Strategic management analysis of the brand new motor vehicle industry in view of Grey vehicles in Malawi

Abstract

The motor vehicle industryis one of the industries which is currently enjoying growth. An increase in the income levels of individuals and rapid changes in technology ,as seen in the Annual Bulletin of Infrastructure Statistics ( 2012) for COMESA ( Common Market for East and Southern Market),has led to an increase in the demand of motor vehicles. However the inflow and availability of second hand vehicles from South East Asia and other Western countries due to favorable pricing and regulationshas resulted in firms in the brand new motor vehicle industry facing competition from second hand vehicle dealers. The main objective of this research therefore is to investigate the competitive strategies used by firms in the brand new motor vehicle industry in the light of the flow of the second hand vehicles. Further, the study aims at exploring the value chain in the brand new motor vehicle industry in Malawi. The study adopted a mixed approach comprising both quantitative and qualitative methods. It involved self-completing questionnaires and semi structured interviews. Where necessary supporting records were obtained to support the responses. The study population was drawn from top and middle management because of their involvement in strategy formulation using purposive judgmental techniques. The study reveals that firms in the brand new motor vehicle industry should expect customers to be going for more affordable cars which are now readily accessible due to the emergence of the internet. However these firms have not remained idle in the light of this threat and have resorted to employing several competitive strategies. These firms have employed generic strategies like having a lean staff, cost reduction tactics, targeting specific customers, sale of unique cars and the use of unique advertising skills. Firms also offer value adding services such as on time delivery, instant rebates, longer warranties and after sales service among others. Marketing strategies such as offering good quality vehicles (value for money, style, luxury, performance, safety and technical superiority) are used. Some firms capitalize on competitive factors like discount offers, aggressive marketing, offering a variety of vehicles, prearranged financing, attractive displays and general cleanliness of the showrooms.