UMW Toyota Motor Sdn Bhd is primarily involved in the production/assembly, the

distribution and marketing of the Toyota brand and the marketing and distribution of Lexus
vehicles. There are many factors widely influencing the automotive sector. Below is a five-
force study of the automotive industry which addresses the five major forces in every sector
that influence its competitiveness and attractiveness. This analytical framework was designed
by Michael E Porter and it is used to keep records of competition and establish sources of
competitive advantage around the industry. The five-force are threats of new entrants,
bargaining power of buyer, availability of substitute product or services, bargaining power of
supplier, rivalry among competitors.

Porter’s Five Forces Level Description/ Effect/ Impact

Determinant
Threats of New Entrant Weak The threat of new entrant provides great capabilities and
opportunities to gain acquire market share that puts
pressure on prices, expenses, and the amount of
investment required to compete in the industry. However,
it is difficult for new brands to enter the automotive
industry because the new brand will be threatened by
existing products that already have market value. A major
barrier to entry is the furthermore there are some barriers
that make it difficult to enter the industry such as large
cost of getting started, maintaining, and creating new
firms.
Every new brand should concentrate a great deal on
project management performance. Having access to raw
materials can be quick, but it is difficult for new players
to on the other word, they also difficult to achieve
economies of scale. Indeed, threats of new entrants for
the UMW Toyota is weak.

Effect and Impact towards UMW Toyota:

1) UMW Toyota must seize this opportunity they
need to win people’s hearts by producing some
unique products or features to attract more people.

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 2) UMW Toyota only needs to improve their quality
to compete with existing competitors only.
Bargaining Power of High There are many automotive businesses in Malaysia that
Buyer produce cars with the same feature, but prices differ.
Additionally, most individuals have more than one
vehicle. This is because a vehicle is something that
everyone wants to own nowadays to facilitate daily work.
On the other hand, buyer have rights to choose their owns
vehicle which it can be based on prices, design, function,
and others. One of the biggest effects is on the price
difference because many businesses in Malaysia produce
cars with the same features, but different in price. This
greatly affects the sales of automotive businesses. Hence
in the automotive sector, rivalry has risen strongly and
changing market preferences have also led to increases in
customer bargaining power.

Effect and Impact towards UMW Toyota:

1) UMW Toyota must identify problems on every
inch of their company from time to time, so that it
can be fixed immediately.
2) UMW Toyota needs to ensure that their services
are always in good condition and they need to
avoid the emergence of problems related to
customers

Availability of Mediu In the most situations, the change from UMW Toyota to
Substitute Product or m substitutes is incredibly easy for consumers. These
Services options people have many options such as public
transport, bicycles and other forms of transportation. In
addition, FOR EXAMPLE residents in cities like Kuala
Lumpur prefer public transport rather than owning a
vehicle. This is because, public transport has more
advantages such as BECAUSE its easy, fast and it is also

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 cheap in price. However, the function of the substitute is
completely different in terms of comfort, flexibility, and
others. For example, when we want to go on vacation, we
prefer to use our own car than other options because of
the comfort we need.
Furthermore, automobiles are a form of vehicle-owned
facility and amenities. The possibility of moderate
competition as it is still a necessity at a time when people
are unable to use alternative products at that time.

Effect and Impact towards UMW Toyota:

1) UMW Toyota needs to make their prices more
affordable according to every age of the customer.
2) UMW Toyota needs to do more promotion of
their products especially in pedestrian areas,
waiting areas and social media.

Bargaining Power of Weak In the automotive industry, the distinction of suppliers is

Supplier very weak because suppliers are all basically the same as
in terms of which is for the goods and cost. Besides, the
rise in vehicle sales would directly raise demand for parts
and equipment. In this context, both of the parties would
get the advantage and profit. On the other words, it’s a
win-win situation.
The cost of switching suppliers is low, and it will also
affect the previous supplier. Therefore, UMW must
provide the best service for Toyota to maintain good
relationships with each other.

Effect and Impact towards UMW Toyota:

1) UMW as a supplier towards Toyota must take
care of the quality for the internal and external
parts of the products.
2) UMW and Toyota need to work together to

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 produce the best product for the customer to
increase their sales

Rivalry among High There are many brands of automotive industry in

Competitors Malaysia such as Proton, Perodua where they are very
high-quality Malaysian brands. The level of consumer
loyalty is high, although the industry is big. The growing
demand creates many possibilities. Rapid growth rates
reduce the strength of competition. In this sector,
operating costs are high, which increases
competitiveness, as there is a because of that, they need
to make more promotion and sales to make a profit.
There are several brand names in the automotive industry
in Malaysia such as Proton, Perodua where they are very
high-quality Malaysian brands and imported brands are
also increasing nowadays such as Nissan, Honda,
Volkswagen. All these brands have their own capabilities
and specialties in their products that can easily attract
customers. Low distinction of significantly influence
rivalry. For customers, changing expenses are low. If it
does not meet your standards, it is not hard to choose
another car brand. On the other hand, it is depends on the
customer preferences and we as a seller need to give the
best to them It boosts rivalry as well. In the automotive
industry, the strength of competition is high overall.

Effect and Impact towards UMW Toyota:

1) UMW Toyota must come up with the speciality of
their new product to attract current and new
customers
2) UMW Toyota can have healthy competition by
doing research or survey on the type of vehicle
that customers are interested in according to the

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 passage of time

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