Swot Analysis of Honda Malaysia Essay

SWOT analysis is a strategic planning method used to appraise strength, weakness, opportunities and threats in a business venture. The meaning of opportunities in SWOT analysis is external chances to improve performance in the environment while the meaning of threats is external elements in the environment that could cause trouble for the business. For the case of Honda Malaysia, their opportunity appeared when the Budget 2010 bring out by Malaysia government, which is tax exemption for hybrid cars. In the Budget 2010, government offered 100% import duty exemption and 50% excise duty exemption.

This is the great opportunities for Honda Malaysia to improve their sales performance of hybrid cars as the price tag for hybrid cars will be slashed drastically. The good news continue with Prime Minister Datuk Seri Najib Tun Razak, who is also Finance Minister, is reading his Budget 2012 speech at the moment, and he has already touched on something that involves the auto sector, announcing that incentives given to hybrid cars have been extended till 31 December 2013!

Previously, it was 100% import duty exemption and 50% excise duty exemption, Budget 2011 made it 100% exemption for both import duty and excise duty.

The deal, for hybrid cars with 2.0 litre engines and below, was supposed to expire on Dec 31, 2011. This has led to huge growth in sales for hybrid models of Honda Malaysia such as Honda Insight and hybrid sports car which is Honda CRZ. This can be clearly shown when Honda Malaysia Sdn Bhd have already recorded combined bookings of nearly 1,500 units for their Honda Insight in the span of less than 3 months. The bookings, if they were to materialise into sales, would represent a significant jump compared with just the 297 total hybrid units sold in the whole of 2009. The opportunities become a threat for Honda Malaysia when there will be no extension of tax exemption to CBU (completely built-up unit) electric vehicles and hybrids beyond 2013 as the government wants local production of fuel-efficient cars.

The government wants to encourage the automotive industry here to assemble and build fuel-efficient vehicles, be it electric or hybrids. As a result, the price tag for hybrid cars will be bring up again and affect the sales performance of hybrid cars. For example, Honda Civic Hybrid which currently cost RM100980 will have a new price tag which is RM129000 as there is no more tax exemption. The sales for hybrid models expected to drop drastically after end of 2012. Beside that, natural disaster such as flood counted as the threat of Honda Malaysia. Honda Malaysia force to shuts down its Pagoh Plant in Melaka due to parts shortage as the huge number of factories in the supply chain that were forced to shut down due to the floods in Thailand. As a result, the quantity demanded in market is greater than the quantity supplied in the market and causing shortage. Thus, customer will opt the product which have almost similar features from the competitor of Honda Malaysia and cause the sales performance of Honda Malaysia decrease drastically.

1. Danny Tan. (2011). Budget 2012: Hybrid car incentives extended till 2013!. Retrieved from http://paultan.org/2011/10/07/budget-2012-hybrid-car-incentives-extended-till-2013/ 2. Eugene Mahalingam, Thomas Huong. (2011). Budget: Boost for hybrid cars?. Retrieved from http://biz.thestar.com.my/news/story.asp?file=/2011/10/6/business/9637466&sec=business 3. Retrieved from http://www.mai.org.my/ver1/index.php?option=com_content&view=article&id=1148:honda-malaysia-shuts-down-pagoh-plant-due-to-thai-floods&catid=3:newsflash

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