SEMA 2011

SEMA (the Specialty Equipment Market Association) held its annual SEMA Show in Las Vegas from November 1st through 4th this year. (1)

In recent posts, we've talked about entrepreneurship in the auto industry and some of the difficulties faced by entrepreneurs trying to enter the market. Effective marketing can be a difficult task for an entrepreneur in any industry, but especially one dominated by several well known brands. One traditional method to spread the word about a new product or business is to buy space at a trade show. SEMA Show is an annual show that features small specialty car makers, parts makers, custom tuning shops, and other companies focussed on highly specialized cars rather than equipment for the mass market. Unlike most auto industry trade shows which focus on major corporations, small companies and individuals present their products with GM or Toyota. (2)


Phoenix-based Local Motors has created buzz at SEMA events since the 2008 show. (3) Local Motors is company with a unique product called the Rally Fighter that fits a very specific need: A purpose built vehicle for the Baja 1000 race and similar events. (4) It also has a very unique value proposition: The vehicle is designed and built by a method called crowd-sourcing, which means potential customers from around the world contributed which components should be used and selected a design from several entries during a design contest. The company also sells their build experience: included in the price of the vehicle, the owner builds the vehicle and learns how to drive it (5).


While major companies tend to make major announcements at more mainstream shows like the upcoming Tokyo Auto Show, small companies like Local Motors are able to connect directly to those interested in their product by going to targeted shows like SEMA.


(1) http://www.autoblog.com/sema/
(2) http://www.autoblog.com/2011/11/02/chevrolet-camaro-concepts-storm-the-general-motors-booth/
(3) http://blog.local-motors.com/2008/11/reflections-on-sema.html
(4) http://jalopnik.com/5398864/local-motors-rally-fighter-the-first+ever-creative-commons-car
(5) http://www.rallyfighter.com/buy-a-rally-fighter
(image) https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaX6PCoRWtsV_-sbvVSoBHDE4q6ObJ7eVU9kEFXZihnMoFKy9Tx3WZ9ma2NoTDNpGKGksSitOjS-rWQASVFXrvMDRqS6C4sHmGdL8L_7GcfpkPJ_PgFXKA9j9bhmSFo9LQqk4BOuB8-5yN/s1600/1841.parker.race.still.jpg

Read More

Influential leaders of Toyota

Toyota is known for keeping the family tradition when changing an important post in the company. Since 1937, when the company was founded by Kiichiro Toyoda, we see that the main positions in the company has been passed down from generation to generation.

I would like to mention the name of Shoichiro Toyoda, who was President (1982-1992) and also Chairman of TMC (1992-1999). Many people consider him a genuinely global manager, mainly because he approved and furthered the expansion of Toyota's production system into the United States, and he approved the development of the Lexus and the Prius hybrid (1). After these merits, when he opened the door for Toyota all over the world, he was considered Japan's leading voice on international cooperation and globalization in the early 2000s (1). 

Now we can notice an interesting case dealing with the 2009–2011 Toyota vehicle recalls.

Safety defects occured in the company's car and have been linked to the deaths of 39 Americans. Also, several vehicles experienced unintended acceleration. Currently, the President and CEO of Toyota Motor Corporation, Akio Toyoda, expressed his apology for the deaths of people and proclaimed that he, more than anyone, wish for their customers' cars to be safe. On the other hand he also mentioned: "I myself, as well as Toyota, am not perfect" (2). We'll see how the negotiations turn out in the U.S. Congress.

Sources:
(1) http://www.referenceforbusiness.com/biography/S-Z/Toyoda-Shoichiro-1925.html

(2) http://abcnews.go.com/Blotter/toyota-ceo-akio-toyodas-testimony-congress/story?id=9924855#.Tr1TD3KoFqI 
Image: http://images.businessweek.com/ss/07/02/0222_toyota/source/2.htm

Read More

Entrepreneurs in auto service industry

In recent posts, we were mainly devoted to automobile companies, their profits, supply and demand, international attitudes, promotion and popularity of the brand, etc. However, it is important to mention that it is not just about to selling or buying cars, it´s also about how to keep it in shape . I found some interesting stories of entrepreneurs who started their small business in the last century and who are progressing in its development so far.

One of these companies is Ziebart International Corporation that is the worldwide leader in vehicle appearance and protection services (1).The company was found in 1954 by Kurt Ziebart, a German mechanic, who developed a process to stop corrosion and opened the first Ziebart store in Detroit (2). The company began franchising in 1963 and has grown to a network of approximately 400 locations in 30 countries (1). The main reason of their success is probably the fact that they focuse on three main sources of profit: professional detailing, window tint and protection.

 

Another successful entrepreneurship we can see in the founding of Big O Tires. A franchise is now based in Englewood, Colo and was established in 1962 by a group of independent tire dealers. "Each Big O center offers a variety of auto repair services, including brake, alignment and front-end repair, as well as tire and ride control products" (3). Like earlier mentioned company, Big O Tires has grown into one of America's largest retail tire franchisors, which is based in 21 states (4).

To become a  prosperous founder of a company, an entrepreneur must show discipline and calmness when the business fails. He must also be prepared for the tolerance of risks and show great attention to details. As an entrepreneur doesn´t have a boss to keep him at work when necessary, he must find his own balance (5).

Sources

(1) http://www.ziebartinternational.com/about/

(2) http://www.entrepreneur.com/slideshow/198048#2

(3) http://www.entrepreneur.com/slideshow/198048#10

(4) http://www.bigotires.com/About-Big-O-Tires

(5) http://www.lifehack.org/articles/management/5-key-characteristics-of-a-successful-entrepreneur.html

(Image) http://technorati.com/business/article/characteristics-of-successful-entrepreneurs/

Read More

Entrepreneurship and its Affect on Market

A high school friend worked for entrepreneur Michael Hinderliter for about 2 years. My friend's job was to prepare and serve bubble tea for the Chill Bubble Tea franchise, but he came into contact with the owner because they shared a common interest: custom car parts. The entrepreneur also ran a car parts importing business. He started by importing crates of the parts he wanted for his car and selling off the parts he did not need on the internet and eventually became the sole US importer for an international suspension manufacturer (1).


It is not easy to enter the auto manufacturing industry; the barriers to entry are very high (1). Tesla Motors is one example of a successful auto manufacturing business, but they are the minority: Their electric car sector has countless examples of failed start-ups. The affect their success has had on the auto market is also very limited: they expect to sale only 20,000 by 2013 worldwide (2).


Opportunities to enter the auto manufacturing business are therefore severely limited. Despite this, there are opportunities for entrepreneurship within this industry. There are opportunities for new firms manufacturing and importing after-market performance parts, like in the case of Hinderliter. Often these new parts will fill different niche markets in the aftermarket parts sector.


There are also opportunities for entrepreneurs to enter the auto industry by participating in its distribution chain. Most auto manufacturers sell new cars exclusively through franchised dealerships (4). Because cars are among the few products still only available through a physical retail location, entrepreneurs can affect regional markets dramatically by bringing new manufacturers to an area. Because car prices are often negotiated at the dealer, the price for a new car can change dramatically if there are more dealers in an area selling cars in the same segment or even of the same model.


Sources
(1) Michael Hinderliter, personal communication (2011)
(2) http://mises.org/freemarket_detail.aspx?control=384
(3) http://money.cnn.com/2011/06/21/autos/tesla_roadster_selling_out/index.htm
(4) http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.3.233
(image) http://upload.wikimedia.org/wikipedia/commons/thumb/9/98/Lexus_Car_dealership_%28setagaya_tokyo%29.JPG/800px-Lexus_Car_dealership_%28setagaya_tokyo%29.JPG

Read More

Toyota's Profits Dip, Earthquake to Blame

Toyota has seen a significant drop in profits in its most recent quarterly report for FY2012 Q1 (1). This drop was expected due to the Japanese earthquake. Toyota's net income dropped from over 210,582 million yen to 2,859 yen, a 207,732 million yen decrease. Toyota is has been worldwide leader in and is often the leader in profits by net income (2). While Toyota's costs decreased in all areas since the this time last year, it's sales have dropped even more and it operated at a loss. These numbers show a significant drop in profit for Toyota, but it still had a profitable quarter despite the Japan crisis.


With Toyota in recovery, there has been some question to who will become the sales leader for 2011. General Motors has been suggested as a possibility for the number one position (3). It's earnings have increased this year from 2,110 million dollars US to 2,579 millions dollars US (4), supporting this prediction.


(1) http://www.toyota-global.com/investors/financial_result/2012/
(2) http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantage/simpleSearchRun.do?ControlName=CompaniesSimpleSearch
(3) http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantage/showIndustrySurvey.do?code=aup
(4) http://finance.yahoo.com/q/is?s=GM
(image) http://pressroom.toyota.com/images/toyota/photo//2008_10_09_Venza_41-prv.jpg

Read More

Ford Up in Revenue, Down in Earnings

        Ford Motor Co. has seen a sudden 2% drop in earnings, even though its revenue has increased by 14% (1). Revenue is the value of what a firm received for goods sold, services performed, and other additional payments received.  If their revenue escalated by such a large amount than why is Ford seeing a drop in earnings?

            This question is answered by simple accounting equations such as net income or net loss. Subtracting the total cost of goods sold and operating expenses from the total revenue gathered throughout the quarter calculate these losses or gains. What Ford endured was a sudden increase in the cost for commodities, materials, warranty and freight costs (1). This cost increased by more than $1 billion in comparison to the previous quarter (1). Ford Chief Financial Officer Lewis Both said “the commodity costs caused Ford to lower its estimate for automotive operating margins to 5.7% from 6.5% for the full year” (1).

           To account for this decrease, Ford is also planning on lowering its capital spending to $4.6 billion down to $5-$5.5 billion (1). Mr. Booth said that Ford will restore the dividend, which has been gone since 2006, “as soon as our balance sheet can stand it” (1). Ford will continue to lower its company’s debt, which sits at $12.7 billion but was once at $33 billion in 2009 and is expecting industry sales to be higher than its previous quarters this year (1).

Sources

(1)http://online.wsj.com/article/SB10001424052970203687504576654740804146776.html#articleTabs%3Darticle

(Image) http://smallbiztrends.com/wp-content/uploads/2009/09/reduce-boost-graph.jpg

Read More

"U.S. and China Play Chicken Over Accounting"

In recent weeks we have noticed that the finance relationship between two global rivals, USA and China, are sharpened. The main reason is the audit reports for Longtop Financial Technologies; the electronics firm that was kicked off the New York Stock Exchange in August. One of the worst-possible case outcomes is that China companies could be completely shut out of U.S. capital markets. Moreover, future accounting data on American multinationals operating in China could also be deemed untrustworthy (1).

"It's really a Cuban missile crisis that we are looking at right now," says Paul Gillis, an expert in trans-national accounting who spends most of his time in China. The U.S. Securities and Exchange Commission (SEC) which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry along with the Justice Department are investigating possible investor fraud by Longtop. Although the SEC has asked China for vital documents, China has refused to provide for violation of the prohibition to provide requested documents directly abroad. This shows that China is not yet ready to work with actors such as the SEC or the PCAOB (Public Company Accounting The Oversight Board) (1). 

Although the U.S. regulators have displayed remarkable patience in dealing with foreign nations, especially China, there was no meaningful movement in negotiations with this country in recent years. Because China needs access to the US capital and China does not want to be a global financial outlier, the PCAOB predicts one or two joint inspections of China-based auditors this month (1). But according to the last information, the planned visit to Washington by their Chinese counterparts to continue the talks has been postponed (2).

Source

(1) http://online.barrons.com/article/SB50001424052748704429004576600932739440342.html?reflink=wsj_redirect

(2) http://online.wsj.com/article/SB10001424052970204524604576609183570744552.html?mod=WSJ_Accounting_leftHeadlines

Image http://djaloezakie.blogspot.com/2010/10/american-vs-china.html

Read More