IOSR Journal of Economics and Finance (IOSR-JEF) e-ISSN: 2321-5933, p-ISSN: 2321-5925.Volume 3, Issue 2. Ver. II (Mar-Apr. 2014), PP 16-20 www.iosrjournals.org www.iosrjournals.org 16 | Page Impact of Market Share on Profitability of Heavy Vehicles Manufacturers-A Case Study of Hino Pak Ltd Muhammad Aqil1, Syed Fazal Aziz2, Muhammed Dilshad3, Seemab Qadeer4 1 ( Assistant Professor, Commerce Department, Defence Authority Degree College, Karachi, Pakistan) 2 (Senior Executive Vice President(retd), National Bank of Pakistan, Karachi, Pakistan) 3 (Lecture, Government Degree College, Paretabad, Hyderabad, Pakistan) 4 (Assistant Professor, Economics Department, Defence Authority Degree College, Karachi, Pakistan) Abstract: In the age of cut-throat competition, maximization of profit has become a challenging job for the firms. They always try to control those factors which influence their profitability. Before the phase of monitoring the determinants of profitability, this is inevitable to identify the factors which affect the firms’ capability to earn profit. This paper addresses one of the important factors that is assumed to have high degree influence on the profit of firms. Market share of organizations have direct impact profitability on profitability. Therefore, in this paper, the effect of market share on the profitability of Heavy Vehicle Manufacturer i.e. Hino Pak Company limited. The correlation and regression analysis reveals that Market Share has a significant effect on Annual Profit, Return on Assets and Net Profit Margin. It means that greater the market share, greater the profitability of the firm. Keywords: Heavy vehicle, Market Share, Net Profit Margin, Profitability, Return on Assets. I. Introduction Automobile industry is considered as the mother of all industries. Vehicles are manufactured by using steel, iron, aluminum, plastics, glass, carpeting, textiles, computer chips, rubber and many other materials. The industry gives birth to many other subsidiary industries such as auto parts, construction, steel, iron, electric, oil and gas industries. As a result, the auto sector contributes billions of dollars to GDP, it creates job opportunities for millions of people and it generates the domestic and foreign direct investment for a huge amount of money. According to an estimate, the manufacturing of sixty million vehicles engages about nine million people directly in making the vehicles and their spare parts [1]. This constitutes over five percent of the world’s entire manufacturing employment. It is also estimated that every direct auto job supports at least another 5 indirect jobs in the country, resulting in more than fifty million jobs owed to the auto industry. Therefore, this is very important to recognize the variables that determine the profitability of automobile firms. Researchers have always been looking for the real determinants of profitability. The purpose is to maximize the firms profit by monitoring variables that influence the profit. There are many internal and external factors that are responsible for firms profit and Market share is one of them. Market share of automobile companies enables the firm to book high sales volume and profits. A company with high market has more opportunity to book more and more profits. The objective of this paper is to find out the relationship of market share on the profitability heavy vehicles manufactures by taking the case of Hino Pak Ltd as a sample. II. Review Of Literature There are many studies which addressed the relationship between market share and profitability. Buzzel, Gale and Sultan established that there is a positive relationship between these variables [2]. Rumelt (1991) also found a significant relationship between market share and profitability of firms [3]. Woo (1981) raised an objection on the relationship [4]. He admitted that there exists a relationship between them over a period of time, this phenomenon is generalized and over-extended without proper acknowledgement. Capon, Farley and Hoening in 1990 conducted a research find out the determinants of profitability of firms and found market share as one of the important one. Hergert (1984) took the sample of 5400 businesses and 76 industries. He found a weak and non-linear relationship between market share of the firm and its profitability [5]. Therefore, this is clear from the above discussion that the relationship between the two variables needs proper verification and data analysis in order to derive concrete conclusions. III. Research Methodology The data for 15 years i.e. from 1995-96 to 2009-10 has been obtained from the financial statements of Hino Pak Company Limited. The data contains Market share of the firm, profit, Return on Asset and Net Profit