Don't have a Fit, Dude

29 January 2010
Massive recalls from both Toyota and Honda must be causing widespread alarm in the auto industry. Just a few days ago, Toyota announced recalls of millions of cars due to a faulty accelerator pedal.

Now Honda is recalling 646,000 Fits (also known as Jazzes) and Citys because of a defective switch that could lead to fires.

Porter's Five Forces Analysis of Automobile Industry

Porter's Five Forces, also known as P5F, is a way of examining the attractiveness of an industry. It does so by looking at five forces which act on that industry. These forces are determinants of that industry's profitability.

The five forces are:

1. The threat of new entrants

A Porter's Five Forces Analysis explores five principal industry factors to determine the attractive of a given industry in a given market. In this P5F exercise, we look at the automobile industry in India. This is independent of any manufacturer. As such, it applies to every Indian car manufacturer.

In any P5F analysis, one must examine the following:

1. The threat of new entrants
2. The bargaining power of buyers/customers
3. The threat of substitute products
4. The amount of bargaining power suppliers have
5. The amount of rivalry among competitors

The Indian automobile industry is one of the biggest and most important. It has tremendous growth potential, both for Indian and foreign manufacturers.

In many ways it is like China's auto industry: Over a billion people, a growing economy, increasing wealth, and cheaper and cheaper cars becoming available. Nevertheless, India is still almost a decade behind China in terms of annual auto production, with 2.3 million manufactured in 2008. However, India exports more cars than China does.

BYD Auto
BYD Auto is one of China's largest and best-known car brands. BYD stands for "Build Your Dreams". It may be cheesy, but it probably works in a nation with such growing wealth and dreams.

BYD has vowed to be the first Chinese car brand to enter the US market - slated for the end of 2010.

BYD unveiled its e6, a four-door electric car, at the Detroit Auto Show. The e6 is supposed to be able to go 330 kilometers between charges, or 205 miles.

Porter's Five Forces Analysis - China

Porter's Five Forces evaluates the competitiveness and attractiveness of a given industry in a certain market. China is an interesting market to analyze for any industry, especially the automobile industry. China is experiencing tremendous growth, and in 2009 more cars were sold in China than in the US.

To see a P5F analysis of the auto industry in the US, click here.

The links below show live video camera footage of the road conditions at Singapore's checkpoints with Malaysia in Woodlands and Tuas.

Woodlands Checkpoint
Woodlands Checkpoint, looking towards BKE

Automotive Industry External Factor Evaluation (EFE) Matrix

In the first column lists key external factors, namely opportunities and threats. These key external factors are derived from tine external-audit process including the opportunities and threats exercise, the CPM (competitor analysis), Porter’s Five Forces, the industry life cycle, and profit pools.