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Research on Nissan Motors Philippines, Inc.

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Research on Nissan Motors Philippines, Inc.

Gallego, Reyjen
Ibasco, Robert
Marcelo, Mary Christine
Tolentino, Keziah
Ty, Rey Jumar


Nissan Motors Philippines, Inc.

Nissan Motors Philippines, Inc. (NMPI) is an affiliate of Nissan Motor Limited of Japan. It was established in April 1982. Shortly after its incorporation, it acquired the Volkswagen facility. As of the moment, it assembles passenger vehicles and serves its customers with around 200 employees. Moreover, there are seventeen authorized dealers of Nissan in the whole country.

Nissan Philippines Research

The ABS used in Mercedes-Benz, BMW, and Volvo cars is made in the Philippines. Ford, Toyota, Mitsubishi, and Nissan are the most prominent automakers that make cars in the country. A 2003 Canadian market research report predicted that further more investments in this sector were expected to grow in the next following years. Toyota has been the most used vehicle in the country. (

Automotive industry in the Philippines

New Motor Vehicle Development Programs (MVDPs)
However, the economic and political crisis in 1983 had a devastating impact on the expanding industry. Because of the declining market for Philippine exports and the resulting capital flight, the industry was left with only two international participants (PAMCOR-Mitsubishi Nissan) and in 1984. Furthermore, only 40 local parts manufacturers remained in operation, dramatically less than the participation of 220 firms 2 years before the crisis.
More comprehensive programs such as the Car Development Program (CDP) and the Commercial Vehicle Development Program (CVDP) were implemented to address the shortcomings of earlier development programs and to provide a long-term solution to the ensuing economic crisis. Previous requirements such as the local content rule were adjusted to support the viability of the local automobile industry through the years. The requirement was lowered to 32.6% in 1988 and again increased to 40% in 1990. These changes in the local content requirement helped the assemblers to assess who among their suppliers were capable of the long-term manufacturing of their needed parts and components. Together with the government, the multinational assemblers aided in the rapid development of the industry by offering technical and financial assistance to their loyal local suppliers.
The Board of Investments (BOI) encouraged the large firms to continue to subcontract for the manufacturing of components. In the process, valuable engineering and technical knowledge were imparted to the country’s industrial firms. As a result, more foreign automakers saw the competitive advantage in the improved efficiency and cost effectiveness of Philippine automotive production. (

Studies conducted by economists in the past on the automobile industry (here and abroad) showed that the following economic indicators tended to affect demand for passenger cars as well:
- Disposable Income per capita (positively): 1% increase in disposable income will increase car sales by 12.3%
- Inflation (positively): a one-point increase in CPI will supposedly increase sales by 143 units
- Population (positively)
- Price index of cars (positively)
- Foreign exchange rate (negatively): Devaluation can cause prices to increase and demand to decrease. 1% increase would lead to 1.03% increase in price, which would lead to a 0.24% decrease in sales.

In the Philippines, ‘substitutes’ in the automobile industry can mean anything from pre-owned vehicles, public transportation in the form of trains, jeepneys, buses, tricycles, FX taxis, or passenger taxis, to motorcycles and bicycles.

The Philippines’ automobile industry is currently dominated by Toyota Motor Philippines (with Lexus) with a 39.03% market share, Mitsubishi Motors PH with a 24.76% market share, Isuzu Philippines Corp. with a market share of 7.98% as of April 2012 and Honda Cars Philippines, Inc. with a market share of 7.82%. Other major players include Ford Motor Co. Phils., Inc (with Mazda), and Columbian Auto car Corp. (Kia).

Refer to the table below:
CAMPI and TMA car sales - June 2012
YTD Ranking | Car Company| January to June 2012 | January to June 2011 |June 2012|June 2011|
1 | Toyota Motor Philippines (+ Lexus) | 29,400| 24,984| 5,893| 3,516 |
2 | Mitsubishi Motors Philippines | 16,956| 16,865| 2,830| 2,803 |
3 | Honda Cars Philippines Inc. | 5,961 | 6,991 | 1,262 | 1,053 |
4 | Isuzu Philippines Corp. | 5,769 | 4,578 | 967 | 667 |
5 | Ford Group Philippines (+ Mazda) | 4,149 | 6,422 | 728 | 1,116 |
6 | Columbian Autocar Corp. (Kia) | 3,898 | 2,185 | 652 | 470 |
7 | Suzuki Philippines Inc. | 2,531 | 1,955 | 410 | 384 |
8 | Universal Motors Corp. (Nissan CVs) | 2,129| 2,871| 454 | 416 |
9 | Nissan Motor Philippines Inc. | 825 | 1,612 | 138 | 294 |
10 | CATS Motors (Mercedes-Benz + Chrysler) | 402 | 492 | 97 | 85 |
Source: Innovation in the Automotive Sector of the Philippines, Quimba, Rosellon (2011)

* It is a global brand. According to the business week global brand score card Nissan is the fastest automotive brand. In 2011 Nissans brand value grew by 27.1% to $13,237 million * Over the last five years the company has established the global brand by focusing on the silky design, vibrant experience, the interplay between serenity and diving pleasure. * Global financial position. One of the key strength of Nissan is global financial position. The five year financial position is as follows:-June 30 2012, in first quarter Nissan is reporting, consolidated net revenues of 2.136 trillion yen and operating profit of 120.7 billion yen, Operating margin of 5.6%. Net income was 72.3 billion yen, which represents a 3.4% net margin. Free cash flow for the auto business was a negative 39.3 billion yen Net cash position of 509.2 billion yen.
* Dependence in overseas market. In the pace of globalization Nissan overseas dependendancy has improved faster than the home production. The major risk associated with this dependency indicates that risk of currency fluctuations, changing government policy and financial transaction. * Product innovation time lag: When compared to the other Japanese automobile companies Nissan was unable to perform at the edge of countries high profit margin and high volume pick up markets. Nissan company concentrate on high-level income groups so company has to find new designs to meet the changing trends of the people because the high value customers are always seeking for new models. There for the time lag affected the company’s profitability and eventually the competitors may take over the market share. * Lack of Diesel technology: - In the automobile market the vehicles sold for diesel are comparatively lower than the petrol vehicles .The advantage of using diesel is that it significantly reduced emissions and the cost for fuel consumption.
* Cost reduction: - Company has opportunity to change their production unit to other places where cost of manufacturing is less because company makes acquisitions to other company. * Opportunity for the Nissan to set up new distribution to Asian countries, due to low market share there is the opportunity for Nissan and Renault to set up a joint distribution network. This will serve to reduce costs for both Nissan and Renault. It would also serve to gain increased market exposure for Nissan across Europe.
* Cross- cultural disharmony: - After the merging of Nissan with Renault further increased the risk of cross cultural disharmony. * Rising commodity prices: Changes in commodity prices could affect the costs incurred by Nissan. Over the past 12 months, the price of steel used in car production has risen by nearly 30%. Company is using good quality steel material hot dip zinc coated steel. * Competition is high rate in automobile field because of technological advancement. Here demand is low but need wide choices. (

Nissan Motors is one of the most prominent automakers that make cars in the Philippines. Due to economic and political crisis in 1983, Mitsubishi Nissan was left in the industry. According to the studies conducted by economists in the past on the automobile industry, showed that Disposable Income per capita, Inflation, Population, Price index of cars, Foreign exchange rate are the economic indicators tended to affect demand for passenger cars as. Nissan Motor Philippines Inc. only ranks no.9 here in the country.
Filipinos prefer to use public transportation than pre-owned vehicles. Nissan company concentrate on high-level income groups so company has to find new designs to meet the changing trends of the people because the high value customers are always seeking for new models. There for the time interval affected the company’s profitability and eventually the competitors may take over.

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