Cah Case Analysis
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Problem statement: Should Camar enter the European market or should Camar concentrate on increasing sales in the United States to keep the company on the fast growth track.
Camar company info:
Manufactures surface automotive hoists, a product used by garages, service stations and other repair shops to lift cars for servicing
Canadian based company
Owner is Mark Camar, worked in the industry as a designer for 8 years, left that company in 1990.
For three years, starting in 1990, Camar opened a plant in Lachine, Quebec and manufacturing and marketing the Camar Lift.
Competes in the speciality shop segment and shops dealing with wheel alignments
As of early 2000, Camar had developed a reputation for a quality product backed by good service in the hoist lift market, primarily wheel alignment segment
Considered setting up an office in NY but was concerned about the wholesaler getting mad about giving up their territory – wholesalers objective is to sell hoists, not necessarily Camars
Camar Lift
Camar Lift considered a leader in automotive lift safety – safety is considered an important factor in auto hoist market
Cadillac of hoists, judged superior to competitors because of
design
quality for workmanship
safety features
ease of installation
5 year warranty
Mark held 4 patents on the life including the lifting mechanisim on the scissor design and the safety locking mechanism.
Sales, costs and earning have all increased from 1997 – 1999
In 1999, 60% sales were in the US, 40% sales in Canada
85% of sales were to the wheel alignment market in service centers like Firestone, Goodyear and independent garages that specialized in wheel alignment
15% of sales were to customers who used the hoist for general mechanical repairs
Sold for average retail price of $10,990 and CAH got $9,210 for each unit sold
-direct got100%
-CN distributors 80% selling price
-US wholesalers 78% selling price
Automotive Hoist industry:
Safety is considered an important factor in auto hoist market
49,000 hoists were sold each year in North America
New car dealers purchase 30% of all united sold in a year
Firms purchasing hoists are part of an industry called the automobile aftermarket
Industry worth more than $54 billion in retail in 1999, servicing approx 14 million cars on the road in Canada
4,000 + new car dealers in Canada, more than 400 Canadian tires stores, 100+ stores in Goodyear/Firestone chains and more than 220 stores in the Rust Check chain
Price of hoists range $3,000 – $15,000 (capital expense for most businesses)
Buying decisions were based on what type of hoist the company needs
Typical hoists have a life of 10-13 years
The product has to be known to the garage owners and parent companies in order for them to buy
In-ground lifts – approx 21% of total lift sales in 1999
Surface lifts (scissor and post lift hoists) – approx 79% of sales in 1999
Within each type of hoist, there are numerous variation in terms of size, shape and lifting capacity
Competition
16 companies in the auto lift market in N America; 4 canadian, 12 US firms
Import/Export b/w CA and US were phased out (Free Trade Agreement)
Fluctuating exchange rate ($.65 – $.70 CN to the US $1) expected to remain the same
Lift industry was dominated by two US firms (AHV lifts and Berne Manufacturing) they had approx 60% of the market
AHV lifts is the largest firm w/ 40% market share and $60 million in annual sales
AHV has
Complete line of hoists (in-ground and surface)
Primarily focused on in-ground market and 2-post surface market
Only company that had its own direct salesforce
Offered standard hoists w/ few extra features – competed on price
Berne Mfg has
20% market share
Competes in in-ground and two-post service markets
Uses combo of sales people and wholesalers – compete on price
Remaining firms operated in a regional market and/or offered a limited product line
CAH has two competitors with scissor lifts
AHV – different lifting mechanism, no safety locking features, 20% less in price than Camar
Mete Lift – similar design but lacked safety features, regarded as a well-manufactured product, sold for 5% less
Marketing Strategy
Three types of distributors used – company sales force (4 people + mgr), Canadian distributors and U.S. automotive wholesaler
Main goal of sales force to set up direct accounts (get parent companies to approve)