Big Drive Auto
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The assignment evaluates on microeconomic data of Big Drive Auto which is an international company that deals with trucks and cars. The company has diversified its products and services to serve the auto mobile market. Hence, it does not only sell trucks and cars but also sell automobile parts, provide servicing, tire replacement services, offer coolant services and sell motor lubricants such as oil. Although the company is a multistate dealer in automobile sales for the purpose of this assignment it will analyze viability of the Canadian market depending on the trend in the automobile industry over the previous years which shall provide good projection on viability of the market for Big Drive Auto goods and services.
The company volume of sales in the domestic market and the prices which they charge for their goods or services are the factors to be taken into considerations in comparison with automobile market in Canada. Big drive auto dealership is in a market which is affected by growth or decline of the economic trends. Therefore, it is important for accurate anticipation of the economic cycles to be able to make informed decisions which will eventually benefit the company.
Examination of the last ten years statistical data in Units of vehicles sold, automobile parts such as Coolant, tires and lubricants and service revenue of the period under review. These will provide the necessary information which would be compared with market information of Canada for the company to make a viable decision on whether it would be able to survive the market. For the period of ten years the sales of Vehicle Units increased from 139,000 units in 1998 to 163,000 units in 2007 this is a growth of 17.2 %. While sales of tires, Coolant and Motor oil was $2,096,000 in 1998 and $2,050,000 this is a decrease of 2.1% this is an area which the company had not been able to improve its operations on. Since 1998 to 1994 there has been a decline trend with its lowest being in 1994 which it realized sales of $1,865,000 which was a decline of 11%.
However, the company has shown some improvement since then by ensuring that it has increased its sales since 1994 to 2007 by 9.9% and there is hope for the trend to continue improving as demand of automobiles parts are increasing as sales increases. Services revenue of the company was $5,915,000 in 1998 and $7,650,000 in 2007 this is a remarkable improvement on provision of services over the period of ten years which resulted to an increase of 29.33%. Index of Sales prices of vehicles in 1998 was 98.0 while in 2007 it was 99.0. Index of sales price have not been having a stable trend as it increased in the first three years under review to a mark of 100 in year 2000 which it later declined to the lowest level of 96.8 in 2003 which later then increased to close at a rate of 99.0 in 2007. Index of sales price of Tires, Motor Oil and coolants was 100.5 in 1998 and 119.0 in 2007 which is an 18.4%. While, Index of sales price of Truck and Auto services was 97.5 in 1998 and 110.4 in 2007 which is an increase of 13.2%.
The industry GDP dropped during the year 2000/2001 to $ 420.2 Billion as compared to the previous year which it was $466.8 Billion. In the same period there was a significant decline of the vehicle sold to 133,000 units as compared to the previous year which had recorded 145,000 units. Although in the same period there was an expected increase in revenue earned due to services which the company offered.
Sales of motor vehicles in Canada have been increasing over the years despite of the economic hardships which have been realized over the last two years. Sales of motor vehicle in January this year increased by 6.2% as compared to the sales which were done last year. The total unit sales for the month of January last years was 81,600 units while this year the units were 102,800 (Deslauriers, 2010).
However, like any other market of automobile in the world the Automobile industry in Canada have been facing crisis. Such crises have resulted to drop in sales in passenger vehicle by 14.4% and an increase in sales of truck by 4.4%. Therefore, it is advisable for Big Drive Auto to invest mostly on sales of trucks instead of passenger vehicle until there is an economic stability in the market. Although Ford has continually increased momentum in Canadian Market there is major decline in General Motors which has a decline of 41.6%, followed by Honda with 21.6% and Toyota with 14.2%. However, despite of Honda experiencing the highest drop margin of 19.4% it still remained the highest volume seller.
The company should indentify how the market treads are in Canada and relate it with economic effect on the major players in the Canadian market. For example GM has been hardest hit by the economic recession despite it being the laddering company in sales last year and this year. Therefore, decline of sales made by GM creates a void market which Big Drive Auto should capitalize on. However, the decisions which are being done should also be based on the GDP trend of Canada which shows a continued decline over the last eight years (Indexmundi, 2010). This is an indicator that the trend in decline of number of vehicles being sold will continue until the company realizes an increase in its GDP.
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