Australian Automotive Industry Essay Sample

Australian Automotive Industry

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Executive Summary

According to the Australian motor industry federation, Out of every 1000 residents in Australia, there are 747 cars owned. That is the highest car ownership in the world. It is also in Australia that vehicle consumers have the highest number of options to choose from when selecting automotive and can choose from 67 brands with 365 models alternatives. With such statistics, it is evident that the Australian automotive industry is one of the highest income earners. Within the industry there are more than the production and selling of automotive which includes production and repair of automotive parts such as Brake Rotors. This report will focus on aftermarket brake rotors in the Australian automotive industry. In this report, a look at the current situation will focus on the background of the Australian automotive market, product, competition and distribution. This report will also focus on the market analysis using SWOT analysis and market strategy highlighting on the 4Ps of market mix.

Current Marketing Situation (market, product, competition, and distribution)According to Harrell & University of South Australia (2013) as of 2011 the Australian automotive industry was on the decline. The reason for the decline is attributed to the constant increase of high AUD. Another reason for the decline of the industry performance is attributed to an increase in imports, rise in input costs and a change in consumer preferences. An increase in imports indicates that the Australian automotive Industry faces serious competition and profitability issues. It is expected that within the next few years, there will be an increase in imports and therefore Australian market share and viability will be significantly affected. The effects on the industry are so intense that some of the leading manufacturers to leave the Australian market. An industry that was once dominated by three major manufacturers including Toyota and Ford is now facing constant external and internal challenges. It is however important to note that despite the negative signs, the industry still remains a high income earner because of tooling, engineering companies and a comprehensive supply chain that involves servicing and repair. Furthermore, there has been a constant support from the state and federal government towards the automotive industry. Research and development will also benefit from new commonwealth policies which aim to increase investments. The policies encourage a global business environment that will help more and more companies to access new markets and with a change in focus in terms of technology and design that means customers can get what they prefer as the industry adjusts to random and fast changes.

At the moment, the government of Australia has come up with a strategy that ensures there is a competitive market through the reduction of tariffs. There have been several trade agreements between Australia and other motor vehicle manufacturing countries which have ensured that there is a high importation of brands into the Australian market. With the constant demand from Australian consumers for new cars have ensured that the Australian market has become one of the most competitive markets in the world. According to statistics, Australian production and sales of vehicles passed the one million mark.

Market Analysis

In analyzing the Australian automotive industry, it is important to look at the key players involved. The Australian automotive industry as at of the present is dominated by three major companies as far as manufacturing is concerned. These three major companies include Toyota motor corporation Australia, which commands approximately 46% of the volume manufactured. Another recognized renowned company is GM Holden which commands 24% of the industry with Ford motor company commanding the least percentage of approximately 19% of volume manufactured (Walters et al. 2013). The competition between the three leading companies can be seen to be less fierce due to the amount of market share they command. Clearly Toyota leads in terms of manufacturing. Below is an analysis on the reasons why Toyota is dominating the automotive industry in Australia. To get a better perspective, the use of the SWOT analysis is important.

SWOT Analysis

Toyota Motor Corporation

StrengthsOne of Toyota Corporations strengths is that it was founded in 1937 and this means that it has been in existence for long and has the experience in the Industry. The other strength that Toyota has is the different brands under it, namely Scion, Toyota and Lexus. Having three different brands under it, means that Toyota is able to reach a wider market due to increased options in terms of preference. With the introduction of the policy of no process can always be perfect, Toyota has left room for improvement every time it develops a new design of vehicle. Through the principle of improvement theory of Kaizen was introduced which eventually led to Japan catching up with the United States vehicle manufacturers. Toyota has always aimed at manufacturing improved vehicles and it manufactured Toyota Pirus which is a hybrid car. Toyota offers different models of cars in different segments of the target market. Furthermore, more and more consumers prefer Toyota because of its affordable prices and assure safety.

Weaknesses

At the same time Toyota suffers some elements as it is seen as a less prestigious brand compared to other vehicle brands such as Mercedes Benz and BMW. Some consumers would associate cheap with low quality and therefore go for expensive but high quality and safe vehicles. As much as Toyota dominates as one of the top five companies with the highest sales, the same does not reflect when it comes to stock performance and pay-outs of dividends. As long as Toyota does not pay its shareholders, investors will be reluctant to join the company which limits its growth. Some products of Toyota such as the Lexus are less preferred to other brands such as BMW because it lacks the V8 diesel engine. This is a design weakness on the part of Toyota that makes it vulnerable.

Opportunities

The Japanese Yen has been getting stronger against other world currencies. The increased strength of the Yen means that Toyota has an advantage as its operations will cost less. As the production cost reduces, Toyota can produce more and more cars. The more money that Toyota saves the more the company has to indulge in other aspects that can increase quality and sales such as research and development. R&D will ensure that Toyota always manufacture what the consumer want and in turn ensures high sales and profits. There has been the opening of the European markets for trade and this offers Toyota the opportunity to line up some of its new products that are considered classy with the likes of BMW who have always been seen as more prestigious and classy than Toyota.

Threats

One major threat to Toyota is its ability to adapt new technologies like other motor vehicle manufacturers do. If Toyota cannot keep up with its competitors, then it will be left behind. Another threat is constant competition from other motor vehicles manufacturing companies that always seek to come up with better cars hence forcing Toyota to constantly adjust.

Objectives (Sales volume, market share, profits)

Toyota Motors Corporation Australia just like the parent company always has the well-being of the consumers at heart. Ensuring that the product produced is of the quality and serves the consumer well is significant. At the same time if the quality of the product is excellent then there will be an increase in sales and with an increase in sales then there will be an increase in the market share and eventually an increase in profit margin. The main objective is to ensure customer satisfaction.

Marketing Strategy

Product

Armstrong & Kotler (2002) believe that before introducing a product to a target audience, it is important that a company considers the design, packaging and design of the product. Toyota Corporation has always believed in producing and manufacturing vehicles that are suitable for specific people in a specific area and needs. Recently Toyota started manufacturing hybrid cars in order to challenge other luxurious brands in the form of Pirus. Manufacturing different products that are suitable for different segments of consumers is a suitable marketing strategy because it allows different consumers to look for different preferences under one brand and still get what they are looking for.

Pricing

Price focuses on the amount of money that customers are willing to pay in order to acquire a product or service. An organization profit margin can be determined by their pricing strategy. At the same time pricing can determine how many consumers purchase a product or a service (Cadogan, 2009). In many instances high prices always repel customers and at the same time low prices attract more customers. As much as Toyota is well known for its production of quality vehicles at an affordable price, Toyota has been successful and popular because of its pricing strategies. Toyota believes that if the quality of a product is excellent and the product is readily available and at a cheaper price then sales can be guaranteed.

Place

Place indicates the location that a specific product can be found by the consumer or ways that a product can reach the consumer (Etzel et al. 2007). Place can be effective if it is well selected, but with the use of internet more and more companies choose to use the internet as a place for their products. Toyota is well known to have a good network of distribution and operation across the globe. Toyota has got dealers in different parts of the world Australia being one of them. The higher the networking base the more exposed Toyota products are exposed and seen by consumers and therefore higher sales and profits.

Promotion

According to Dobni (2002) promotion is the most fundamental element of the marketing mix. It is significant because it what exposes the product, its features, price and where it can be found which are all marketing mix elements. The main method of promotion is through advertisements in radios, television, billboards and magazines (Lamb, 2004). The automotive industry is a lucrative and big industry and therefore many companies in the industry would spend a lot of money in marketing to ensure that their products are well known about and more consumers get an interest about them. Toyota Company ensures that its brand is familiar to the consumer. The best way that Toyota achieves this is through the use of a well-defined and unique logo with a unique color only associated to that logo (Anon., n.d. Toyota, 2015)....