PESTLE Auto industry

PESTLE Auto industry

Automobile Industry PESTLE Analysis During the last decade, automobile industry has evolved tremendously. With manufactures investing a great deal in their research and development programme innovations have come up at a rapid pace, however with the grudging economic times it has seen its downturn too, like the General Motors and Chrysler facing bankruptcy. The automobile industry has then moved on and surged ahead in 2012 and 2013, with the notable exception of Europe, where a dull economy was particularly hard on auto sales.

Generally the focus has shifted away from the conventional cars, to the environment riendly electric cars and the Hybrid card technologies. The rising need to cut automotive emission and the increasing fuel prices have challenged car manufactures enough to come up with a sustainable alternate solution to meet the future demand of the industry. Keeping this in mind the PESTLE analytical tool has been used to gain more insight to the Global automobile industry.

Political Factors Government Regulations: With mandates that manufacturers have to meet high average miles-per-gallon rules and the rise in fuel prices, US companies are aggressively pushing their smaller, high efficiency vehicles. European manufacturers with high costs, tough labor laws and at the same time government regulations are facing constant challenges. Even closing down a factory to reduce cost in order to save the company from bankruptcy is daunting and expensive task.

Meanwhile, China’s government controls the market, as it may increase sales by encouraging new auto loans, or decrease sales by adding new registration fees, limiting number plates or restricting traffic in major cities in order to reduce congestion and pollution. The shift of economic growth from the traditionally stronger western countries such s US and European Countries to other parts of the world, especially Asia, Africa, and South America has been seen as a major economic factor.

America enjoys a better GDP and economic recovery with a more youthful population and the low fuel costs equally supports the automobile industry. GM and Chrysler are expecting a 80% higher turnover then 2009 when they went on crisis. While Europe is witnessing a sixth year of slump, through a weak economy and high petrol prices. Fuel prices on the rise demanding for mini or compact cars. Social Factors Issues such as congested roads, inner cities with limited parking spaces and the heer cost of running your own car are social factors that are likely to have a significant bearing on future vehicle development.

Automobile Markets of developed countries are being saturated with very high rate of auto owners, coupled with initiatives and projects such as well linked Public Transport system which includes high speed rail, trams, intercity train services etc are seen as key factors. In Addition the ageing population, households with only one or two occupants continue to grow across Europe has also been seen as a factor effecting the automobile industry. Where as in the developing countries with number of car owners/population is comparatively much lower and a better economy supports the industry.

Here owning a car is not only a means of transportation but also considered as a need of social status. China’s “one-child” policy has resulted in an overall decline in the share of working-age people in the population. As growth of the labour force slows, employers have to compete for workers and wages thus continue to rise, boosting household incomes and vehicle demand. The programme has also resulted in smaller households a notable feature for shaping the industry.

While in Sub-Saharan Africa and middle east as the projection to experience the growth in population is expected in the coming decade, Car makers are therefore increasingly drawn into the region. As (sub) urbanization continues to gather pace, youth employment rises and there are increasing numbers car users visible. Technological Factors Environment concerns and cost factors are driving technology in the automobile industry and have become reasons to create no-frill cars to the more Eco-friendly cars.

Today the technology for electric engine is maturing, hybrid cars have been rought on roads, there is major investment in place to fgure out better battery for electric cars thus increasing the capacity of the battery. Some countries have started Technology is further advancing in the automobile industry with the launch of Formula-E race for the first time in 2014 with all new high-speed electric cars. The aim to eliminate casualty caused by transportation accident will be met by the adoption and perfection of automatic pilot (unmanned driving).

Google has started the trial operation of a fleet of autonomous driving cars. Some pioneering states in he US have started to set the rules to govern robotized motoring (autonomous driving) Technology and design flaws are also a major concern when trying to compete in a low cost market and at times when developing new products, issues such as 3 incidents of fire in the new Tesla battery operated cars over the last 5 weeks and Toyoto, calling back about 240,000 cars because of various design errors in their hybrid cars have been observed.

Legal Factors Apart from the regulation on reducing carbon in the environment there were stricter legislation to ensure the safety performance of the car. This process was termed as homologation, which was a certificate according to the standards of the country where the car will be sold. There are many different homologation processes: U. S. has the self-certification according to the Federal Motor Vehicle Safety Standards issued by the National Highway Traffic Safety Administration.

In Europe the national laws worked with the two European systems of homologation: the European Union Directives and the United Nations Economic Commission for Europe regulations. Apart from these homologations, there are independent organisms that go further han the legislation and give advice about the safety performance of cars. These organisms are for example in Europe, EuroNCAP and in China the ChinaNCAP.

There have been cases where the car manufacturers have decided to stop selling one car modelthat passed the homologation process but had a low punctuation in the EuroNCAP, and therefore damaged the manufacturer’s brand. Environmental Factors Stringent law by policy makers and the introduction of US emission standard and the EIJ emission standard to drive anti pollution curb and challenge car makers to make reener environment friendly cars have borne great results and is one factor which will drive the future of automobile industry.

In addition to this need for environmental sustainability has paved way for the introduction of low sulfur gasoline liquifled petroleum gas and compressed natural gas to run the cars. In addition the EIJ directive concerning end-of-life vehicles (2000/53/EC) has been in that the manufacturer must accept end of life vehicles (ELV) back from the last owner without charge. Car manufacturers are therefore obligated to carry all, or a significant part, of the costs associated with ELV recycling.

Definition according to EIJ directive for end-of-life vehicles are: Reuse means any operation by which components of end-of life vehicles are used for the same purpose for which they were conceived. Recycling means the reprocessing in a production process of the waste materials for the original purpose or for other purposes but excluding energy recovery. Recovery means a suitable process for ensuring that waste is recovered without endangering human health and without the use of processes or methods likely to harm the environment. regeneration of acids is an example of a recovery operation.