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In the Budget'08 duty rate on vehicles has been increased while Capital Value Tax

(CVT) has been removed. Thus the overall impact will remain the same. Moreover,
withholding tax at 5% on purchase of local cars has been imposed.
Import of used cars will now be restricted for cars up to a maximum of 3 years old
that was previously 5 years which will benefit the local industry. Tight monetary
policy stance by the government will add fuel to the fire.
Whereas, the demand will go down on account of high cost of borrowing, those with
the buying power will be bogged down by the 5% withholding tax as the prices of
the locally manufactured cars have climbed up.
Changes in steel prices, interest rates, transportation cost and rupee-yen parity, are
some of the uncontrollable factors that might hamper the growth of the company
The State Bank in its recent monetary policy announced higher KIBOR rates that will
further raise the cost of borrowing and might affect the interest paying ability of the
company. Higher debt will result in high interest payments, which would affect the
debt management ratios considerably.

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The positive outlook is underpinned by favourable monetary conditions, which will help to lower
credit costs for potential car buyers, while the government's taxi scheme will also continue to
spur demand momentum over the coming quarters.

An SWOT analysis is a simple and flexible tool, consisting of gathering opinions from
a knowledgeable body of people familiar with a particular business or industry to
help evaluate internal strengths and weaknesses, as well as external opportunities
and threats (Helms and Nixon, 2010).

Traditionally SWOT analysis are associated with business studies and used to
identify strengths, weaknesses, opportunity and threats for planning, development
and decision making. SWOT analyses are useful because they can help to identify
areas of strengths and weaknesses of an organisation, discipline or individual (Hill
and Westbrooke, 1997). SWOT can provide useful information and it is this attribute
that this study draws on (Hay and Castilla, 2006).
Porters five forces model has been widely applied to analyze industry competition
in various markets. It can be inferred that the five forces model has advantages in
industry competitive analysis.

Porter proposed a framework for the evaluation of global changes to the industry with the
following five forces: threat of new entrants, bargaining power of suppliers, threat of
substitute products or services, bargaining power of buyers and rivalry among existing
firms. Comprehensive environmental analysis is important in recognizing the variety of
internal and external forces with which an organization is confronted

Porter explains that there are five forces that determine industry attractiveness and
long-run industry profitability. These five "competitive forces" are; The threat of entry of
new competitors (new entrants),The threat of substitutes, The bargaining power of
buyers, The bargaining power of suppliers, The degree of rivalry between existing
In terms of porters five forces framework, the strengths of the company are determined
by its competitive position under five forces. Managers can use Porters five forces
analysis to determine the competition level and attractiveness of the analyzed industry,
evaluate its position, and construct strategies to gain a competitive advantage


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M.M. Helms, J. Nixon Exploring SWOT analysiswhere are we now? A review of academic
research from the last decade J. Strat. Manag., 3 (2010), pp. 215251
T. Hill, R. Westbrook SWOT analysis. It's time for a product recall Long Range Plan.,
30 (I) (1997), pp. 4653
G.J. Hay, G. Castilla Object-based image analysis:: strength, weakness, opportune ity and threats
(SWOT) Available from (2006)