HONDAVS TOYOTA Auto market is one of the largest segments in world trade.

Changing models, improving fuel efficiency, cutting costs and enhancing user comfort without compromising quality are the most important challenges of the auto industry in a fast global world. The automotive industry rightly prides itself on being recognized as the mother of all industries. In its folds it carries many different kinds of vehicles to provide mobility to people and goods. While they may appear to be simple machines, their design and manufacturing, have much deeper roots in all the known technologies. In-depth knowledge and skillful application of mechanical, electrical, electronics, chemical and a host of other technologies terminate in achievement and improvement of the manufacturing base of a country, by focusing on a single product the automobile. This then provides an opportunity to produce a large number of goods and services for consumption of the entire international community. Use of the word mother for automotive industry is therefore the most appropriate description to define the nature and importance of the industry.

Automotive industry in Pakistan

The Automobile industry has been an active and growing field in Pakistan for a long time, however not as much established to figure in the prominent list of the top automotive industries. Despite significant production volumes, transfer or technology remains low. Most cars in the country have dual fuel options and run on CNG(compressed natural gas) which is more affordable than petrol in the country. There are only three major passenger car assemblers in the market; PakSuzuki, Indus Motors and Honda Atlas. Paksuzuki has an almost complete monopoly in the small car segment as it faces almost no competition other than the single odd DiahatsuCuore produced by Indus Motors. In the Subcompact Sedan segment Toyota Corolla, Honda Civic, Honda City, Suzuki liana, Suzuki swift are currently the only cars in production. There are still no locally made SUV, Mid or Full sized sedans available. As of 2010, Pakistan has not adopted any automotive emission or safety standards. Therefore, most cars manufactured and sold in the country are still carburetor based and do not meet any international emission standards. Many locally made cars such as Suzuki Mehran, Suzuki Cultus, Suzuki Ravi, Suzuki Bolan, DiahatsuCuore, etc are globally obsolete cars from the 1970s or 1980s which are no longer produced or sold in any country other than Pakistan. Pakistan is an
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HONDAVS TOYOTA emerging market for automobiles and automotive parts offers immense business and investment opportunities. The industry is already employing some 120,000 people, contributing more than Rs. 12 billion to GDP, contributing more than Rs. 42 billion to the national exchequer in terms of duties and taxes, attracted investment worth Rs. 52 billion including a substantial foreign investment. At the end of the year 2010 there was 32.4% growth from the previous year in the automobile sector of Pakistan.

History
The automotive assembling in Pakistan started in 1950s when National Motors Limited, a public limited company and the pioneer in the industry came into existence. Established by General Motors of USA, National Motors assembled passenger cars as well as commercial vehicles which carried General Motors brands such as Bedford, Vauxhall, Chevrolet and Holden. A regular car industry started in the country in 1983, when Suzuki commenced production eyeing the small and LCV car segment of 800cc-1000cc range, and introduced Suzuki car which targeted the middle-income group (constituting the larger segment of the market) by providing an affordable car. Then there was a long gap until the early 90s. In 1993 Indus Motor Company manufactured its first Toyota Corolla in Pakistan. Soon after Honda Atlas came with the Civic and Gandhara Nissan entered the market with Sunny. Some years later Dewan Motors set up a plant to manufacture Hyundai and Kia vehicles in Pakistan. Since then the market has changed all together. As for the vendor industry, the initial focus of auto parts manufacturing units established in 1950s, 1960s and 1970s was limited to tractors, buses & truck parts as well as to cater the need of after sales market of different automobiles. However, the major advancement in the industry took place during the 80's when for the first time Suzuki commenced production in Pakistan. After that other assemblers of cars and motorcycles were also established. The establishment of assembling plants gives the encouragement to local industry to enter in auto parts manufacturing. Overall 80s and 90s are the decade when the auto parts industry start to develop rapidly.

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The automobile industry in Pakistan can be broadly categorized into following segments
Cars and Light Commercial Vehicles (LCVs). Two and Three Wheelers. Tractors. Trucks and Buses. Vendor Industry. The industry operates under franchise and technical cooperation agreements with Japanese, European and Korean manufacturers

CAR INDUSTRY IN PAKISTAN

In Pakistan the there was 1.5% growth in production in cars at end of accounting period of year 2010 from the previous year, the typically trend in our country is of 1300cc and above categories cars and they depict 32.8% of the total cars that have produced and sell out in 2010. Japanese manufacturers still control most of Pakistan's passenger car production and sales. Suzuki, Toyota, and Honda are the bigger assemblers in Pakistan and from which Suzuki have the 62% of the car passengers after that Toyota and the Honda cars ranked.

Honda
Honda, one of the worlds leading automobile-manufacturing companies, began its operations in Tokyo in 1958. As time passed, Honda, together with Atlas Group of Companies, stepped into Pakistani vehicle-manufacturing industry, and became one of the favorite suppliers of cars, motorcycles and power products (generators, water pumps, and many more) in Pakistan. Given in the following is detailed information of the history of this company both worldwide and in PakistanHonda Motor Co., Ltd. operates under the basic principles of "Respect for the Individual" and "The Three Joys" commonly expressed as The Joy of Buying, The Joy of Selling and The Joy of Creating. "Respect for the Individual" reflects our desire to respect the unique character and ability of each individual person, trusting each other as equal partners in order to do our best in every situation. Based on this, "The Three Joys" expresses our belief and desire that each person working in, or coming into contact with our company, directly or through
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HONDAVS TOYOTA or products, should share a sense of joy through that experience. In line with these basic principles, since its establishment in 1948, Honda has remained on the leading edge by creating new value and providing products of the highest quality at a reasonable price, for worldwide customer satisfaction. In addition, the Company has conducted its activities with a commitment to protecting the environment and enhancing safety in a mobile society. The Company has grown to become the world's largest motorcycle manufacturer and one of the leading automakers. With a global network of 492* subsidiaries and affiliates accounted for under the equity method, Honda develops, manufactures and markets a wide variety of products, ranging from small general-purpose engines and scooters to specialty sports cars, to earn the Company an outstanding reputation from customers worldwide

Honda in Pakistan
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited Japan, and the Atlas Group of Companies, Pakistan. The company was incorporated on November --, 1992 and joint venture agreement was signed on August ---, 1993. The ground breaking ceremony was held on April 17, 1993 and within a record time of 11 months, construction and erection of machinery was completed. The first car rolled off the assembly line on May 26, 1994. Official inauguration was done by President of Pakistan, SardarFarooq Ahmad Khan Leghari. Mr.Kawamoto, President of Honda Motor Company Limited Japan was also present to grace the occasion. The company is listed on Karachi, Lahore and Islamabad Stock Exchanges. On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and Islamabad. Since then the Dealerships Network has expanded and now the company has sixteen 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pitstops network in all major cities of Pakistan. Since the commencement of production in 1994, the company has produced and sold more than 150,000 cars till Oct, 2008. All dealerships are constructed in accordance with the standards defined by Honda World over.Percentage of local parts conforms to the government's policy. Local vendors are

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HONDAVS TOYOTA continuously patronized to develop parts locally. The quality of local parts is thoroughly checked to meet stringent international standards. We always strive to give outstanding service to our valued customers. In addition to providing regular service to customers, the company also regularly conducts Service Campaigns, to facilitate customer's need for service. This has given our customers absolute confidence in our cars, clearly evident from the ever increasing sale volumes. It is the constant endeavor of Honda Atlas Cars (Pakistan) Limited to achieve No .1 Customer satisfaction. Honda Atlas Cars (Pakistan) Limited is committed to meet customer expectations, and to provide good value for money . Currently we are offering 8 different models of Honda CIVIC and CITY cars in wide range of colors with unique technological and other features.

Board of Directors
Mr. Yusuf H. Shirazi Chairman

Mr. Shirazi is a Law graduate (LLB) with BA(Hons) and JD (Diploma in Journalism) Punjab University and AMP Harvard. He served in the Financial Services of the Central Superior Services of Pakistan for eight years. He is the author of five books including Aid or Trade adjudged by the Writers Guild as the best book of the year and continues to be a columnist, particularly on economy. Mr. Shirazi is the Chairman of Atlas Group with several listed, public and private companies including joint ventures with Honda, GS Yuasa, MAN and TOTAL. He has been President, Karachi Chamber of Commerce and Industries for two terms. He has been on the Board of the Harvard Business School global Alumni Association and is the Founder President of Harvard Club of Pakistan and Harvard Business School Club of Pakistan. He has been visiting Faculty Member at National Defence College, Navy War College and Pakistan Administrative Staff College. He has been on the Board of Governors of LUMS, GIK and FC College. Previously he
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HONDAVS TOYOTA also served on the Board of Fauji Foundation Institute of Management and Computer Sciences (FFIMCS) and Institute of Space Technology - Space & Upper Atmosphere Research Commission(SUPARCO),amongothers.

Mr. Atsushi Yamazaki President / CEO Mr. Yamazaki is President & CEO, Honda Atlas Cars (Pakistan) Ltd. He has been associated withHonda Motor Company Limited over 30 years. He started his professional career with the companyin 1979. Mr. Yamazaki has vast experience in automobile industry, having worked with Honda ventures indifferent markets, across the globe. He has diverse working experience in Japan, Asia & Oceania,Africa and Middle East region. for

Mr. Yukimitsu Miyagi Director / VP Production Mr. Miyagi has been associated with Honda Motor Company Ltd., Japan for last 33 years. He started his professional career in 1977 at Saitama Plant, Japan. He has served at different positions in Honda Malaysia and Honda Philippines for 12 years. Mr. Miyagi was Manager of Overseas Production & Business Planning Divisions in Japan before he took over as Director/VP Production of Honda Atlas Cars (Pakistan) Ltd. He has vast experience of production planning and vehicle assembling in Japan and overseas assignments.

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HONDAVS TOYOTA Mr. Aamir H. Shirazi Director Mr. Aamir is the President of Atlas Group of Companies. He graduated from Claremont Mckenna College, California and completed his OPM from Harvard Business School. He was the Chief Executive of Atlas Honda Limited for over 10 years. He was also appointed as professional director on the Board of Lahore Stock Exchange for two consecutive terms by the Securities & Exchange Commission of Pakistan. He has been Honorary Consul General of Japan, Lahore since 2002.

Mr. Jawaid Iqbal Ahmed Director Mr. Ahmed is an AMP from Harvard Business School, Boston USA, and IPBM from IMD Lussanne,Switzerland. He is also MBA from IBA Karachi University. He has been working in Atlas Group of Companies in various capacities. He has over 45 years of experience in the field of industrial and financial markets of Pakistan. He spearheaded joint venture partnerships of Atlas Group with Honda Japan, JSB Japan, Bank of Tokyo, Asian Development Bank and ING.

Mr. Takashi Nagai Director Mr. Nagai has been associated with the Honda Motor Company for more than 27 years. He is currently President & CEO, Honda Siel Cars India Ltd. and Honda Motor India (Private) Ltd. He is also Honda Motor Company Operating Officer for South West Asia Region. Mr. Nagai has vast experience in the automobile industry, having worked with Honda ventures in different markets, across the globe including America and Europe. In
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HONDAVS TOYOTA April 2007, he became Executive Vice President of Asian Honda Motor Company Ltd., Thailand and Director of Honda Motor CompanyLtd, JapaninJune2007.

Mr. Shigeru Yamazaki Director Mr. Shigeru Yamazaki has been associated with Honda Motor Company Ltd., Japan for over 27 years. He is currently General Manager of Automobile Business Division, Asian Honda Motor Company Ltd., Thailand. Before taking over his current responsibilities, Mr. Shigeru Yamazaki was General Manager, Overseas sales operation in Honda Motor, Japan supervising North America, South America and Europe. He has vast experience of automobile industry.

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VISION

Focusing on satisfaction (customers, associates and shareholders) with challenging spirit and flexibility, we are dedicated to supplying latest generation cars with advanced technology, greater fuel efficiency and competitive prices, along with friendly and efficient after sales back up, maintaining quality as core of all activities.

MISSION

To be a dynamic, profitable and growth oriented company through market leadership, excellence in quality and service adding value to the shares and maximizing exports. To give attractive return to business associates, share-holders as per their expectations and market value and employees according to their abilities and performance, and to be good corporate citizen to fulfill its social responsibilities.

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SWOT ANALYSIS
STRENGTHS Quality and customer satisfaction High R&D like Hybrid Technology Innovation Market share leadership Strong brand equity Unique products WEAKNESSES High Price (latest technology being used in Honda products it is difficult to keep the prices low.) Reputation for being underpowered. OPPORTUNITIES Progressing low emission vehicles and alternative power sources. Mid segment economical small Cars. THREATS Too many competitors in automotive industry. Lower cost competitors Economic slowdown Expanding market size of compact cars ( currently it is around 76% ) Regaining the lead of low emissions is a risky proposition as other companies are coming out with new and cost effective ideas of producing low emission vehicles. External changes (government, politics, taxes, Steel Prices etc)

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BCG MATRIX

PESTEL ANALYSIS
Government proposal to limit number of cars being sold in the PAKISTAN. This would affect the sales of Honda as they couldn't manufacture at the level they previously could have. 2. The PAKISTAN Government was keen to attract foreign firms to invest in to the PAKISTAN. Honda investing in England (Swindon aswell as initial stake in rover) 3. Pressure to produce cars with cleaner emissions. This has meant Honda has had to invest heavily in R&D to produce cars with cleaner engines e.g. i-vtec. 4. What Economic trends exist that will help or hinder the business? (E.g. current stage of the business cycle) Economic Trend How the Trend Helps or Hinders the Business 1. Investing in Europe, Selling in Europe Manufacturing inside of Europe has meant that they wouldn't have had to add the cost of extra tariff to their cars. 2. Exchange rate RS to . The weakness of the yen makes Honda's cars expensive in the PAKISTAN. 3. Income Rising incomes means that people have more to spend, Honda has kept up with this by introducing newer models, especially the new Honda Civic which is to go on sale this year. 4. Cost of Petrol Honda have had to accommodate for the market by introducing more economical cars such as the 1.4 Honda Jazz.
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What Social and Demographic trends exist that will help or hinder the business? (E.g. aging population) Social and Demographic Trend How the Trend Helps or Hinders the Business 1. Language Barriers Honda decided to set-up in Swindon because they preferred to deal in the English Language. 2. Increased desirability of Personalized Cars. Honda is a leading manufacturer of cars which can be easily modified, stylistically and performance wise. This is perhaps their USP. 3. Desire for City cars. This has meant Honda has had to create smaller and economic cars such as the Honda Jazz & Honda Beat. 4. Formula1 - Speed! This is an aspect of Honda which is mainly concerned with show-boating rather than profit. Honda is one of the leading motorbike manufacturers and has a huge R&D budget devoted to that cause. What Technological trends exist that will help or hinder the business? (E.g. wireless Internet) Technological Trend How the Trend Helps or Hinders the Business 1. Specialization through machinery Machines that specialize at one task ensures that the product is made much quicker and of a higher quality. 2. Safety Requirements Because of Legal & Consumer pressure, car manufacturers have had to develop cars with significant safety features which Honda would have had to research and test. This would be at the expense of their R&D Department. This is significantly different from a decade ago when crash-testing dummies were used. 3. Clever cars have had to include Satellite Navigation systems etc. as standard, Honda has had to catch this up in their newer models. 4. Environmentally friendly cars Honda developed i-vetch, which is a follow on from their infamous vetch engines. The vi-Tec engine provides fuel economy, ample torque and clean emissions.

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MRKT SHARE IN PAKISTAN

HONDA SAZUKI TOYOTA

TOYOTA MOTORS
Back in 1936, Kiichiro Toyoda, founder of Toyota, wanted to get his new automotive business off to the most auspicious start possible. By changing the spelling of the family name slightly, it could be written using eight brush strokes - a lucky number in Japan - so Toyota it was. In the 70 years since then, Toyota has become the world's largest, most profitable car maker by living up

Kiichiro was given a flying start from his father, Sakichi Toyoda, an industrialist often referred to as the King of Japanese inventors who, having revolutionized the weaving industry with the world's first automatic loom, passed his dream to make automobiles on to his son. Kiichiro didn't disappoint. A mere 10 years after starting The Toyota Motor Corporation, 100,000 vehicles had rolled off the productionline.

The first British motorists knew of Toyota was the arrival of the Corona at the Earl's Court Motor Show in 1965. It cost 1,000 (the Motor Show programmer cost two shillings (20p) and showcased contemporary exotica like the Riley Elf). It was imported exclusively by Pride and Clarke, a small family firm in South London whose foresight paid off when it
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HONDAVS TOYOTA the start, Toyota made compacts: smaller, fuel-efficient cars with a reputation for reliability, because that's what the domestic market in Japan wanted. Even though they began to make larger, more luxurious cars in the 1990s, the unique experience of making resource-efficient cars from day one has proved invaluable in today's world, challenged as it is by global issues of sustainability. Today, Toyota employs over a quarter of a million people; builds vehicles in six continents, including Burnaston and Deeside here in the UK; is constantly introducing new technologies like Hybrid Synergy Drive, is listed on both the London and New York stock exchanges; builds engines for the Williams F1 team and plans to be the first manufacturer ever to sell over 100 million cars in 2008.

BOARD OF DIRECTORS OF TOYOTA MOTORS

Type of Board Member -------

Name (Connections) Akio Toyoda Takeshi Uchiyamada Yukitoshi Funo Atsushi Niimi Shinichi Sasaki Mitsuhisa Kato

Board Relationships 58 Relationships 76 Relationships 27 Relationships 52 Relationships 27 Relationships 52 Relationships

Title President and Director Executive Vice President and Director Executive Vice President and Director Executive Vice President and Director Executive Vice President and Director Senior Managing Director, Chief officer of The Product Development Group, Chief officer of The R&D Group 1 and Vice Chief officer of The

Age 55 65 64 64 65 58

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Name (Connections)

Board Relationships

Title Customer Service Operations Group

Type of Board Member

Age

Satoshi Ozawa Mamoru Furuhashi

27 Relationships 27 Relationships

Executive Vice President and Director Chief Officer of the Government & Public Affairs Group, Senior Managing Director and Director Chief officer of The North America Operations Group, Chief Executive officer of Toyota Motor Sales Usa, President of Toyota Motor North America Inc, Chairman of Toyota Motor Sales Usa and Director of Toyota Motor Sales Usa Chief Officer of the General Administration & Human Resources Group, Chief Officer of the Accounting Group, Chief Officer of the Information Systems Group, Senior Managing Director and Director Chief Officer of the Purchasing Group, Senior Managing Director and Director

---

62 61

Yoshihiro Inaba

34 Relationships

--

65

Takahiko Ijichi

37 Relationships

--

59

Yasumori Ihara

27 Relationships

--

60

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Name (Connections) Nobuyori Kodaira

Board Relationships 27 Relationships

Title Chief Officer of the Business Development Group, Chief Officer of the IT & ITS Group, Senior Managing Director and Director

Type of Board Member --

Age 62

Name (Connections) Fujio Cho Alexis Herman Yoichiro Ichimaru Masaki Nakatsugawa Akishige Okada Yoichi Morishita Kunihiro Matsuo Federico Pea J.D. Susan
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Board Relationships 95 Relationships 127 Relationships 27 Relationships 27 Relationships 76 Relationships 44 Relationships

Type of Board Member -------

Primary Company Toyota Motor Corporation Dell Inc. Toyota Motor Corporation Toyota Motor Corporation Sumitomo Mitsui Banking Corporation Panasonic Corporation of North America Asahi Glass Co. Ltd. Vestar Capital Partners Google Inc.

Age 74 63 63 58 73 77

135 Relationships 145 Relationships 28 Relationships

----

69 64 53
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Name (Connections) Molinari James Lowry Nathaniel Jones Gilbert Casellas Phyllis Campbell Roger Martin Yoko Wake Masahiro Kato

Board Relationships

Type of Board Member

Primary Company

Age

132 Relationships 42 Relationships 114 Relationships 74 Relationships 127 Relationships 27 Relationships 27 Relationships

--------

Toyota Motor Corporation Toyota Motor Corporation Dell Inc. JPMorgan Chase & Co. Zerofootprint Software Inc. Toyota Motor Corporation Toyota Motor Corporation

71 -58 59 54 64 --

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HONDAVS TOYOTA VISION IMCs Vision is to be the most respected and successful enterprise, delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology". The most respected. The most successful. Delighting customers. Wide range of products. The best people. The best technology. MISSION Mission of Toyota is to provide safe & sound journey. Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world.

SWOT ANALYSIS
STRENGTHS Global organization, with a strong international position in 170 countries worldwide. High financial strength (1997, sales turnover, 131,511 million), sales growth of 29.3% Strong brand image based on quality, environmental friendly (greener), customized range. Industry leader in manufacturing and production. Maximizes profit through efficient lean manufacturing

approaches (e.g. Total Quality Management) and JIT (Just in Time) manufacturing and first mover in car research and development Excellent penetration in key markets (US, China, EMEA) and now the second largest car manufacturer in the world, surpassing Ford.

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HONDAVS TOYOTA WEAKNESS Japanese car manufacturer - seen as a foreign importer. Production capacity. Toyota produces most of its cars in US and Japan whereas competitors may be more strategically located worldwide to take advantage of global efficiency gains. Some criticism has been made due to large-scale re-call made in 2005, quality issues. OPPORTUNITIES Innovation -first to develop commercial mass-produced hybrid gas-electric vehicles (gas and zelectric), e.g. Prius model. Based on advanced technologies and R&D activity. With oil prices at an all time high - this investment and widening of product portfolio fits consumers looking to alternative sources of fuels away from gas guzzling cars To expand more aggressively into new segments of the market. The launch of Aygo model by Toyota is intended to take market share in youth market. To produce cars which are more fuel efficient, have greater performance and less impact on the environment. To develop new cars which respond to social and institutional needs and wants. The development of electric cars, hybrid fuels, and components reduces the impact on the environment. Toyotas Eco-Vehicle Assessment System (Eco-VAS) has helped in production, usage, and disposal. Continued global expansion - especially in the emerging markets e.g. China and India, Russia, where population and demand is accelerating. THREATS Saturation and increased competition, intense marketing campaigns increasing competitive pressures Shifts in the exchange rates affecting profits and cost of raw materials. Predictions of a downturn in the economy e.g. recession, will affect car purchases (especially new cars). As household budgets tighten - this could lead a decline in new car sales and possible rationalization of dealerships. Changing demographics e.g. number of large families is declining.
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HONDAVS TOYOTA Undermining the demand for large family cars Changing usage - families using the car less for taking children to schools. Home deliveries. Businesses - restricting business travel (teleconferencing). Governments encouraging alternative forms of transport - cycling and incentives to use public transport across Europe. Rising oil prices (fuel costs) and the costs of maintaining cars. Increase in families who have chosen not to own a car, or decided to use their car less BCG MATRIX

STARS: Toyota Corolla of IMC falls into the category of Stars. It generates large amount of cash because of its strong relative market share, but also consume large amounts of Cash because of its high growth rate; therefore the cash in each direction Approximately nets out. However companies usually invest in star units as they are Feeling that the future of their company depends on the success or failure of that Particular unit or product. CASH COWS: If IMCs Toyota Corolla could maintain its large market share, it will become a Cash Cow when the market growth rate would decline. The portfolio of a diversified company always should
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HONDAVS TOYOTA have stars that will become the next cash cows and ensure Future cash generation. Typically needs this cash to support its rapid and significant Growth. It generates large amounts of cash for the organization and usually segments in which management can make additional investments and earn attractive returns. In case of Indus Motor Company Limited, the Hilux is a cash cow for the company Which earns a lot of cash for the company and company utilize this cash to run its Future units like Toyota Corolla. QUESTION MARK: According to Boston consulting group matrix, a question mark is such a business unit about which you are not about the success or failure. The unit can be very successful In the market or it can be simply being ruined of. In case of IMC the question mark is Actually the Cuore. It is due to the large competition of in this category of cars. As the Suzuki Aulto, Mehran, Santro and some imported vehicles like Vitz are already Present in the market. DOGS: This category of BCG matrix includes the product that has no market share as well as Consuming the large amount of cash instead of generating the cash. The company Wants to dissolve that product.

PESTEL ANALYSIS
In order to formulate a strategy view, the current business environment of the auto industry is analyzed. The business environment is mainly analyzed in the PESTEL framework and the Porters five forces model. In this post, We analyze PESTEL Model first, and this will help you analyses the Opportunities and Threats of Toyota 1. Political Factors In the background of the financial crisis, each countrys government carried out the relating remedy policy to protect or stimulate each important industry, including the annotative industry. For example, in end of 2008, U.S. government gave $17.4 billion
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HONDAVS TOYOTA short-term loans to General Motors and Chrysler to help them. In March, 2009, Toyota has asked for $2 billion loan from the Japanese Government. These loan policies may help the vehicles corporation survive in the difficult position caused by the financial crisis. In addition, the U.S. Federal Reserve Board took the quantitative easing policy, which leads the global asset price inflation to protect U.S. trade. Therefore, these policies would help each country to spur its own automotive industry and protect others country automotive corporation to occupy the market share. 2. Economic Factors The automotive industry shows the recovery evidence. The General Motors paid back $8.1 billion in emergency government loans and Chrysler demonstrated that it started to produce an operating profit. In the United States, the passenger vehicle sales rose 12.3 million in 2010 compared with 11.3 million in 2009. It is the first time that the sales exceed 10.0 million since the financial crisis, September 2008. In Canada, the revenue of passenger vehicle was 1.61 million compared with 1.56 million last year, due to the new growing point light trucks. The Asian automotive market was the bright point in the past several years. For example, the Chinese new automotive reached 9.32 million in 2010, while the Indian automotive reached to 1.82 million, which is shown in the Figure 1. These positive data will increase the confidence of investors, and the rising of Asia market will attract more automotive corporations. 3. Social Factors Due to the increasing price of the oil, more and more people choose the small displacement engines due to its high efficiency. For example, 140,000 Chevrolet Cruze with small displacement engines were purchased in the first six months of 2010. This tendency will lead the manufacturer to produce the small displacement engines. For instance, GM and SAIC develop small displacement engines, and Toyota plans to launch more such types of cars in China. In addition, with the rising power of the middle class in China, they became the main purchasing power of automotive, which help China to
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HONDAVS TOYOTA become the largest growing car market in the world. It is demonstrated that Chinas middle class occupies 23% of its total population. And the luxury cars also are preferred in China. For example, Beijing includes 8,800 billionaires and 143,000 millionaires. Most of wealthy own between a minimum of two to five luxury cars millionaires. This may lead the changing of the production direction about the vehicles types. 4. Technology Factors Regarding to the precious energy resource, the demand for vehicle drove by other types of energy caused the interest of vehicle interest, so such types of vehicles were invented by the vehicles manufactures. For example, Hybrid electric vehicle is such type vehicle which comprises of a conventional engine propulsion system with an electric propulsion system. The features of these cars are to achieve both the better fuel economy and a better performance. Toyota leading brand Prius, was sold in 80 countries for 2 million in 2010. General Motor was developing innovative battery technologies and hybrid systems that will help hybrid and electric vehicles travel farther, which may be used in the brand Cleveland. This tendency may cause the basic transformation in the automotive industry, and attract more automobile manufactures concentrate on the hybrid engine system. 5. Environmental Factors The waste gas emitted by the vehicles became the hot point in the recent years. The stringent emission standards for the passenger and light vehicles were adopted by the European Union (EU) Commission and the EU Parliament since 2005. In the standards, the automotive corporation must be responsible for the emission performance of these vehicles. And another severe emission standard was adopted by EU in 2009. And the EU Commission plans to carry on more severe standards. And different countries have the different emission standard. For example, the national emission standard of Australia is more stringent than several Asian countries. Thus, with the more stringent emission standard, the additional costs should be spent by the automotive manufacturers to meet it in the factors of product development, testing and manufacturing operations.

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HONDAVS TOYOTA 6. Legal Factors Each country operated the legal policy to protect its own automobile corporation benefit. The Asian countries changed their import duty for the automobiles. For example, it is demonstrated by China government, the preferential taxes will be ended on the small displacement cars, in order to reduce the pollution in the large cities. India also reduced the import duty and excise duty on hybrid cars, and reduced the tax on the auto component aimed at helping the Indian auto component manufacturers. In 2009, U.S. government would restrict imports of Chinese commercial low cost tires, and increased the additional tariffs. This caused that the U.S. automotive corporation cannot chose the expensive European tires instead of Chinese tires, which increased the cost of the manufacturers. Thus, the manufactures should adjust their strategy according the various ration legal policies.

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