MARKETING PLAN FOR

TOYOTA COROLLA
MARKETING CONCEPT
Marketing is the process associated with promotion for sale of goods or
services. It is considered a "social and managerial process by which
individuals and groups obtain what they need and want through creating and
exchanging products and values with others." It is an integrated process
through which companies create value for customers and build strong
customer relationships in order to capture value from customers in return.
Marketing is used to create the customer, to keep the customer and to
satisfy the customer. With the customer as the focus of its activities, it can
be concluded that marketing management is one of the major components
of business management. The evolution of marketing was caused due to
mature markets and overcapacities in the last decades. Companies then
shifted the focus from production to the customer in order to stay profitable.
The term marketing concept holds that achieving organizational goals
depends on knowing the needs and wants of target markets and delivering
the desired satisfactions. It proposes that in order to satisfy its organizational
objectives, an organization should anticipate the needs and wants of
consumers and satisfy these more effectively than competitors.
STRATEGIC PLANNING
Strategic planning is an organization's process of defining its strategy, or
direction, and making decisions on allocating its resources to pursue this
strategy, including its capital and people. Various business analysis
techniques can be used in strategic planning, including SWOT analysis
(Strengths, Weaknesses, Opportunities, and Threats) PEST analysis (political,
economic, social and technological)
Strategic planning is the formal consideration of an organization's future
course. All strategic planning deals with at least one of three key questions:
"What do we do?"
"For whom do we do it?"
"How do we excel?"
In many organizations, this is viewed as a process for determining where an
organization is going over the next year or more, typically 3 to 5 years,
although some extend their vision to 20 years.
In order to determine where it is going, the organization needs to know
exactly where it stands, then determine where it wants to go and how it will
get there. The resulting document is called the "strategic plan."
It is also true that strategic planning may be a tool for effectively plotting the
direction of a company; however, strategic planning itself cannot foretell
exactly how the market will evolve and what issues will surface in the coming
days in order to plan your organizational strategy. Therefore, strategic
innovation and tinkering with the 'strategic plan' have to be a cornerstone
strategy for an organization to survive the turbulent business climate.
DEVELOPING A VISION AND MISSION

Mission: Defines the fundamental purpose of an organization or an

enterprise, basically describing why it exists and what it does to achieve its
Vision. Mission may be long term as well as for short term for any
organization. A corporate mission can last for many years, or for the life of
the organization or may change as per the demand of the organization
mission varies. It is an objective with a timeline, but rather the overall goal
that is accomplished over the years as objectives are achieved that are
aligned with the corporate mission.
Vision: Defines the desired or intended future state of an organization or
enterprise in terms of its fundamental objective and/or strategic direction.
Vision is a long term planning, sometimes describing a view of how the
organization would like the world in which it operates to be. For example a
charity working with the poor might have a vision statement which read "A
world without poverty"
MARKETING PLANING
A marketing plan is a written document that details the necessary actions to
achieve one or more marketing objectives. It can be for a product or service,
a brand, or a product line. Marketing plans cover between one and five
years. A marketing plan may be part of an overall business plan. Solid
marketing strategy is the foundation of a well-written marketing plan. While
a marketing plan contains a list of actions, a marketing plan without a sound
strategic foundation is of little use.
THE MARKETING PLANNING PROCESS
In most organizations, "strategic planning" is an annual process, typically
covering just the year ahead. Occasionally, a few organizations may look at a
practical plan which stretches three or more years ahead.
To be most effective, the plan has to be formalized, usually in written form,
as a formal "marketing plan." The essence of the process is that it moves
from the general to the specific; from the overall objectives of the
organization down to the individual action plan for a part of one marketing
program. It is also an interactive process, so that the draft output of each
stage is checked to see what impact it has on the earlier stages and is then
amended accordingly.
The marketing planning process can thus be elaborated in just a few points
which will cover each and every important aspect of the market that can be
beneficial for an effective marketing plan. These steps can be elaborated as:
Review of the marketing environment. A study of the organization's markets,
customers, competitors and the overall economic, political, cultural and
technical environment; covering developing trends, as well as the current
situation.
Review of the detailed marketing activity. A study of the company's
marketing mix; in terms of the 7 Ps.
Review of the marketing system. A study of the marketing organization,
marketing research systems and the current marketing objectives and
strategies. The last of these is too frequently ignored. The marketing system
itself needs to be regularly questioned, because the validity of the whole

marketing plan is reliant upon the accuracy of the input from this system,
and `garbage in, garbage out' applies with a vengeance.
_
MARKET SITUATION
Current Market Situation

REGIONAL MARKETS:
The auto market is one of the largest segments in world trade. The annual
size of automotive export trade in the world has grown to a massive level of
over US$ 600 billion, this account for about 10 per cent of the world export.
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 globalizing world. Hence there is a need for
exploring the industrial complementarities in the region for better quality,
favorable costs, fuel efficiency and attractive designs. Therefore, the
requirement of information exchange in the region is much more pronounced
now than ever before for keeping the auto industry afloat and competitive.
The objective should not be only to understand each others comparative
advantage but also to explore mutual complementarities as well as to build
an early warning system on the trends in industry and changes in user
preference to brace for the challenges confronting the auto industry. Mutual
consultation among the countries of the region therefore assumes the
proportion of an abiding imperative for regional capacity-building and
preparing the countries to meet the requirements of the new economy
through research, advisory services, information dissemination and exchange
of country experiences, besides joint ventures and technology tie-ups.
Pakistans automobile sector is surely better off than many other Asian
neighbors including Sri Lanka, Nepal, Bhutan and Bangladesh. Its high time
that local manufacturers and assemblers should penetrate into the world
market. Signing free trade agreements with these countries is surely
beneficial for the local automobile industry. However, franchises cannot
export so policies should be formulated and strategies designed to enhance
infrastructural development and promote innovation by local investors by
offering duty free capital investment as well as ample amount of financial
assistance. To become a part of world supply chain a culture of progression
should be promulgated and investment should be done at both technological
level as well as labor level.

PAKISTAN AUTO INDUSTRY:

Among the active players of the large scale manufacturing sector, probably
the automobile comes on the top of the list in view of multi-dimensional
impact on socio-economic as well as trade relations with the countries taking
extra interest in the backdrop of a huge untapped market as only 8 persons
out of 1000 have a car in Pakistan.
Automobile sector is one of the fastest growing sectors in Pakistan. It
contributes towards the nations economy in the form of Technology Transfer,
Employment, Investment and much more. Automobile sector contributed
over Rs.23 billion to the national exchequer in the year 2007-08.
Pakistani market has lesser penetration for cars. Eight in every one thousand
in the country have the cars. The same figure is 10, 12 and 21 in every one
thousand in India, China and Indonesia respectively. This is also a fact that
from 1993 to 2004 the car industry was working below capacity as the car
market had been staying below 50,000 units per annum. In the year 2005-06
the industry produced 49,656 units against its installed capacity of 108,000
units per year. The total car production stood at 120,000 units in 2007-08
compared to 80,000 units in the previous financial year. This indicates that
the response was very quick. The car industry is on the track and it is poised
to produce a more than 215,000 units this fiscal.
The existing population of automotive vehicles in Pakistan is 3.9 million. The
annual demand is estimated at 300,000, two thirds of which is being met
from local sources and imports and the remaining one third is left unmet. The
market value of automotive vehicles in dollar terms is estimated at more
than 1 billion, out of which import constitutes around US$ 200 million. The
after market of auto parts is estimated at US$ 500 million, imports and local
production taken together.
Notwithstanding a manifold increase in car production in Pakistan during the
last few years, Pakistan still stands relatively low in terms of motorization
when compared globally and even to its neighbors. The automakers need to
take into account, as the demand is lot greater then the supply.
Since 2005-06 the automobile market is growing rapidly by over 40 percent
per annum and if an average annual growth of 30 percent per annum is
maintained, Pakistans market will cross the milestone of 500,000 units by
the year 2010. Long-term investment friendly policies of the government and
up-gradation of production facilities are considered as pre-requisite by
experts for achieving the automobile vision 2010 of 500, 000 units. Major
automobile companies in Pakistan have set up as joint ventures with foreign
multinational companies, thus encouraging the inflows of FDI in Pakistan.
The automobile sector of Pakistan has shown significant growth in the last
couple of years. Sales performance of different segments is given below.
Production of cars in first nine months of 2007-08 increased from 87,104 to
112,478 units. Another 16, 885 different types of vehicles were imported
during July-Feb, FY06 under transfer of residence, baggage and gift schemes

as compared to only 5,177 units in the same period last year, showing an
increase of 230 percent.
So far, Pak Suzuki, Honda Atlas and Indus Motor have been dominating the
market, emergence of competition was experienced by the entrance of
Dewan Farooque, Daihatsu and Hyundai Motors in the market with a number
of new product lines. This intense competition has totally changed the
paradigm of Auto Industry in Pakistan. Pak Suzuki has been a sole market
leader in assembling 800cc and 1000cc small passenger cars as well as
1000cc jeeps, Potohar. In 1993, Toyota started its operation and in the
proceeding year 1994 Honda Atlas has commenced its operation in Pakistan
as the main competitors in 1300-2000cc segment but the Suzuki has an
edge over the market with 1300cc (Margalla) Baleno.
Automobile market has become more competitive in recent years as new
players are going to introduce their products in the market like Daihatsu has
launched its 850cc Daihatsu Coure, Dewan Farooque has launched its Kia
classic 1300cc and Hyundai Santro Plus 1000cc car. There are a number of
new products like Kia Shuma 1500-1800cc car by Dewan Farooque Motors.
The sudden competition in small car segment is expected to pose challenge
for Pak Suzuki, the former lone player in the market and other leading name
in the market. In near future, Dewan Farooque will offer the widest range of
products in the domestic automobile market. The trend of localization is
experienced at large in the industry. Toyota is also following the trend of
localization with 3o per cent on its all models of 1300-2000 cc Corolla.
_
_
The demand in the auto sector in Pakistan is skewed towards small cars. Due
to this trend Pak Suzuki Motors enjoys a monopoly in the small-car market.
Despite ongoing import of cars units from other countries and increase in the
production of cars in the country, the demand of cars in market is increasing
day by day. The production of cars has registered a staggering increase of
127738 units as compared to last years figure of 100213 (27.5%).
Product Situation
Toyota Corolla is the market leader in its class. Toyota Corolla is
manufactured both in Diesel and Petrol engines i.e. 2000cc diesel and
1300cc and 1600cc petrol versions. Its main attributes are:
_
Competitive pricing.
_
High reliability.
_
Easy availability of spare-parts.
_
High goodwill.
_
Aggressive styling.
_
After sales services.
_
Swift distribution channels.
_
High resale value.
Decent safety features.

Toyota Corolla is the market leader in the 1300cc and higher engines.
In an effort to appeal more to the Young at Heart people, the New Corolla is
aimed at offering the Pakistani Customer with World-size Wheelbase and
Height to achieve more interior space, luxury and a sporty look. We call it
NCV."NewCenturyVehicle.
Cool, Sleek styling and bigger dimensions for an improved sense of luxury.
Many things in our life get bigger as society and the environment change, or
smaller as technology advances. Toyota Engineers designed the Corolla by
setting aside conventional ideas such as, "This class of car must be this size".
Making the Corolla bigger was a natural consequence of today's trends.
Capturing Tomorrow's Values: Comfort and Luxury. Toyota Engineers
reviewed every possible angle to ensure total luxury: from the concept of
interior space to how the quality and texture of materials appeal to the eye
and to the touch. Today's users are not wiling to be satisfied with the status
quo. We are determined to offer a level of comfort that goes beyond even
what the users seek.
_

Integrating today's leading-edge technology. Society and specially the car's

role are definitely changing, as seen in cars attaining higher performance. At
Toyota, we integrated today's leading edge technology to reflect those
changes.
Indus Motors sales during FY06 stood at 40,961 units, portraying 17 per cent
upsurge compared to 34,983 units last year. The companys Toyota Corolla
sales depicted 33 per cent increment to 30,527 units with market share at 46
per cent in the 1300cc and higher engine cars. Toyota Corolla is considered
to be the most successful car in Pakistan.
Products specification includes:
Basic
Corolla Sedan
1.3L
XLi
1.3L
GLi
1.8L Manual
Transmission

1.8L Automatic Transmission

2.0D
2.0D
Saloon

Exterior- L x W X H (mm)
4530 x 1705 x 1480
Exterior- L x W x H (mm)
1915 x 1430 x 1230
Wheelbase (mm)
2600
Minimum Turning Radius
4.9 m
Engine Type
2NZ-FE
1 ZZ-FE
2C
Engine Displacement (cc)
1299
1794
1975
Fuel System
EFI
VVTi
Fuel Injection
Max.Output (SAE-NET)
60K KW @ 6000 rpm
100kw@6000 rpm
53 kw @4600 rpm
Max.Torque (SAE-NET)

119 Nm @4400 rpm

171 Nm @4200 rpm
131 Nm@ 2800rpm
Transmission
5 M/T
5 M/T
4 A/T W / OD
5 M/T
ECT Switch
X
X
X
0
X
X
Brakes (FR/RR)
Ventilated Disc/Disc
ABS with Brake Assist
Ventilated Disc/Disc
ABS with Brake Assist
Suspension (FR/RR)
Leading Arm, McPherson Strut Coil Spring/ETA Torsion Beam, McPherson Strut
Coil Spring
Stabilizer Bar
Front/Rear
Steering System
Power
Tires
175/70
185/65
175/70
185/65

R14
R14
R14
R14

Fuel Cut System

X
X
0
0
X

0
Exterior
Antenna
Glass Embedded Print Antenna
Bumpers
Coloured
Front Head Lamps
4 Lamp Multi-reflector
Rear Lamps
LED (Light Emitting Diode) Type
Door Mirrors
Manual
Power (Colored)
Manual
Power (Colored)
Door Sash Black
0
0
0
0
0
0
Front Wipers
Intermittent
Var-Intermittent
Intermittent
Var-Intermittent
Fog Lamps
X
X
0
0
X
0
High-mounted Stop Lamp

X
0
0
0
X
0
Laminated/ tinted Windscreen
0
0
0
0
0
0
Mud Flaps (FR/RR)
Black
Colored (RR only)
Black
Colored (RR only)
RR Garnish
Colored
Side Impact Bars
0
0
0
0
0
0
Side Protection Molding
Black
Chrome
Black
Chrome
Side skirts
X
X
0 (Colored)
X
0 (Colored)
Wheel Caps

full
Wheel Rim
Steel
Interior
Air Conditioner
0
0
0
0
0
0
Cassette Player
W/AM/FM Radio
(Remote Control)
0
0
0
(with Mp3 CD Player)
0
0
(with Mp3 CD Player)
Central Door Locking
X
0
0
0
X
0
Digital Clock
0
0
0
0
0
0
Digital Trip Meter
0
0

0
0
0
0
Door Trim
Semi Fabric
Foot Rest
0
0
0
0
0
0
Heater
0
0
0
0
0
0
Key Reminder Warning
0
0
0
0
0
0
Leather Gear Shift Knob
X
X
0
0
X
0
Light on Warning
0
0
0
0
0

0
Optitron Meter
X
X
0
0
X
0
Power Windows
X
0
0
0
X
0
Reverse Gear Warning
X
X
X
0
X
X
RR Seat Arm Rest (Center)
X
X
0 (with Cup Holder)
X
0
(with Cup Holder)
RR Console Box
W/Lid
W/Lid
W/2 Level Lid (F)
W/Lid
W/2 Level Lid (F)
RR Head Rest
Adjustable
Roof Lining
Molded

Seat Belt (FR)

3 Point ELR x 2 (W / Adjustable Anchorage)
Seat Belt (RR)
X
3 point ELR x 2,
Lap Type x1
3 Point ELR x 2,
Lap Type x 1
X
3 Point ELR x 2 ,
Lap Type
x1
Seat Material
Fabric
Shift Position Indicator
X
X
X
0
X
X
Speaker
2
4
6
2
6
SRS Air Bag (Drive)
X
X
0 (Electronic)
0
0 (Electronic)
Steering Wheel
3 Spoke
4 Spoke Leather
3 Spoke
4 Spoke Leather

Sun visor
D + P W/Mirror and Card Holder
Tachometer
0
0
0
0
X
0
Tilt Steering
0
0
0
0
0
0
Trunk Lamp
0
0
0
0
0
0
Wood Grain Finish
X
X
0
0
X
0
Wood Grain Finish on Arm Rest
X
X
0
0
X
0

PERFORMANCE

VVT-I (Variable Valve Timing - intelligent)

The powerful 1.8 liter VVT-i engine offers smooth and seamless delivery of
power, thanks to optimal timing achieved by using Toyota's proprietary VVT-i
(Variable Valve Timing - intelligent) technology
Delivers powerful torque through low-to-medium engine rpms by optimizing
valve timing
Provides smooth acceleration
Enhances fuel economy and reduces emissions
ECT - Electronically Controlled Transmission
The new Altis 1.8 VVT-i comes equipped with an electronically Controlled
Transmission Switch that allows you to choose the kind of driving experience
you want to enjoy. You can choose between normal and power driving
modes. The normal drive results in economic fuel consumption while driving
on busy roads in the city, whereas, the power drive extends the interval of
automatic gear shifts for optimal speed.
SAFETY
Anti-lock Breaking System (ABS) with BRAKE ASSIST ABS (Anti-lock Braking
System) prevents wheel lock-up when braking hard or on slippery roads. This
allows the driver to steer around obstacles and ensures stability.
GOA BODY STRUCTURE
Highest level of safety body, conforming to Global Outstanding Assessment
body standards provides a crushable zone specifically designed to dispense
impact energy through the rest of the structure, while keeping the
reinforcement cabin intact, protecting passengers.

PRICES
MODEL
Corolla
Corolla
Corolla
Corolla
Corolla
Corolla

PRICE
Xli, 1.3L
Gli, 1.3L
2.0D
2.0D Saloon
Altis M/T 1.8L
Altis A/T 1.8L(Sun Roof)

(PKR)
1,269,000
1,384,000
1,317,000
1,754,000
1,754,000
1,839,000

Competitors Situation
SUZUKI MOTORS:
Suzuki is the leading name in small commercial vehicles and passenger cars.
Suzuki commenced its operation by assembling small 800 cc cars. Suzuki
has been so far a sole leader in 800cc and 1000cc passenger cars as well as
1000cc jeep Potohar. But the emergence of so many competitors in the
market will definitely trigger a very hard time to Pak Suzuki. Suzuki has
launched Mehran 800cc, Cultus 1000cc, Baleno 1.3 & 1.6 Eli and Gxi, Bolan
van & Ravi pickup 800cc and Potohar jeep.
Pak Suzukis sales during FY08 portrayed 31 per cent upsurge. Sales figures
of Pak Suzuki Motors during FY08 posted sanguine growth at 31 per cent to
99,104 units compared to 75,720 units during FY07. On MoM(month to
month) basis, sales figures increased by 3.9 per cent to 11,247 units during
June compared to 10,824 units in May 2006. Pak Suzuki is the market leader
in the 1000cc and lower segment of cars with sales of Suzuki Mehran, Suzuki
Alto and Suzuki Cultus at 35,982 units, 16,823 units and 21,390 units
respectively. The company has replaced Suzuki Baleno with Suzuki Liana
during the period and the product is getting acceptance in the market. Sales
figures of Suzuki Liana remained on the ascending trend with 1,535 units
during June compared to 1,187 units in May.
Honda:
Honda started its operation in Pakistan in 1994. Honda is enjoying its key
position in the segment of 1300 cc and above. Honda has launched many
models like Civic 1.5 cc, City 1.3 cc to 1.5 cc etc. VTI brand continued to be
popular among customers.
During FY08, Honda Atlas Cars sales soared by 17 per cent to 28,134 units
as against 24,066 units previously. Currently, Honda Atlas assembles only
two vehicles namely Honda Civic and Honda City to tap the upper-end
segment of car market. On MoM basis, Honda City sales stood at 1,229 units
in June, almost double compared to 626 units during the preceding month.
Demand of Honda Civic declined by 61 per cent to 341 units MoM.
Dewan Farooque Motors:
It is the major competitor which has commenced its operation with a wide
range of products in domestic automobile market. Dewan Motors is basically
collaboration with Hyundai and Kia, two Korean auto manufacturers. The
initial response to Dewan's offering in the market with record company
booking of its Santro Plus. It has launched its Kia classic 1300 cc car with
sophisticated features. In future wide range of models like Kia Shuma 15001800cc car, Kia Sportage 2000 cc sports utility are expected to launch in the
market. Dewan has also launched its 1.5 tons Shehzore, the assembly of

Hyundai light commercial vehicle has already started at the Sindh

Engineering Plant in Karachi under contractual agreement.
Dewan's presence in the market will give the major move to the auto
industry in Pakistan. The intense competition will give the benefit to the
potential buyer in the market.
Automobile sales figures of Dewan Farooque Motors has remained stable on
the back of increased demand of Hyundai Shahzore, which is considered to
be the most competitive vehicle in the LCV segment. During FY08, Hyundai
Shahzores sales stood at 9,234 units, 15 per cent higher compared to 8,012
units previously. On the other hand, Hyundai Santros sales remained almost
intact at 7,031 units during FY08 as against 7,009 units last year due to
intense competition from small imported cars.
Daihatsu:
Daihatsu, another new player in the market with its Cuore 850 cc, increased
the competition in the market . Daihatsu and Indus Motor signed an
agreement to launch the Coure in market. The project worth Rs 750 million
was developed at Port Qasim between Daihatsu and Indus Motor to produce
Coure. Daihatsu also heated up the competition in small car segments.
Suzuki for the first time faces competition in small car business. It is for the
first time that Daihatsu will produce its car in Toyota Plant in Karachi. The
assembly plant of Daihatsu has the capacity to produce 10,000 Cuore cars in
the year. But the expected level of output in future will be some about 5000
cars in the starting year of its operation.
Distribution Situation
Toyota's corporate philosophy revolves around customer satisfaction, which
is symbolized in the 3S Concept. Toyota is the Pioneer in the 3S System,
which offers Sales, Service and Spare Parts all from the same facility.
Indus Motor Company is privileged to have the most modern Service Network
in the country. All our Toyota and Daihatsu Dealers operate on "3S" basis
(Sales, Service, and Spare Parts). Customer Satisfaction is the cornerstone of
our Marketing philosophy. Modern equipment and facilities exist at each
dealership that is named by professionally trained Service Technicians.
The Service network under-went recent expansion and comprises of 25
Dealerships in 14 cities. Our Service network has over 750 stalls where
catering to General Jobs, Car Wash, and Body Paint Jobs are undertaken.
IMC's dealerships are equipped with Toyota and Daihatsu special Service
Tools (SSTs), modern state-of-the-art computerized auto servicing and
diagnostic equipment. The repair jobs are under taken by trained and
qualified staff. Service staff training and development are always a priority at
Indus Motors.
IMC '3S' Dealers are in the following cities:
Karachi (7), Quetta (1), Multan (2), Lahore (6), Faisalabad (1), Sargodha (1),
Mirpur AK (1), Rawalpindi (1), Islamabad (2), DI Khan (1), Peshawar (1),
Mardan (1), 25 Dealers in 14 Cities.

Specialized Equipment with dealers:

Engine Analyzers
Computerized 4 wheel alignment equipment
Paint Booths
Special Service Tools
2 Post Auto Lifts
Wheel Balancer
Frame Aligner (some dealers)
Wide Range of Garage Equipment
Body Repairing Equipment
Electrical Service Equipment
Other computerized Equipment and Testers
IMC and its service Department undertaken extensive training of its dealer'
service staff by conducting over 30 specialized course a year for service
managers/service advisors, service Engineers and Technicians. Over 200
man-days are devoted each year to Service Training.
Macro Environment Situation
STABLE political conditions, improved international standing and robust
economic growth in the country have really changed the market dynamics
during the past some years. Pakistan has become one of the leading
countries in the developing world to register a GDP growth of over 6.5
percent for the last two consecutive financial years.
With changes in the market dynamics, the demand for certain industrial
goods has increased and almost the same happened in the demand for
passenger cars.
A fast emerging middle income group on the back of growing noticeable
economic growth in the region, huge investment in auto sector is a natural
come especially Pakistan is the country which offers highest rate of return in
this region.
Generally speaking, the minimum rate of return on investment in Pakistan is
15 percent while it shoots up geometrically in many cases. As against that
the average rate of return or profit earnings in neighboring India, China,
Singapore, Thailand etc hardly oscillates between 3-5 percent, whether it is
automobile, pharmaceutical or for that matter investment in the stock
exchange business.
As a result of this attractive rate of return, loopholes in the system, ever
growing demand, and the investors in the automobile sector have brought in
huge investment by almost doubling the volume of production.
The major factors that really revolutionized the market are the introduction
of bank leasing and financing at a larger scale than imagined. Flushed with
liquidity, the banks also enhanced their credit disbursement to the private
sector at very low mark up rate. Similarly, the economic condition of the
people has improved to some extent and they also went for buying cars.
There was also a surge in remittances of expatriate Pakistanis since 2001.
With these developments the passenger cars demand has increased thus
resulting in a gap between supply and demand. This problem has perturbed

a large segment of society. However, the prime victim of this episode is itself
the car industry of Pakistan. There has been consistent criticism of the car
manufacturers at every possible level despite the fact that this increase in
demand is actually offering a unique opportunity for them to penetrate in the
market.
Instead facilitating the car industry, the government went on a rampage and
it allowed the used cars imports with liberal depreciation allowance and easy
conditions in the Trade Policy 2005-06. The government says that the import
of used cars has been facilitated only for the overseas Pakistanis. But the
fact remains otherwise if properly analyzed. Numbers of auto dealers are
openly trading imported used cars and in some cases massive under
invoicing is resorted to.
The capacity expansion plans drawn by the local automobile industry
involving a huge investment worth Rs150 billion during 2006 is feared to
receive a severe jolt by the permission given to the overseas Pakistanis to
import used cars in Pakistan.
During July 2005 until May 2006, 34,723 vehicles have entered Pakistan,
which indicates a 225% rise as compared to the previous fiscal year in which
only 19,658 vehicles were imported. This alarming trend is setting off
warning signals for the local automakers who were disheartened by the
budget and the governments allowance in facilitating a new tax regime for
the new admissions in the auto sector.
The local auto industry sees the new budget as a move by the government in
discouraging the local car makers as the new policies will lead them to
eventually scrap their capacity enhancement plans.
These figures reveal that the import of cars facilitated not the middle class
but the elite segment of society.
This small majority who prefer the cars are not concerned about the cost or
the availability of the spare parts in the local market. The local auto sector
has repeatedly reminded the government that the facilities which are being
offered under various schemes are continuously being violated by dealers
and non- genuine buyers who sell these used cars which are in reality
imported by overseas Pakistanis and are in fact breaking the law as these
vehicles are only to be used by members of family.
The government has allowed the overseas Pakistanis to import the cars. But
there is no mechanism in place to ensure that only this segment of Pakistanis
is actually importing the cars. The government claims in this regard seem
baseless because the unregistered car dealers largely misuse this facility.
Here one must know that import is done of some vehicles, which are not
suitable for the roads of Pakistan. They are also not fit as far as the fuel
specification generally being observed in the country. Most of expatriates are
exploited by the used car dealers as service and back up facility remain
unavailable in the market.
On the other hand this could give really a very serious blow to the local
industrys growth prospects in the long run. Over 400,000 people are
employed by the car industry. Their employment could be at risk due to

import of used cars which offers no employment. Unlike the imports, with the
local manufacturing the technology is also transferred.
The significant aspect of this episode is that the import of used cars is
contributing much to the rising trade deficit, which has touched an alarming
level in the current financial year. The used car import is capital intensive
business. The local manufacturing leads the country self-reliance and other
option will leave the country dependent on foreign sources.
Automobile development is a fusion of more than seven hundred
technologies and thereof its an extensive and multifaceted process. Where
nations like Germany have been consistently trying since 1800 or so they are
reaping the benefits at this point in time. India too has locally manufactured
vehicle under the brand name of Maruti. Indian government fully supports
locally made cars and this is portrayed by the usage of locally manufactured
cars by their own governmental officials. As for Pakistan several prototypes
have been built lately but government has not been very supportive.
University level education in Pakistan is not up to the mark. There is no
specific engineering branch for automobile engineering or production
engineering. At present the industry requires innovative thinking
professionals and entrepreneurs. Good professionals arent available owing
to the brain drain, and those present are very few in number to meet the
market demand.
Pakistan lacks research and development facilities therefore local
manufacturers can only copy and not tailor-make when developing an
automobile. Unlike the west Pakistans a third world country where fuel is as
expensive as Rs57 per liter hence development of an underpowered, fuel
efficient car is required. This would not only require lesser fuel intake but will
also be comparatively cheaper.
Governments investment policies
The Government has liberalized the investment policy environment for
domestic as well as foreign private investment in the industrial sector. There
is no upper limit on foreign equity and foreign ownership of industrial
projects. There is also no restriction on remittance of profit, dividends,
payment of royalty and technical fee. The Government is also encouraging
joint ventures, technology tie-ups, co-manufacturing and co-exporting
arrangements with foreign investors. Even relocation of projects is being
encouraged in view of the transformation of developed economies into hitech areas. Major advantages for investment in Pakistan are as follows:

Abundant land and natural resources

Vast human resources
Growing domestic market
Well established infrastructure
Strategic geographical location

Fundamental problems in the automotive sector are as follows:

Low volumes / under utilization of capacity
High prices
Slow transfer of technology
Pakistans investment space is vast. Imperatives of the investment
continuum e.g. economic interest of the country and the financial interest of
the individual investors are the key considerations. There is a kind of an
organic link between the national economic interest on the one hand and the
individuals financial interest on the other. Sustainability of this linkage is the
key to a win-win situation. This is being achieved by completely freeing the
Government from the upfront controls and regulatory overhang which it had
instituted on investment over the years. Trade and industry is no more being
controlled by the Government. The private sector is now in the drivers seat.
The Government is trying to put it on the high road of development.
Approach is fast-track. The policy focus is shifting to the provision of the
following requirements; namely:
Adequate policy framework
Simplified operating procedures
Strong support mechanisms
Easy access to capital
Upgrading technologies
Enhanced productivity
Reliable quality control
Enhanced management skills
Well-trained manpower
Improved marketing skills.
Thus a reliable investment environment is being developed. The strategic
preference is massive change instead of marginal one. Value-addition is our
national priority for increasing national wealth. This requires upgrading of
technology and capacity-building in design development for improving our
position on the value chain. There is therefore an immense scope of
cooperation and technology tie-ups for cost-effective co-manufacturing of
automotive vehicles in Pakistan for domestic and export requirements. The
Asian and Pacific regions support to Pakistans volume-starved automotive
sector and nascent vendor industry manufacturing auto parts for OEM and
export markets is therefore a felt need of Pakistan.

SWOT ANALYSIS

Strengths
_
Competitive pricing.
_
High market share.
_
High durability.
_
Easy availability of spare parts.
_
Aerodynamic body shape.
_
Elegant body features.
_
Comfortable ride.
_
Luxurious car interior.
_
High goodwill.
_
Prestigious car history.
_
Good resale value.
_
Swift distribution channels.
_
Updated safety features (Air-bags, seat-belts, ABS braking, Safety
beams etc.)
Low fuel consumption
As production of vehicle is based on foreign joint ventures of Japanese origin,
the product quality is of international standard.
Weaknesses
_
People often criticize the breaking of the car although that braking
system of the car has been updated to ABS but still the body rolls when the
brakes are applied at high speed.
_
The cheesy of the car is not stable while doing high-speed sharp turns.
_
The body of the car is too heavy.
_
The rims and tires of the car are not impressive.
The cars steering is a bit light and the driver cannot feel the road.
Opportunities
_
Making a sporty version of the car just like the CIVIC TYPE-R, this is the
faster racing version of HONDA CIVIC having 200bhp and a sports body
frame.
_ Extra market can be captured by introducing Company fitted
CNG Kitts in the car.
Threats
_
Swift competition from other manufacturers mainly Japanese and
Korean car-makers.
_
High oil prices resulting in decrease in demand of fuel thirsty sedans.
But the fuel Consumption of Toyota Corolla is fairly decent.
_
Global inflation due to increase in population and high oil prices may
result in decrease in demand of sedans.
_
Increase in demand of other cars may result in downward trend of the
brands goodwill.

_
Lower prices of Korean car manufacturers may be a threat in the
future. But presently Korean cars are not making a big impact in the market
because of reliability and resale problems.
Currently Pak Suzuki is posing a threat as Pak Suzuki is producing cheap cars
and is targeting the lower-middle and middle income group consumers.
Permission given by the Government to the overseas Pakistanis to import
used cars in Pakistan.
Issue analysis
Main issues concerning the Toyota Corolla are:
Should it develop a Sports version of the car, like in the case of Honda
making CIVIC TYPE-R to complement Honda CIVIC?
Should company fitted CNG kits be introduced in the cars?
Should it increase its prices?
OBJECTIVES
To obtain the production target of 29,000 units (current: 25,100) by the end
of year.
To increase market share from 25% to 29%.
To achieve internal growth rate of 50%.
To increase brand awareness among consumers target market.
To earn rate of return on investment (ROI) of 10%.
Produce net profit of 2.14 billion with a target net profit margin of 6%.
To increase sales volume from current 24,344 units to about 27,000 units
annually.
MARKETING STRATEGY
Product Development:
Alloy rims should be introduced in all the versions of Corolla so as to
contribute to smooth braking, stability, comfort & vibrant look of the car.
Speedometer panels should be developed into digital units to compete with
new Honda Civic.
Accessories like Traction Control should be introduced in the car so as to
improve its traction on rainy and snowy surfaces. It will also enhance high
speed cornering stability. This new product feature will attract extra
customers in the Pakistani market.
Electronic Sunroof should be etched in the Saloon versions (2.0D Saloon and
1.8 VVT-i) as it is in Honda Civic.
Concentric Diversification Strategy:

As Corolla is the market leader in manufacturing Sedans and is enjoying wide

customer base and high good will, it should take advantage of the present
situation and develop a Sports version of Corolla because of the following
reasons:
To compete with the Civic Type-R, this is the sport version of Honda Civic.
To increase its customer base.
To increase its sales revenue.
Pricing Strategy:
The prices of the present Corolla should be reassessed for the 1.8 Corolla
Altis VVT-i (Manual and automatic) units which are the front line competitors
to the new Honda Civic 2006.
The prices for the above model should be increased up to a minimum of Rs.
30,000 because of the following reasons:
The new Honda Civic is charging from Rs. 1.32 million to 1.5 million, whereas
Corolla being the market leader is charging from Rs. 1.22 million to 1.31
million (Corolla Altis M/T 1.8L and Corolla Altis A/T 1.8L) respectively.
As the demand for Toyota Corolla is considerably more than the supply, thus,
an increase in prices will not harm the current demand.
Due to double-digit growth in inflation and subsequent increase in production
costs.

ACTION PROGRAMS
To increase its sales revenue and to achieve the production target of 52,000
units by the end of the year, the company should take the following steps:
It should expand its present production plant capacity so as to meet the
required target.
The company should hire trained manpower so as to meet the requirements.
The company should expand its distribution channel.
For the Sport version of Corolla, the company should establish a separate
division and should be assigned the task of developing the new Sports
prototype with a span of one year. For this, Toyota should acquire technical
assistance like engineers and mechanics from abroad.

After the development of the prototype, it should be tested thoroughly in all

respects. The new product should be launched during the first quarter of
2009 with an aggressive marketing strategy.

PROJECTED FINANCIAL STATEMENTS

INDUS MOTOR COMPANY LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE30, 2009
(Rupees '000)
June 30,2009 March 31,2008 ASSETS NON-CURRENT ASSETS Fixed
assets 1,630,541 1,484,672 Long-term loans 2,631 1,462 Long-term
deposits 5,163 5,181 Finance under musharika arrangements 9,503 7,986
1,647,838 1,499,301 CURRENT ASSETS Stores and spares 278,355
200,256 Stock-in-trade 5,361,489 4,142,145 Trade debts 1,740,247
1,139,092 Current maturity of finance under musharika arrangements 3,589
5,844 Loans and advances 1,051,100 448,039 Short-term prepayments
310,938 49,044 Accrued mark-up 191,302 98,356 Other receivables
2,414,822 1,620,686 Taxation - net - - Cash and bank balances 15,206,585
9,639,674 26,558427 17,343,136 TOTAL ASSETS 28,206,265
18,842,437
EQUITY SHARE CAPITAL Authorized capital
100,000,000 (June 30, 2007:100,000,000)
Ordinary shares of Rs 10 each 1,000,000
1,000,000
Issued, subscribed and paid-up capital 786,000 786,000 Reserves
8,325,895 4,613,023
9,111,895 5,399,023 LIABILITIES NON-CURRENT LIABILITIES Liabilities
against assets subject to finance lease 877,378 7,883 Deferred taxation
55,556
58,469
932,934 66,352 CURRENT LIABILITIES Trade and other payables
3,702,338 2,834,543 Advances from customers and dealers 14,056,681
10,290,208 Accrued mark-up 56,361 28,110 Current portion of liabilities
against assets subject to finance lease 4,386 5,552 Taxation- Net 347,160
218,649
CONTINGENCIES AND COMMITMENTS 18,161,436 13,377,062 TOTAL
EQUITY AND LIABILITIES 28,206,265 18,842,437

INDUS MOTOR COMPANY LIMITED

PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE30, 2009
(Rupees '000)
June 30,2009 March 31,2008
NET SALES 32,419,951 25,345,908
Cost of sales 29,509,135 22,541,544 GROSS PROFIT 2,910,816 2,804,364
Distribution cost 399,382 270,749 Administrative expenses 194,940
167,202 594,322 437,951 2,316,494 2,366,413
Other operating
expenses 284,697 233,358 2,031,797 2,133,055
Other operating income
1,401,755 778,753 3,433,552 2,911,808
Finance costs 97,492 95,581
PROFIT BEFORE TAXATION 3,336,060 2,816,227 Taxation 1,187,812
1,034,635 PROFIT AFTER TAXATION 2,148,248 1,781,592

INDUS MOTOR COMPANY LIMITED

CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE30, 2009
(Rupees '000)
June 30,2009 March 31,2008 CASH FLOWS FROM OPERATING
ACTIVITIES
Cash generated from operations 8,089,626 4,699,737
Interest paid (88,397) ( 61,175) Workers Profit Participation Fund paid
(5,257) (6,547) Workers Welfare Fund paid (39,200) ( 38,804) Interest
received 1,270,601 696,220 Income tax paid (488,886) ( 717,895) Longterm loans net (4,296) (1,074) Long-term deposits (14) (32) 644,551
( 129,307) Net cash inflow from operating activities 8,734,177 4,570,430
CASH FLOW FROM INVESTING ACTIVITIES
Fixed capital expenditure
(2,247,739) ( 832,496) Proceeds from sales of fixed assets 63,484 3 8,129
Receipt of finance under musharika arrangements 46,063 2 7,583 Net cash
used in investing activities (2,138,192) ( 766,784)
CASH FLOW FROM
FINANCING ACTIVITIES
Repayment of obligation against assets subject to
finance lease (77,222) ( 26,446) Dividend paid (951,852) ( 857,525) Net
cash used in financing activities (1,029,074) ( 883,971) Net increase in cash
and cash equivalents 5,566,911 2,919,675 Cash and cash equivalents at the
beginning of the year 9,639,674 6,719,999 Cash and cash equivalents at the
end of the period 15,206,585 9,639,674

Controls/Feedback
The goals and objectives that are set out and the targets mentioned in
Projected Financial Statements should be evaluated at every stage.
Necessary corrective measures should be taken if any deviation is found
from the predetermined benchmarks.
Promotional expenditures allocated should be properly utilized and the
subsequent results of the advertising campaigns should be evaluated from
time to time.
Strategies implemented should be assessed and necessary changes should
be made according to the changes in internal and external environmental
factors.