PESTLE Political * Political insatiability affects the sales of the automobile industry.
The political instability has a direct impact on the sales of the automobile industry. When there is a political unrest the purchasing power of the individuals in the particular area goes down. * Government support towards the industry favourably. This industry is the 6th largest industry in the world and brings out a lot of revenue and creates employment opportunities.
Therefore governments tend to help and protect the industry.Eg: USA bailed out GM and Chrysler * Taxes and levies charged against the automobile industry has a negative impact on the sales Many countries tend to have taxes or duties against the automobile industry; this may either be to protect their own local manufacturers, to gain revenue, or to discourage buyers due to traffic congestions. (Many BRIC countries today face the issue of traffic congestion). These may be to enact price or exchange controls as well. These additional charges would discourage buyers and reduce sales. Strict rules and regulations related to the automobile industry throughout the world Governments tend to have strict rules and regulations with regard to the protection of the environment, employment laws (where safety of the employees is a must), and etc.
* Trade Restrictions Many governments, in order to encourage local manufacturers have trade restrictions in place. The best example would be the US automobile market where a specific quota is allocated to Chinese and Korean car manufacturers.This is one of the reasons Toyota had to setup their own manufacturing plant in USA which created employment opportunities in USA. * Car Scrappage programmes by governments These are government initiated programmes aimed to promote the replacement of old vehicles with modern ones. This is done with the dual aim of boosting the automobile industry and removing inefficient, high emissions vehicles off the road. Economical * The economic crisis The economic crisis that occurred had a huge negative impact on many industries.
It was a reason for the losses Fiat incurred in some stages.The economic crisis also discouraged buys to purchase vehicles. Eg: Depressed economy in Italy due to Eurozone Debt * Effects from the currency fluctuations Currency fluctuations means the exporters would find it hard to predict their returns. They will have to pay more for their suppliers because of the currency fluctuations and these changes cannot be added to the customer. The manufacturers have to bear these exchange losses alone in most instances. * The fluctuations of the interest rates also would have adverse effects on the industry.
The manufacturers will have to pay more for the raw materials such as steel, precious metal, non ferrous alloys including aluminium and plastic parts. Social * New opportunities for FIAT because of the growth of the middle class in emerging countries. * Social awareness of pollution leads people to travel in public transport which in turn would have an adverse effect on the sales. * The latest trend of teens buying “grandpa” cars like Chevrolets, Buicks and etc from 1970s and 1980s partly because they are cheap and partly because they are so easy to fix. Technological Many car makers are researching into alternative means for fuel crisis. Electric cars can be said to be a by product of these researching.
* Many manufacturers in this industry try to get the optimum benefit they can from technological advances. An example would be the Robogate system introduced by FIAT. Its an innovative and flexible robotic system for assembling bodywork introduced in 1978. * Many manufacturers go into mergers to share the technology between them to get the maximum efficiency thereby gaining economies of scale in the production processes.Eg Fiat-Chrysler * A fair share is invested on Research and Development by manufacturers to gain a competitive advantage in the industry. Legal * Legal issues in this industry arise mainly due to lack of proper employee treatment or environmental issues.
Environment * The industry is subjected to various barriers and has to keep in check regarding emission levels, fuel economy, noise and pollution to safeguard the environment. * Environmental disasters affect the productions processes. Eg: The 2011 tsunami in Japan affect the production of Japanese cars.
