Automobile Industry

Group 3
Matt Davis
Charlie Kim
Adam King
Brian Larson
Sean Redmond
Andy Schick
 S.W.O.T. Analysis
 Ford
 General Motors
 Daimler/Chrysler
Major Strengths
 Ford Motor Company
 Diversity
 Jaguar
 Volvo
 Mercury
 Lincoln
 Mazda
 Land Rover
 Second Largest Automaker in the World
 Owns Hertz Rent-A-Car
 Ford Motor Credit
 Ford Strengths
 Supportive
 Gave Generously after the September 11 Attacks
 Give Generously to Help Fight Breast Cancer

 Support Racing Teams

 NASCAR
 Formula One
 Etc.
 4th on the Fortune 500 List (U.S. only)
 4th on the Global 500 List
 39th on the Best Companies for Minorities List
 General Motors Company
 World’s Largest Auto Manufacturer
 In 2000, Sales Exceeded $183 Billion Globally
 Gaining $5 Billion in Profits

 Manufacturing Facilities in Over 30 Countries

 Sell Vehicles in Over 200 Countries
 As of 1999, GM Held 15.1% of the Automobile
Market
 GM Strengths
 Diversity
 Chevrolet, Pontiac, Buick, Oldsmobile, GMC, Cadillac,
Saturn, Hummer, Saab
 Dominance
 3rd on Fortune 500 List
 3rd on Global 500 List

 Alliances with Suzuki and Isuzu Motor Companies

 Technological Alliances with Toyota and Honda
Motor Companies
 Setting the Standard
 Daimler/Chrysler
 Leaders in the Mini-Van Lines of Automobiles
 Became More Sleek Looking with Time
 Leaders in the Convertible Lines
 Sebring
Major Weaknesses
 Ford Motor Company
 Firestone Tire Recalls
 Caused Stock Price to Suffer--$14.70, Lowest in Years
 CEO Jacques Nasser and Chairman Bill Ford Jr.
Cannot Get Along
 This past Week, Bill Ford Took Over as CEO
 Cash Reserves Have Sunk to $4.1 Billion
 $13 Billion on Acquisitions
 $3.5 Billion to Cover Tire Recalls
 General Motors
 Recalls Have Hindered Growth
 314,000 Mini-Vans made between 1997-2000
 Repair Power Sliding Doors

 Maybe Too Diverse?

 Might Lose Focus on Some Lines
 Daimler/Chrysler
 Lack of Diversification
 Feel the Need to Refurbish Older Lines to Stay
Competitive
 Smaller Share of the Market than Ford or GM
Opportunities
 Ford Motor Company
 More Environmentally Friendly
 Cleaner Engine Emissions
 Working With Environmental Groups to Help Clean the
Environment
 Solar Power

 Generosity
 Giving to More Charities
 General Motors
 GMAC Financial Services
 Mortgage, Auto, and Business Financing
 Electronic Business and Digital Technology
 Direct TV
 OnStar System

 Becoming More Environmentally Friendly

 Daimler/Chrysler
 State-of-the-Art Technology Center in Auburn Hills,
MI
 Hard at Work to Keep Chrysler Competitive
 Need to Expand More Into Foreign Markets
 Threats!!!!
 The threat are really the same across the board for the
automobile industry. Competition is huge, in this
industry, and nothing hurts a company more than
internal strife, as is the case with Ford Motor
Company. Also an impending recession does not
smile upon any industry in this day and age.
 Toyota Strengths
 Partnerships
 EPA Global 500 Award
 #1 of Japanese Producers
 SUVs
 Toyota Weaknesses
 Poor Website
 Toyota Opportunities
 Hybrid Engines
 Matrix
 Toyota Threats
 Consumer Confidence
 Honda Strengths
 Used Cars
 Honda Insight
 Popularity
 Honda Weaknesses
 Europe
 Passport
 Honda Opportunities
 Alliances
 Fuel Efficiency
 Honda Threats
 Second Movers
 Nissan Strengths
 Teams
 Revival Plan
 Nissan Weaknesses
 Low Market Capitalization
 Renault
 Nissan Opportunities
 Revival Plan
 Nissan Threats
 Low Market Share
 Losing Company
Porter's Five Forces in
the Automobile
Industry
Charlie Kim
 Five Forces Within Auto
Industry
 Threat of New Entrants
 Bargaining Power of suppliers
 Bargaining power of buyers
 Threat of substitute products
 Rivalry among competing firms
 Threat of New Entrants
 Slow sluggish state of economy
 Personal consumption declined from 4.5 to 2.9%
 Productivity decreased in manufacturing level

 Automotive sector has no space for new

entrants
 Small demand base and wide choice
 High Fixed cost and constant R&D
Bargaining Power of Buyers and
Suppliers
 Automakers design and assemble, suppliers
have little responsibility
 Trust has been scarred by Ford-Firestone problem.
 Essentially little power is given to suppliers

 Japanese emphasize trust in suppliers allowing

for collaborative design efforts
 Corporate culture allows for such an arrangement
to work
 Bargaining Power of Buyers
 Customers take over management of world’s
car business.
 Over capacity - wider choice – zero switching cost
 More discerning customers

 Dealer Freedom

 Better-quality products
 Consumers take advantage of current quality in product
 Threat of substitute products
 Natural gas
 Electricity
 Ethanol
 Vegetable oil
 Sunlight
 Water
 Intensity of Rivalry among
Competitors
 Gas crisis during 1980’s and 90’s
 Foreign Trade increased intensity of rivalry
 Export becomes essential to expanding and
competing
 Financial Comparision
Price Mkt Cap P/E P/Sales ROE

F 16.21 29.4b 49.73 0.19 4.08%

DCX 35.4 35.5b NM 0.28 -4.47%
GM 41.84 23.01b 28.88 0.14 2.61%
HMC 73.87 35.99b 15.45 0.64 12.05%
NSANY 9.01 17.9b 7.31 0.4 43.51%
TM 49.32 91.2b 17.07 0.88 9.69%
Industry 37.31 0.27 0.93%
S&P500 29.79 3.68 17.73%
 Financial Comparison
 Highlights
 Strengths
 Weaknesses
 General Environment
 Demographic Segment
 Population
 Age

 Internet

 Income Distribution
 Sociocultural Segment
 Jobs
 Women in the Workforce

 Consumers
 Technological Segment
 Environment
 Aluminum
 Global Segment
 Economic Segment
 Very International, with the main places being
United States, Europe, and Japan
 Historically auto stocks move with direction of
North American sales cycle
 Until September U.S. retail car and light truck
sales declined in nine of last ten months.
 U.S. Economy
 Struggling in recent months
 Going to have to spend its way out of sharp
downturn
 Congress considering temporary tax rebates
and accelerate planned permanent cuts
 Japan
 Verging on deep recession
 Predict tax revenue shortfall of $1.1 trillion
yen this year.
 Livestock industry seeking $104 b yen in aid
for losses from Mad Cow in September
 Germany
 Economic growth increase moderately
 Inflation will fall
 Overspending on health and sharp economic
slowdown raise deficit
 Political/Legal Segment
 Global Agreement on Vehicle Regulations
 Trade barriers
 General Motors
 Claim to be the pacesetter for the automotive
industry
 Has the largest share of the world’s vehicle
market at 15.1%
 Offer a variety of services including GMAC
 Strive for technological innovations such as
the Onstar system
 Ford
 Passion for better ideas
 Pushing the limits of technology and design
 Striving to make the world a better place
 Concerned with environment and developing
more efficient automobiles
 Built Ford tough
 Daimler Chrysler
 Striving to become the number one automobile
manufacturer in the world
 Formed various partnerships to enhance access
to various global markets
 Premium priced product
 Leader in innovative designs and styles
 Honda
 Manufacturers of a wide range of products
 Industry leader in fuel-efficiency and low
emission technology
 Maintains values of a small company despite
competing in a global market
 Nissan
 Slogan of “thinking ahead”
 Offer a sport edition for every model of car
they produce
 Development of ecologically minded
transportation
 Believe that design is the most vital contact
they have with their customers
 Toyota
 Slogan is “get the feeling”
 Devoted to the customer and excel in customer
service
 Local outreach programs
 High standards for dependability