AUTOMOBILE INDUSTRY

Automobile Industry



Executive Summary

As we study closely the recent years the automobile industry of Australia is facing some adverse threats and some major opportunities along with the challenges that hinders and boosts the performance of the companies and the overall industry. The growth in the sales has been very impressive and unbelievable despite the recession that hit the industry in the past years. Moreover the Australian customers are being offered wide range of the vehicles and automobile products. Before recession the customers markets was the buyers markets whereas after the recession the market turned in to a slow paced market due to the lower spendable income. The cars became difficult to afford and the revenues of the firms started to fall due to lower sales and lower sales margin.

Executive Summaryii

Introduction1

Porter Five Forces Model in Australian Automotive Industry1

Background1

Threats of New Entrants2

Government policy2

Distribution channels2

Threats of Substitute2

Substitute performance3

Competitive Rivalry3

Price Competition4

Product Quality4

Supplier Bargaining Power4

Number of Suppliers5

Ability to Substitute5

Buyers Bargaining Power5

Switching Cost6

Number of Sales6

Theoretical Models For External Environment6

Analysis Of Australian Company In Relation To External Factors7

Economic Analysis7

Social Analysis7

Technological Analysis8

Political Analysis9

Profitability9

New Vehicle Profitability13

Alternative Options20

Recommendation20

Conclusion20

References22

Automobile Industry

Introduction

This report will describe the analysis of the Australian automobile industry which is considered as the largest industry that aids in with lots of contribution to the economy of Australia. The report will be using the different models and the theories in order to analyze the external environment of the industry as well as the major industry analysis. The report entails in it the porter's five forces analysis, the PEST analysis as the theoretical models to explain the external environment in which the industry is operating (Wright, 2011, 172-188).

Porter Five Forces Model in Australian Automotive Industry

Porter's five forces are a way examining the attractiveness of an industry. This part realizes the automotive industry in Australia and discusses the major competition under guidelines of Porter five forces. We will also evaluate the strategy and discuss the major issues that Australian car manufacturing company already had. These forces are mainly focus on to determine profitability of Australian Automotive industry (Haugh, 2010).

Background

The Australian automotive industry has grown well in history, with basic trend of Sport Utility vehicle Model. Thus, car manufacturers in Australia start focus on to manufactured this model. According to (Challis, Det.al, 2005) Australian Ford focused on this territory (SUV) in April 2010 and gained tremendous success in the market.

Threats of New Entrants

Australian auto manufacturing industry is generally facing a low threat. Factors that examine to threats are generally include barrier to entry such as a requirement of huge capital (it generally need a heavy cost to set up a facility of car manufacturing company) equity of product brand (new firm may not have) governmental policy and legislation (thinking about safety standards and emission), product distribution ability (Dakarti has been out from the Australia since 90s, largely due to inability for establish a car dealer network).

Government policy

Although the government of Australia is based on mixed economy system, it restricts the competition through rules and ...