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Suzuki Motor SWOT & PESTLE Analysis

ID : 52421553| Jul 2018| 15 pages

COMPANY PROFILE -Suzuki Motor

Business Sector :Automobile

Operating Geography :Japan, Asia, Global

About Suzuki Motor :

Suzuki Motor Corporation is headquartered in the city of Hamamatsu, Shizuoka prefecture. Founded in the year 1909 as Suzuki Loom Works, it has completed 109 years as of 2018. The company operates in three segments; Automotive, Motorcycles and Marine products. The company’s vehicle production is around 3% of total global production and its rank globally is 11 according to International Organization of Motor Vehicle Manufacturers (OICA). Suzuki’s mission statement as per their annual report is three-fold: “Develop products of superior value by focusing on the customer; Establish a refreshing and innovative company through teamwork; and Strive for individual excellence through continuous improvement.”

Suzuki Motor Revenue :


¥3,757.2 billion (FY ended 31st March 2018)(y-o-y growth of 18%)
¥3,170.0 billion (FY ended 31st March 2017)

Competitive Analysis of Suzuki Motor

SWOT
PESTLE
The SWOT analysis for Suzuki Motor is presented below:
Strengths
Weaknesses
1. Consistent Financial Performance
2. Stronger Partner
3. Research & Development
4. Leadership position of Maruti Suzuki in India
1. Recalls of vehicles due to technical glitches.
Opportunities
Threats
1. Powered two wheeler vehicle Market
2. Marine Outboard Motor Market
3. Automobile Industry growth in emerging economies
1. Increasing competition in automobile segment.
2. Smuggling of Auto – parts
3. Demand for public Transport
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Detailed SWOT Analysis of Suzuki Motor

Strength

1. Consistent Financial Performance: The Company has shown a consistent performance over the years, with stability in Cost of goods sold as a percentage of sales and net profit margin. The return on equity has increased to 14%, due to the increase in leverage ratio from 1.93 to 2.25, over the years. The company has been able to decrease its cash conversion cycle over the years from 414 to 340 days, which is a positive sign. Also, over the years cash asset has increased substantially. Most of its current assets is in form of cash and liquid securities. The receivables and payables have remain constant over the years. The revenue growth for the company has been around 4.22% CAGR and profit growth has been around 15% CAGR.

2. Stronger Partner: The recent cross – branding deal between the two companies will open up opportunities for Suzuki Motor Corporation. SMC will receive research and development support as well, apart from branding. This will help SMC in pushing the premium segment automobiles in various markets around the world, it operates in. SMC will get support in developing the hybrid and electric car segment from the industry leader. The deal with Volkswagen went sour because of ownership issues and lacking of appropriate access to the technology for SMC from VW, but with Toyota, the deal seems synergetic because the cultural fit and requisite empathy. Recently, a trend of Japanese entities teaming up is also observed.

3. Research & Development and Testing Centres: SMC continually tries to develop "value-packed products", adapting to the demands of the new generation, developing novel technologies and implementing them to create better mix of product portfolio. Yokohama R&D centre, Marine technical centre and Motorcycle technical centre stand as the backbone of the R&D of the company, providing requisite impetus in the domains of energy, electronics, environmental applications, and information and computer applications. Lately, SMC has also ramped up R&D spending to defend its market share in India. The company is planning to spend 160 billion Yen for R&D in year 2018, which is about 13% increase in R&D spending as compared to last year.

4. Leadership position of Maruti Suzuki in India: The partnership with Maruti has proved to be a great boon for the company in India. Together they capture around 47.4% of the four wheeler market share in India. Indian auto industry is fourth largest in the world with sales increasing at a rate of 9.5% annually for 2017, excluding the two – wheelers segment. India serves as an important market as well as a country of abundant resources like skilled labour, steel at a lower cost. It has the largest dealer network (2020 outlets in 1652 cities) augmented by its 3305 service centres in 1570 cities. Also Indian production caters to the export requirements of various countries like Sri Lanka, Chile, Philippines, Peru, etc. Apart from that, the company maintains a varied product line catering to different segments of the society.

Weakness

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Opportunity

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Threat

1. Increasing competition in automobile segment: The industry that Suzuki Motor Corporation operates in is very competitive, as there are large number of players operating, with production capacity very low as compared to industry leaders. E.g. Isuzu, another Japanese automaker having 0.65% production to total global production. So, there is always a possibility of consolidation in the industry. Even partnerships between Suzuki and Volkswagen did not work out as only possible ultimate option was a takeover of Suzuki by the later. Also, industry leaders generally become the trend setters in various domains, as they put in more capital into Research & Development, for futuristic technology.

2. Smuggling of Automotive Parts: Counterfeit parts have plagued the automobile industry, always. It costs brands there image, customers their life, sometimes. The estimated cost borne by the companies due to the fake parts is around $45 billion, globally. These counterfeit products are sold using online marketplace using the images of original equipment. According to Automotive Aftermarket Supplier’s Association (AASA), US also faces a major challenge from the counterfeiters, losing $3 billion annually.

3. Demand for Public Transport: A trend pertaining to greater use of public transport is seen, globally. China, the most populous emerging economy in the world, has seen a second largest growth in public transport usage. Moreover, urban dwellers demand the public transport for travelling. E.g. In Canada, 70% of the total public transport ridership comes from three largest metropolitan cities. Similar trend is also seen in European Countries. Also, the governmental initiatives of transit – oriented – development of urban areas will lead to efficient public transport infrastructure. So, demand growth for public transport will lead to investments in creating infrastructure for the same and affecting the market of automobile makers.

Major Competitors :

Automobile: Toyota, Volkswagen, GM, Ford, Nissan, Honda, Fiat, Renault Motorcycle: Honda Motor Company Limited, Yamaha Motor Company Limited, Hero MotoCorp Limited, Bajaj Auto Limited, Harley-Davidson Incorporation Marine Products: Honda Marine, Yamaha Motor Corp, Mercury Marine, Tohatsu Corp, Evinrude Outboard Motor

Major Brands :

Automobiles: Alto, Celerio, Ciaz, Dzire, Lapin, Wagon R, Solio, Swift, SX4, Baleno, Ignis, Every, Every Landy, Ertiga, Landy, APV, Jimny, Vitara, Carry Motorcycles: GSX, Hayabusa, Strom, Boulevard, Burgman, Kingquad, Quadsport.
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Check out analysis of other relevant companies

TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Suzuki Motor Analysis Report

1. Act 1, Scene 1 of Toyota-Suzuki partnership unfolds-https://www.thehindubusinessline.com/specials/auto-focus/act-1-scene-1-of-toyotasuzuki-partnership-unfolds/article9970872.ece
2. Research and Development- http://www.globalsuzuki.com/corporate/rd/
3. How much impact does government regulation have on the automotive sector https://www.investopedia.com/ask/answers/042015/how-much-impact-does-government-regulation-have-automotive-sector.asp
4. Clean Air Act Administrative Settlement- https://www.epa.gov/enforcement/suzuki-motor-america-inc-and-suzuki-motor-corporation-clean-air-act-administrative

Copyrights and Disclaimer

Suzuki Motor SWOT and PESTLE analysis has been conducted by Abhishek Mishra and reviewed by senior analysts from Barakaat Consulting.

Copyright of Suzuki Motor SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Suzuki Motor SWOT & PESTLE Analysis
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