Ford Motor CompanyIndonesia Entry Strategy

Eric ChanNaveen CheerathDandan ChenLeslie ForteLance KimWenfeng TangRenzhong YuLele Zheng

Agenda

Indonesia Overview

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Conclusion

Competitor Analysis

Supply Chain

Questions6

5

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3

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Marketing

Overview on Indonesia

ASEAN

• A geo-political and economic organization – 10 nations– 3% of total land area of Earth– A population of approximately 600 million, 8.8% of the

world’s population– As a single entity, the 8th largest economy in the world

• Average GDP growth rate 2007- 2012: 5.1%• GDP per capita: $5,807

Data source: http://www.dfat.gov.au/geo/fs/asean.pdf

Demographic

• Indonesia is the doorway to Southeast Asia’s 650 million inhabitants

• Population: 240 million; Around 58% population live in Java

• GDP: 846.8 billion• Average economic growth rate: 6%• Average per capita income US$3,500• Encouraging FDI policies• Car ownership: 45 vehicles per 1,000 people 

Indonesia market & GDP

2008 2009 2010 2011 2012

-25.00%

-15.00%

-5.00%

5.00%

15.00%

25.00%

35.00%

45.00%

55.00%

Market growth rate & GDP growth rate

Car sales growth rate GDP Annual Growth Rate

http://www.indonesia-investments.com/news/todays-headlines/indonesias-car-industry-continues-strong-growth-in-q1-2013/item634http://www.tradingeconomics.com/indonesia/gdp-growth-annual

Macro Economy

• Strong economic expansion• Record low interest rates• Auto market has expanded rapidly • Expect Indonesia to emerge as the largest auto

market in Southeast Asia in 2014• More interconnected with ASEAN

economy

Consideration of model selection

Affluent class with a disposable income above $7,500 a month

6.6% of country’s 240 million people, possible reach 16.5% in 2020

Luxury and sports cars are becoming a more common sight, particularly in the capital, as Indonesia's elite grows. It is forecast to jump from around six million people to 16.6 million

Model selection

Indonesia's car market is dominated by van or Multi Purpose Vehicle (MPV)

A kindly of utilitarian, capacious vehicles – a low-priced seven-eat multipurpose vehicle

Demand for light vehicles is expected to grow rapidly. Mostly young and techno-savvy, discerning

consumers…who want cars that match with their gadgets and lifestyles.

Current Ford Lineup

Model Recommendation

Explorer

Flex Crossover

Ranger

Escape

? Lincoln Navigator

Competitor Analysis

Competitor Analysis

• Japanese brands have about 95% of the market.• Low- med end vehicles dominate the market-

95%• Customers have more preference of MPV.• Indonesia car sales increased by 17.8% in Q1

2013.

Big Four39.1%

15.9%

14.6% 12.1%

1.2%

Favorite Models

• Suzuki invested $80 million in expanding

production in Indonesia.• Toyota invested $20 million in expanding

production in Indonesia.• Mitsubishi will invest $1.8 billion in five years in

Indonesia.• Daihatsu plan to invest $24.6 million in

Indonesia.• Chrysler plan to invest $10 million in Indonesia.

Competitor News

• In Q1 2013, Sales growth of Toyota: 8.4%,

Daihatsu: 5.2%, Mitsubishi: 8.2%, Suzuki: 70.4%, Honda: 228.8%

• Benz, BMW, Chevrolet increased assembling rate to decrease taxes.

• Chevrolet restored its factory in Indonesia to manufacture Chevrolet Spin to compete with Toyota Avanza.

Competitor News

Marketing

“Ford goes further to build great, environmentally sound products, a strong global business and a better, more humane world. We go further every day by offering vehicles with innovative technologies, plug-in hybrids and EcoBoost® engines that combine power and efficiency”

Go Further

Traditional Marketing

• 75% marketing budget spent in traditional media (print, television, etc)

#SocialMedia

Strategy: to humanize the company by connecting consumers with Ford

employees and with each other when possible, providing value in the

process.

Ford Dealers in Indonesia

Sumatra - 9

Papua - 5

Bali - 3

Kalimantan - 6

Java – 28

Sulawesi - 3

Television accounted for more than 60% of ad spending, followed by newspapers (34%) and magazines (3%)

• Television is the dominant source of news and entertainment.– Over 90% of Indonesian households

have a TV set

• Spend about 40% of time watching television

• Main focal point for social gatherings– Main viewing times are in the evening

• Affluent communities have cable

Television

http://adage.com/article/adagestat/stat-day-mists-mobile/230750/

Mobile Growth

(81.0%) Indonesians now saying they have a mobile

phone in their household, up from two-thirds (67%) in 2011

(49.8%) Indonesians now say they use SMS/text

messages at least once a week to get news

Recommendation

Hitting the television market first will ensure the largest amount of exposure to consumers because of the high existing amount of television viewers

Television

Waiting and strategically implementing mobile device marketing campaigns, Ford can effectively target this growing segment over time

Mobile Device

Once online penetration increases, Ford can deploy full forced online marketing and social media campaigns.

Internet

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Supply Chain

Operation and Supply-Chain

2013

1999

1995

Distribution in partner with RIMC

Held 100 million Supply-Chain project in Indonesia

Cars are Imported from Thailand. Distribution with IndoMobile

Current Operation is managed by Ford’s ASEAN Region

Demand

ASEAN Operation keeps inventory at dealership at a minimum

Demand

Waitlist is provided for car buyers and depends on the model, wait time ranges from 5 days to 6 months

D

em

an

d

Supply-Chain

Thailand’s Hub Manufacturing

Supply

Challenges in Supply-ChainIndonesia currently lacks infrastructure to support plant operation and export.

Takes 18 days for to export and 21 days import (Documentation to port handling)

40% of the roads lack the ability to handle standard 40 ft. freight trucks (20-25 tons)

Ford lacks a strong local distribution network & partners

Ford’s shift of investment in 1999 still has lingering effects. A distrust among local dealerships.Local partnership is not exclusive. IndoMobile also operates JV with VW, Nissan, Volvo etc.

Demand forecast is grouped with other ASEAN

Recommendation

• Regional Development of Production and Supply Chain in ASEAN

Reasons:

1). 2 Billion potential customers and reached $5k-$6k per capita income level

2). Till 2020, Industry volume 32MM units to 52 MM units, APA accounts for 46% of global automotive industry and over 60% of its growth.

3).Align capacity with demand means adding a significant amount of capacity the next several years

4). One ford plan : produced on global platforms with 80% parts commonality and gives us the scale generate profit

5). Elimination or lower tariff barrier

6). Utilize the different advantages in different countries

Recommendation

• Expand dealer network in Indonesia to accommodate sales growth

• Provide the car models that fit for the regional consumer needs( quality, fuel efficiency, safety, smart tech)

• Enhance consumer satisfaction through the 3S service concept ( Sales-service-spare part)

• Cooperate with 3rd party to facilitate the process

Verdict

Questions?