class which lie slightly below the upper middle class are fulfilled through

Toyota’s subsidiary (Memon, 2016), Daihatsu, both in terms of price and quality.

Following is the product portfolio (Toyota , 2017):

Showroom

Cars & SUVs & Buses &

MPV Pickups Vans

Corolla Fortuner Hiace

Prius Revo Coaster

Camry Hilux E

Land
Avanza
Cruiser

The general target audience of Toyota Pakistan is diversified in terms of the needs of the

customers; thus each product targets a different type of consumer.

 Segment C targets middle to upper income professionals of age group of 35-45 who are

looking for true value for money and a comfortable ride in the given city conditions.

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  Segment D caters to middle aged adults who have families and they are mostly searching

for cars with highest comfort level, yet a good reliability.

 Segment E, F and M are all about wide space and for individuals who want to be trendy.

 Segment J is designed for active businessmen and industrialists who belong to the age

group of 35-45.

Honda

Honda has always targeted elites and upper middle class groups. It is perceived to be a higher end

brand as compared to Toyota, based on the price of the automobile and its spare parts’ cost. Honda

tends to forgo that segment of the market where Daihatsu lies.

Selling Products/Service
Toyota

The company follows a six sigma approach i.e. without any errors in all its departments.

Furthermore, it has maintained the legacy of innovating and improving constantly.

Two types of After Sales Service are provided by Toyota. The first one is prepaid maintenance

offer for which the customer pays in advance at time of purchase. Second is the periodic cost which

is incurred when the car has ran certain miles. We recheck the car for any possible issues after it

has covered around 1000 miles.

As per the company personnel, a Pakistani consumer does not contact the company in case of any

issues; he/she visits a local mechanic to solve the problem, unless it’s a huge one. But Toyota is

always available to serve its customers, even if the spare part needs to get imported.

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Honda

Honda and Toyota are perceived to provide the same level of after sales service, but Toyota gets

the advantage because of its widespread dealership network which makes it more accessible for

customer to get in touch with the company.

Distribution
Toyota

As mentioned earlier, Toyota’s first priority is customer satisfaction and they follow a 3S model

i.e. Sales, Service and Spare Parts. The company is known to have a sustainable service network

all over the country. The dealers comply with the 3S model to maintain the same level of service

and are therefore trained by the service technicians of the company, as per the Global Toyota

Standards.

An extensive dealership network of 55 officially registered dealers is established and maintained

by the company. The firm treats them more like partners, than dealers. These dealers are situation

in 19 cities of the country including Abbottabad, Bahawalpur, DG Khan, DI Khan, Faislabad,

Gujranwala, Hyderabad, Islamabad, Karachi, Lahore, Mardan, Mirpur, Multan, Peshawar, Quetta,

Rahimyar Khan, Sahiwal, Sargodha and Sialkot.

Furthermore, these dealers are equipped with Special Service Tools (SSTs), along with

computerized auto servicing tools, to keep track of everything. More than 200 man days are

dedicated every year for service and training of these dealers.

Honda

Honda also follows a 3S model, but their dealership network is not as extensive as Toyota’s. This

is where the company lacks in its distribution, the registered and official dealers are only half of

Toyota’s.

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Operational Analysis

Dealer

Toyota: IMC has a strong network of 55 3S (Sales, Service and Spare parts) dealerships. IMC

has been spreading its application of Kaizen philosophy to its dealerships and more than 80

vendors as well. IMC’s dealerships have a strong role to play in terms of being the middlemen

between the company and the customers. Due to ineffective tax laws that apply double taxation

on first the company when it sells the vehicle to the dealer and then the dealership when it sells

the vehicle to the customer. Thus, IMC does not sell bulk vehicles to its dealers as it happens

worldwide but rather the customer place an order with the dealerships which is then sent to IMC

and then IMC send individuals invoices to the customers and then carries out the delivery of the

vehicles. IMC’s distribution strategy is to open dealerships in peripheries of major cities as well

as small towns. Toyota’s Global Customer Relations standards are applied across all dealerships.

To maintain these relations IMC occasionally carries out mystery-shopping surveys to gain

insights into the dealerships’ relationship management. “Toyota Customer Delight Workshop” is

organized annually to provide cross-functional training to the staff at the dealerships. In co-

operation with Toyota Motor Asia Pacific IMC went live with the Dealer Operations Guidelines

to give accreditation to dealerships for maintain their high level of employee satisfaction. A

fundamental principle of Toyota is Customer First, Dealer Second, Manufacturer Third. (Indus

Motor Company Ltd., 2015)

Honda:

The Honda dealership network is almost the half of what IMC has achieved. Currently it has 21

3S (Sales, Service and Spare parts), 18 2S (Service and Spare parts) and 5 1S (Spare parts)

authorized dealerships across the country.

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Capacity of production

Toyota: The manufacturing facility and head offices are situated at a 105 acre site in Port Qasim,

Karachi. Indus Motor Company, Pakistan’s leading auto-maker, has an annual production of

54,800 vehicles and daily output of 240 units per day. Currently all of which are sold under the

umbrella-brand Toyota. However, in an announcement made in April of 2017, the company

revealed a massive PKR 4 billion expansion plan that would allow for the production to be

increased to 75,000 units. Currently, the company can produce 65,000 vehicles per year, but the

new expansion project which will be completed by 2018, will result in IMC being able to

produce 75,000 units per year. In line with the increasing demand due to a growing middle-class,

IMC’s Chief Executive Office, Ali Asghar Jamali hopes to capture a bigger share of the growing

market, which is why his long term plan is to produce 100,000 vehicles annually with a plant

capacity of 80,000 units. (Jamal, Indus Motors plans $40m investment to boost capacity, 2017)

Toyota sales saw a 5% decline in sales during July-February of 2016-2017 which has been

partially attributed to restricted production due to operational issues by Analyst Sohaib Sabzwari

of Taurus Securities Limited. (Shah, 2017)

Honda:

Honda has a capacity to produce 50,000 units (in double shifts), for the most part production has

been below 60 percent of the capacity. However, the demand for the latest Civic pushed the

numbers upwards. (Business Recorder, 2017) Earlier, Honda was producing 90 units per day –

until last year. After the Civic demand, the number’s hiked up to 180 units per day. The overall

production moved up by 33.2% from 34,560 units to 25,939 units. Sales also improved to 35,381

units from 25,800 units – an upward movement of 37.1%. For Civic in particular, the increase in

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registrations was a highly impressive 148.9%. Honda City has also shown significant

performance. (Honda Atlas Cars, 2017)

Workforce

Toyota: Indus Motor Company started off its operations with 496 employees in 1993. Today,

Indus Motor Company has a large workforce of 2,800 employees that have been receiving

training through local and international institutions over the past years. The company has

achieved 1.8 million man-hours through skill training. The workforce is occasionally sent to

institutions such as Harvard, Wharton and INSEAD to improve their knowledge and skills.

Honda:

In the third quarter of the financial year, Honda had to begin double shifts to keep up with the

demand and reduce waiting time. To cater the requirements of second shift, total workforce was

increased by 45%. The 180 units per day production was, thus, achieved in double shifts this

year.

Quality

Toyota:

QUALITY AT SOURCE

Toyota Indus Motors has a principle of ensuring quality at source or ensuring built in quality

which means that it is imperative that errors are identified by production line workers before they

become defects. This is how they make sure that units are produced with zero or minimum

defects. The following philosophies and practices are involved in this process:

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Jidoka (Intelligent Automation):

Jidoka aims at identifying abnormalities, halting the process, resolving the issues and fixing the

root cause immediately. At Toyota, any line operator can stop the process if they discover any

abnormalities. The machines also have sensors that are meant to identify the abnormalities.

Poka Yoke:

Poka Yoke is aimed at avoiding the origination of defects. It includes alarms that are meant to go

off if a problem is discovered.

Heijunka:

Heijunka is related to plant loading. Under this concept, all plants are meant to have a uniform

production level.

Minimized Changeover Times:

Changeover times have been minimized a range of 3 minutes maximum.

Just In Time Systems:

Inventory costs are kept at a minimum by buying parts only when needed. Cars are produced in

accordance with orders and JIT is implemented through the Kanban system.

Kaizen OR Continuous Improvement:

Under Kaizan philosophy, Toyota Indus Motors remains vigilant about any incremental changes,

no matter how small, that can improve quality.

Kanban Production Control System:

Kanban is a signaling system which in which when any empty container is sent back it serves as

indicator that it has to be filled and send forward again with the assigned quantities.

23 | P a g e
DESIGN QUALITY AND QUALITY CONFORMANCE:

To ensure customer satisfaction, Toyota’s next step in the quality department is to improve the

design quality.

Design Quality:

Toyota motors is not a completely zero inventory system, instead they have a pull inventory

system which is based on instant customer demands instead of forecasted purchase patterns.

Storing appropriate quantity of inventory is considered important for maintaining a smooth

workflow. However, the more expensive parts are scheduled for delivery beforehand.

Quality conformance:

Toyota Indus Motors has set up a culture that on the assembly line, each worker deals with the

next one as their customer, thus, each point has strict pre-set standards.

Lean Production

Toyota’s efficiency in its production system has provided it with much acclaim globally. The

Lean Production system allows it to avoid seven kinds of waste known by the acronym

TIMWOOD (Transportation, Inventory, Movement, Waiting, Overproduction, Over-Processing,

Defects).

Safety

Toyota Indus has specifically focuses on safety feature a lot, which can be compared to civic or

any other car in Pakistan. Safety features which are not even mandatory by the government have

been incorporated in Toyota cars. Considering fuel efficiency, there are certain standards which

are globally set at levels such as Euro 1, Euro 2, Euro 3 and so on. This measures the certain

amount of emission from the car for environment safety. Euro 2 is implemented in Pakistan by

24 | P a g e
the Government, but still as per our interviewee, Toyota Indus makes sure that their cars are

designed with at least Euro 3 to Euro 4 levels. All corollas across the board have dual air bags;

this feature has not been incorporated by any other automobile company in Pakistan.

Business Strategy

Indus Motor Company- Differentiation based on dealer network, customer service, brand image

in terms of resale value and durability. Etc.

Atlas Honda- Differentiation based on comfort, extra features and design.

SWOT ANALYSIS

Strengths Weaknesses
 Toyota quality standards e.g Kaizen  Excessive delivery times for some
etc. models of Toyota e.g. Fortuner and
 Vast dealership network that act as Hilux.
partners of Toyota-55 dealers across  Losing sales due to limited capacity
Pakistan.
 Car recall due to faults in locally
 Excellent after sales service and
assembled cars-for example 7892
customer relationship management.
units out of 9,896 recalled in February
 Safety standards. Euro 2 is
2017 had faulty brakes
implemented in Pakistan whereas
Toyota cars are designed towards Euro
3 and Euro 4
 Focus towards capacity expansion in
recent times-$40M Invested to
increase capacity from 60k to 70k
vehicles per year
 Highest resale value

25 | P a g e
 Opportunities
 Growing demand for cars due to
expanding middle class and Business
ventures like Careem and UBER etc.
 Shift in consumer preferences towards
fuel efficient cars.
Threats
 Big International players like Renault
entering in Pakistan will give an
intense competition to existing
players.
 Fluctuating government policies e.g
taxes, custom duty.
 Increase in imported smaller cars such
as Mira, Aqua etc

Strengths

 Firstly, Toyota quality standards are rigid, six sigma is applicable throughout the

entire production, plant, assemble, corporate offices, etc. Kaizen concept is being

applied throughout whole company, it’s a Japanese term which means “constant

improvement.”

 Second factor is customer relationship. Indus Motor Company has a huge number

of dealers, around 55 dealers across Pakistan. These dealers are partners, basically

extension of Toyota. They are certified and authorized; hence they go through

rigorous training for customer service and handling. These are a key

differentiating component in Indus Motor Company’s success

 There are two things in after sales services. First is the prepaid maintenance offer

in which customers pay advance maintenance cost at a discounted price at the

time of purchase. Second is the periodic cost. This cost comes after the car has ran

certain miles. E.g. 1000 miles. Cars are inspected to make sure that there isn’t any

26 | P a g e
 servicing issue. These services are only offered by Indus Motor Company and are

not provided by its competitor Honda or any other automobile company in

Pakistan.

 Third factor to buy Toyota is innovation; Indus motor company is continuously in

line with Toyota global, continuously researching which cars are present abroad

that can be made or assembled in Pakistan. Even corolla has gone through many

model changes and innovations.

 High Resale Value. Among the various brands in Pakistan, Toyota cars enjoy the

highest resale values. Toyota cars are known as semi liquid cash according to car

dealers. Specially the Toyota Corolla models, they are the quickest to sell on the

second-hand market- this information was collected from dealers operating in

multiple areas of Karachi.

 Toyota specifically focuses on safety feature a lot, which can be compared to

civic or any other car in Pakistan. Safety features which are not even mandatory

by the government have been incorporated in Indus Motor Company’s cars. IMC

is the leader in this factor. When we talk about fuel efficiency, we talk about

certain standards which our known as Euro 1, Euro 2, Euro 3 and so on. This

standard measures the certain amount of emission from the car for environment

safety. Euro 2 is implemented in Pakistan, but still IMC makes sure that cars are

designed towards Euro 3 to Euro 4. All corollas across the board have dual air

bags; this feature has not been incorporated by any other automobile company in

Pakistan.

27 | P a g e
  IMC Has also invested $40M to increase its capacity from 60,000 to 70,000

vehicles. This investment will help in reducing the current bottleneck which is the

excessive throughput time in the paint shop

Not only this, Toyota is the automobile leader in Pakistan because it is the first one to

incorporate all the new innovations. One example is of fuel efficiency.

Weaknesses

 Recall of cars negatively affects image

o During February 2017, Indus Motor Company recalled 9,896 units of

various Corolla models due to faulty brakes.

o The faulty cars included 7,892 units of XLI and GLI Corolla 1,300cc,

1,020 units of 1,600cc Altis and 984 units of 1,800cc Altis and Altis

Grande of 2016-17.

(Khan A. S., 2017)

 Greater delivery time of some models compared to Honda.

Opportunities

 Demand for fuel efficient cars on the rise in Pakistan due to business ventures like

Careem and Uber and the growing middleclass of Pakistan.

Threats

28 | P a g e
  Big International players like Renault entering in Pakistan which will have a

production facility. Those competitors would have processes and facilities that are

sublime and of International standard thus pose a huge threat to the existing

dominance with respect to market share of Indus Motor Company

 Fluctuating government policies- this includes tax policies, subsidies and

decisions on import of cars from overseas

 Increase in imported smaller cars such as Mira, Aqua etc.

Note- the weightages assigned to factors are given below. SFAS matrix could not be

made as we could not get the assessed ratings on how Indus motor company performs

specifically on each factor. We got an overall review of the situation

1. Toyota quality standards- 0.1

2. Vast dealership network + aftersales service-0.2

3. Highest resale value brand wise.-.05
4. Continuous investments for process improvement-0.05

5. Late deliveries. -0.05

6. Losing sales due to limited capacity-0.05

7. Increased demand for cars-0.1

8. Governmental policies-0.1

9. International competition-0.3

29 | P a g e
TOWS

Internal Factors Strengths Weakness

1. Toyota quality standards 5. Late deliveries.

2. Vast dealership network + 6. Losing sales due to
aftersales service limited capacity
External 3. Highest resale value brand
Factors wise.
4. Continuous investments for
process improvement

Opportunities  Increase in capacity-from  Increased capacity can

60k to 70k can cater to the help in accommodating
7. Increased
growing demand of cars in for the lost sales
demand for
Pakistan
cars.
8. Shift in
consumer
preferences
towards fuel
efficient cars.

Threats  Leveraging vast dealership  Compensating customers

network along with after for late delivery of
9. Governmental
sales service to retain vehicles to mitigate risk
policies.
customer loyalty of customer switching to
10. Arrival of big
different brands
international
 Source:
players
https://fp.brecorder.com/
2017/02/2017022714537
8/

30 | P a g e
ST Strategy

 In the wake of the incoming international competition by Renault. Toyota Indus Motor

Company can reduce the bottleneck which it has during the painting stage thereby

increasing the capacity from 60,000 to 70,000 vehicles. For this purpose, Toyota Indus

Motor Company has invested $40 million in hopes of catering to the increasing demand

and retention of its market share. This will also help to mitigate the difference between

demand and supply of Toyota Cars

 Another way to retain the market share is by leveraging on excellent customer

relationship and after sales services along with the vast and highly trained dealership

network that works as an extension to Toyota Indus Motor Company.

SO Strategy

 Growing demand of cars in Pakistan can be catered to by an increase in capacity.

According to IMC, its greatest bottleneck is the paint shop for which it invested $40M to

cater to growing automobile industry in Pakistan

 Brand loyalty can also be leveraged to capture the growing automobile industry.

WO Strategy

 Increased capacity can help in accommodating for the lost sales

WT Strategy

 By compensating customers for late delivery of vehicles, IMC can mitigate the risk of

customer switching to Honda or any other brand as it’s the only one following this policy.

31 | P a g e
 According to the auto Policy 2016-2021 if the delivery time exceeds two months, a

discount of KIBOR +2% should be provided as compensation. Even though it’s not

mandatory to compensate Toyota Indus Motor Company is the innovator in this regard

and the only local producer who has started compensating to its customers

(Ghumman, 2017)

Corporate Strategy

To analyze the corporate strategy of Toyota Indus, we have broken it down in three parts:

1. Directional strategy

2. Portfolio analysis

3. Parenting strategy

Directional Strategy
This part of corporate strategy explains where the organization is headed towards. This can either

be growth, stability, or retrenchment. According to our financial analysis and statistics, Toyota

Indus is focused on the growth aspect. Facing tough competition and government restraints, they

cannot go for mergers and acquisitions. Instead, Toyota Indus focuses on vertical growth.

Towards the lower end, they aim to increase their 3S (sales, service, spares) dealers in Pakistan

from 45 currently to 60 in a few years. Moreover, they work closely with spare parts producers to

provide authentic after sales service to their consumers. On the upper end, Toyota Indus works

with fixed contractors for raw materials. They have developed trusted relations with suppliers. To

acknowledge their support, Indus Motor Company (IMC) organizes Annual Suppliers Convention

in Karachi which is attended by all stakeholders. (Indus Motor Company, 2015) This is also known

as Quasi-Integration where a company doesn’t make its supplies but purchases them from

32 | P a g e
suppliers that are in partial control. Japanese support is also ensured as a few parts such as the

engine is directly imported from Japan.

Portfolio Analysis
Market Growth Rate

Question Mark
Star
Prius
Corolla

Cash Cow
Hilux Dog
Fortuner Camry

Relative Market Share

Toyota Indus has been consistent with its portfolio barely making any drastic changes. On the

BCG matrix, their star is the ‘Corolla’ which has a high market share and high market growth rate.

It has loyal consumers who switch to latest models as soon as they arrive while many aspire to

own one and save for it.

Their ‘Hilux’ can be placed in the cash cow category where it has a high market share in its

category and a low growth rate as Pakistanis prefer sedans on bigger vehicles. Both the sports

utility vehicles, Hilux and Fortuner are imported in the form of slightly knocked down units and

then assembled in Pakistan. (The Journey of Toyota Indus Motors in Pakistan, 2016)Since these

are the only SUVs offered in the market, they are automatically a success in Pakistan, as there is

33 | P a g e
no other alternative for the customers of this segment. (How CUVs are taking over Pakistan's

automobile market, 2017 )

Toyota’s Camry can by placed in Dog category as it has a low market share and low growth. The

primary reason for that is its affordability. At a price point of Rs.11 million, a consumer can buy a

mid-range Audi instead of a Toyota Camry in Pakistan.

Toyota Prius is currently offered in the market at a price point of PKR4.49 million. It is a fuel

efficient hybrid car which has a mileage of 25-27 Km; thus there are very promising sales

prospects. But the company is still testing Prius’ future in the market; hence, it is categorized as a

question mark in the BCG Matrix. (Khan B. , 2017 )

To summarize, Toyota Indus milks the Corolla as much as it can before introducing a face-lift

with minor changes. However, they are looking to expand in other vehicle segments such as

SUVs and Light Commercial Vehicles by introducing the new Fortuner and Hilux in Pakistan.

Parenting Strategy

Parenting strategy refers to the transfer of skills and knowledge by the owners to the basic

functions of the organization. Toyota is well known for its global management strategies of lean

manufacturing. Its models are considered to be a benchmark for other organizations and

consulting groups. Headquarters in Japan have ensured to transfer their manufacturing

techniques to Toyota Indus Pakistan. The safety guidelines, inventory management, quality

management, and manufacturing processes being carried out in Pakistan bear the same spirit as

those being done by Toyota globally. Every year, a thorough audit is carried out by Japanese

representatives to ensure enforcement.

34 | P a g e
Recommendation

 Launch of new models of Corolla with features that are at par or more with the new

Honda civic. Recently the sales of corolla declined by 5%, partly attributed to the launch

of new civic. Moreover, a more for less proposition is necessary for Indus Motor

Company if it wants to compete with the existing as well as the incoming international

competition from automobile giants like Renault.

 The late delivery payments is a good imitative to mitigate customer switching. This

policy is a great addition to Indus Motor Company’s already brilliant customer

relationship management and should continue even after the increase in capacity.

 Mid-tier vehicles should be introduced in Pakistan, many of which are already being

produced by Toyota globally. These vehicles will target to the growing middle class

which Honda has been catering to through its Honda City and Suzuki has been catering to

with its Suzuki Swift. In this regard, Toyota can also start the assembly of Mira in

Pakistan which already has a strong market and is being bought consistently by the

market. However, since it is imported, Toyota Indus does not gain any earnings from it.

 While hybrid cars like Prius continue to have potential growth prospects in future, cars

like Camry are not doing good in the market because of a very high price point. As per

the BCG Matrix, mentioned above, Camry is a dog in the product portfolio, and the

customers have other alternatives available in the market with similar technology and a

lower price point. Thus, Toyota should consider either discontinuing it from the market

or decrease the price point in order to compete at the same pace.

35 | P a g e
  Suzuki still dominates in the small car segment in Pakistan. Considering that the

company has lesser financial constraints as compared to competitors, Toyota can choose

to invest in this market, to further dominate the market.

Conclusion
In brief, with the rise of automobile demand in Pakistan owing to a growing middle-class among

other factors, the automobile industry as a whole is seeing a lot of growth. In line with the industry

trends, Toyota has adopted an active strategy to expand its production to cater to the demand. In

terms of financials, even though Honda’s ratios show better numbers than Toyota, the figures begin

to favor Toyota once the ratios are quantified. Toyota’s net profit has been the double of Honda

and the DPS has been 9 times ahead of Honda. From the numbers it seems that Toyota aims to

produce more expensive units since the demand is in optimistic numbers. Following a customer-

centric approach and putting the “customer-first”, Toyota Indus has garnered a market for itself

where the core customer is on the look-out value rather than price competitiveness, this has allowed

the company to less price elastic. However, it has managed to keep itself at a competitive price

against Honda in particular.

Toyota’s strong focus on expanding distribution has given it a great push against its competitors.

With 45 3S dealerships in the country, Toyota has its representation spread across the nation which

is further elevated by the training provided to these dealerships, based on the same principles and

philosophies that have guided Toyota’s manufacturing for decades. Their large production

capacity - which is undergoing further expansion plans – coupled with their sharp sense of quality

36 | P a g e
in design and in manufacturing has placed them at a level high above their competitors. This

provides Toyota with an advantage over the new entrants that are expected to target the Pakistani

market in the upcoming years, one of them being Renault.

In the future, Toyota Indus aims to continue milking the Corolla brand, however, they also hope

to venture into other automobile categories such as SUVs and Light Commercial Vehicles while

also carrying out vertical growth by continuing to expand their dealership network throughout the

country to cater to the growing demand.

37 | P a g e
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Indus Motor Company Ltd. (2015). 2015 Annual Report.
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39 | P a g e
Appendix
Interview Transcript

1. In terms of after sales services, how do you compare yourself to Honda? What
percentage of cars bought from your showrooms return here only for servicing?

There are two things in our after sales services. First is the prepaid maintenance offer in
which customer pay advance maintenance cost at a discounted price at the time of
purchase. Second is the periodic cost, this comes after the car has ran certain miles. After
the car has covered 1000 miles, we recheck it to make sure that there isn’t any servicing
issue. These services are not provided by Honda or any other companies, moreover, our
dealers are authorized dealer.

2. How frequently does a Toyota car require servicing in a year?

Annual maintenance is recommended, though a lot of customers do not come to us for

maintenance rather they go to some local mechanics.

3. How long does a customer have to wait after they administer a request to buy a
spare part?

There are some spare parts that dealers already have such side mirrors, wipers, etc. so you
can get your work done for these spare parts within 24 hours. But other specific part
which dealer does not have it and its on the plant, then we give one-week time to the
customer.
If there is any part which needs to be imported, we facilitate the customers for that also.
The waiting time depends upon the country from where its being imported.

4. How early, on average, does a car return to your showroom for repairs after its
purchase?

It depends on the way the customer is using the car. But in case of Pakistan, mostly the
customers forget about the company once they have purchased the car; they depend on
local mechanics. One disadvantage for this is that once local mechanic has done any
modifications in the car, you cannot claim warranty then.

5. Can you specify three factors that would lead to your target market buying a Toyota
instead of a Honda?

Firstly, Toyota quality standards are rigid, six sigma is applicable throughout the entire
production, plant, assemble, corporate offices, etc. Kaison concept is being applied
throughout whole company, it’s a Japanese term which means “constant improvement.”

40 | P a g e
 Second factor is customer relationship; we have huge number of dealers, around 55
dealers across Pakistan. These dealers are partners, basically extension of Toyota. They
are certified and authorized; hence they go through rigorous training for customer service
and handling.
Third factor to buy Toyota is innovation; Indus motor company is continuously in line
with Toyota global. We are continuously researching which cars are present abroad that
we can make or assemble in Pakistan. Even corolla has gone through many model
changes and innovations. Then same is with Fortuner.
Toyota specifically focuses on safety feature a lot, which can be compared to civic or any
other car in Pakistan. Safety features which are not even mandatory by the government
we have incorporated those also in our cars. And it is the leader in this factor. When we
talk about fuel efficiency, we talk about certain standards which our known as Euro 1,
Euro 2, Euro 3 and so on. This measures the certain amount of emission from the car for
environment safety. Euro 2 is implemented in Pakistan, but still we make sure that our
cars are designed towards Euro 3 to Euro 4. All corollas across the board have dual air
bags; this feature has not been incorporated by any other automobile company in
Pakistan.
Not only this, Toyota is the automobile leader in Pakistan because we are the first one to
incorporate all the new innovations. One example is of fuel efficiency; we need to make
sure that there shouldn’t be more than

6. Can you specify three factors that would lead to your target market buying a Honda
instead of a Toyota?

It will be based on the loyalty with particular car. Or the physical appearance of the car.

7. What changes have taken place in your market share over the past 5 years?

Toyota market share in the last quarter, it declined from 29% to 25%. A lot of new
players are entering into automobile industry; Renold is about to come in Pakistan soon
for production, it is approved deal. BMW, Volkswagen are also planning to come. Italian
automobile manufactures are also taking interest
Another reason was increased import of used cars, though government has taken action
against this now by increasing the tariffs.

8. How do you intend to increase your market share in the upcoming years?

Different stages include Welding, press shop, paint shop (longest time). Paint shop is
bottle neck activity which slows down other process, so we have invested 40 million
dollars in this to increase the production to increase number of units from 60k to 70k. this
will help us to renew our market share.

9. What would be an optimal market share for you five years from now?

41 | P a g e
 We are now looking at a market which will have a lot of players and not only Honda. We
are looking for the highest market share among all the existing and upcoming
competitors.

10. How do you intend to rival against cheaper and more cost-efficient imported cars
that are become widely popular now?

Answered above. This import cars drastically increased in last year, but last month
government regulated the duty on it and hence the demand has decreased because of
increased price.

11. Do you think it would be a profitable decision for you to increase your capacity in
the near future? How would you respond to Honda increasing its capacity in the
near future?

Capacity expansion feasibility is on going process, that we are always evaluating.

The recent 40 million investment we did was on capacity enhancement and not
expansion.

12. How would you respond if the government makes it easier to import cheaper cars by
eg: reducing the custom fee?

It doesn’t affect Toyota as such as we operate on full capacity and work over time. But it
will definitely affect local industry, FDI will be pointless and all the companies coming
in will back off.

13. What growth/expansion are you expecting in the industry in the near future?

New competitors talked above.

A lot of companies are planning on electrical vehicles. These are being imported from
Chinese.
Hybrids vehicles exist, deewan motor charging station is present outside out the dolmen
city mall. We need infrastructure for electric vehicles to be charged.

14. What are some of the biggest challenges faced in the automobile industry?

The biggest challenge is the surplus demand. we are operating on overtime and still we
are not able to cater to the existing demand. Moreover there are certain customers whom
we call investors, they buy cars in bulk and then sell them at premium price in the
market. The incentive given by these sellers is that consumers do not have to wait much.
If corolla is of 16 lac originally, they will buy it in bulk and later sell it for 18 lacs. We

42 | P a g e
 discourage this act and make sure to cross check the customers. 1288 bookings were
cancelled because there were discrepancies in the orders.
Then we have challenge of imported cars.

15. How does Toyota tackle with government policies not going in its favor?

All our cars sell. We are done with June 2018 booking already. There is hardly any
impact because of government policies. We take actions when policies are not in favor of
the whole industry to support the automobile industry as whole. We go to government
through auto associations named, PAMA and PAPAAM

16. Identify 3 major weaknesses of Toyota in Pakistan

Overall Japanese influence; Japanese are conservative and perfectionist. They do not take
huge risks hence decision making is delayed.

17. What strategies or plans are in place to tackle Volkswagen in Pakistan?

Volkswagen is still not final, if they will come or not. Our strategies revolve around
maintain the market share such as capacity enhancement.

18. TOYOTA leads in the revenue share, however, Honda leads in the volume share. Is
that a major threat to toyota’s future revenue share?

This statement Is wrong. Toyota leads in the revenue share but Volume ka hissaab sa
Suzuki leads because of Mehran. Obviously, value of Corolla is more than Mehran, so we
are one at revenue. This is not a threat we are operating in different class in different
category for different target audience.

19. Toyota – In 2011, Toyota recalled 111,000 models of Toyota and Lexus brands’
vehicles due to shutdown of the hybrid system, how did it cope with that?

Was it done in Pakitan?

20. What are the core driving values of Toyota Indus management style?

Two core values:

1. Continuous Improvement.
2. Respect for people. (all the stakeholders)
Even our chair man (Ali Habib) he treats every one with great respect. We celebrate
birthdays twice a month 15th and 30th, our CEO and chairman attends it.

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21. How competitive is the environment when it comes to substitutes and what is being
done for retaining consumers?

Half discussed above. Moreover, we work a lot on after sales services and knowing our
customers. We make sure that all the information of our customer is recorded. We try to
maintain the past buying history to know the preference and need. we don’t take a lot of
bookings on one NIC. On one NIC only one car can be booked at a time.

22. How much buyer power does Toyota think that its consumers have?

23. How price elastic is Toyota’s consumer?

Not much price elastic, because consumers in this industry are brand conscious.

24. Identify 3 major internal strengths of toyota’s management

1. Extremely organized: for any new activity grand chart Is made for all the things
involved.
2. Trust and Respect factor
3. It encourages mistake so that you learn from them, they believe that mistake happens
because of system and not human. (Fish Bone Analysis/Root Cause Analysis)

25. How do you consider these strengths to be different than of Honda?

Professionalism. It is different from Honda because we are extremely streamlined.

26. Are the ongoing public transportation projects a viable threat to company’s sales?

If we are talking about careem or uber, that is good for us because it will increase the
sales for us.

27. How important it is keep your suppliers happy by providing the certain incentives?

It is really important obviously, they are extension of ourselves. The major thing that we
do for them is constant training, professional development, and we get their technology
transfer agreements done between local and foreigner supplier. This will enhance skills,
knowledge transfer and creates a linkage.

28. How does your suppliers help you to differentiate from other companies?
Technical assessment agreement or technology transfer agreements, these differentiate us
from other companies.

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