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Abstract
The Automobile Industry of Pakistan is one of the fastest growing sectors even in the adverse economic conditions. Over the years it has been observed that this sector has been contributing even the economic conditions were not favourable. The auto industry is involved in assembling vehicles in Pakistan. As vehicle purchasing involves a huge amount this industry needs to reach its customers effectively through advertising and promotion which impacts the profitability of the industry. This study is conducted to evaluate the impact of high advertising and promotional expenses impact on sector's profitability. For this purpose extensive study was conducted from the annual reports of automobile organizations and insights from customer and corporate were obtained through the questionnaire and interview. This paper assesses the impact of advertising and promotional expenses on profitability of automobile industry of Pakistan. The hypothesis was tested and the findings suggest that there is a positive relationship between advertising and promotion expenses and profitability of automobile sector as the expenditure on advertising promotion reaped profit for the industry.
Keywords: advertising, promotion, automobile, profitability, market
Introduction
The Automobile sector of Pakistan mainly involves assembling of passenger cars, light commercial vehicles, trucks, buses, tractors and motorbikes. The contribution of this sector in the GDP is 4% providing employment to almost 3.5 million people of the country. The market is dominated by three Japanese brands: Toyota, Suzuki and Honda. The total number of organizations registered with the Karachi Stock Exchange that are operating in the country are 12 automobile assembling firms. The profitability of the organization highly depends upon the investment in advertising and promotion heads. Being a huge manufacturing industry the profitability of the automobile industry is always important and investors from all over the world have a close eye on the performance of the industry. This study is aimed at assessing the profitability of the automobile industry in relation to different variables that determines the efficient performance of the industry. The area of research is selected for this study after extensively studying the previous studies conducted and the annual reports of the different organizations of the automobile industry. It was found that the advertising and promotion of the automobile sector plays an important role in the profitability of the industry since...