PEST Analysis on Automobile Industry

The year 1890 marked the birth of the automobile industry, which later became much more successful than the manufacturing industry over the last 20 years in the United Kingdom (2006), and is perhaps the most important industry in the world. . (1982) reported that the Automobile Revolution began at around the same time, and it is when the technology to produce and operate cars is already possessed by the Europeans and North Americans. But earlier in the 18th century, there was already a long series of efforts to combine the steam engine and the road wagons in some parts of the United States, Italy, France and Britain (2001). (1999) documented that it was in the 1890 that the process of uniting the technology, the manufacturing ability and the potential market in order to sell motorcars occurred in France and in Germany. The first boom of the industry, however, happened a few years later, specifically from 1895 to 1908. France dominated the young industry during the first boom, being the leading producer and exporter of automobile at the time. One of the reasons for the French dominance for most of the early car manufacturing days is the hesitation of the other industrial nations to participate in it (2003). A minor economic recession in between the years 1907 and 1908 became the turning point for the industry, as Britain and Germany overtook Frances lead by growing at a faster rate than the latter and breaking away from Frances shadow (, 1990). The United States, likewise, took the challenge of revolutionary innovations in order to satisfy the mass markets they found (2002). By 1985, most of the cars produced around the world came from Germany (Benz) and France (Panhard et Levassor and Peugeot). In the course of the revolution of the automobile industry, a shift in its clientele, its labour force, its strategy and structure is ever apparent. Cars originally catered only to the urban upper classes, but in the course of developing cheaper and more efficient ways in manufacturing them, which resulted to the manufacturers ability for mass production, the scope of market extended even to the general populace (1995). What once was a status symbol for the affluent now became a necessity, as cars proved to be one of the most convenient means of transportation available the world over (1982).

The automotive sector is a critically important and complex one. In many ways, the automotive industry offers an almost endless stream of political, economic, social, technological, legal and environmental inter-connections which affect people in one way or another. The industry faces a need for accelerated investment, in order to deploy the new technologies, for pressing geo-political, economic, environmental and societal reasons. PEST Analysis Political Observers will see a continuing progression in the ruinous steps which have forced the industry into a socio-politico-economic corner. Whether this is related to flat demand or to the industrys creation of an ever-wider range of vehicles that many buyers seem to care little about, there is a problem. The industry is likewise linked closely to the policies of governments, the earnings of banks. Little wonder then that so many emerging countries are keen to develop an auto sector or that there is such a political pressure to protect it in the developed countries. The worlds vehicle industry is currently dominated by little more

than a handful of firms, each wielding colossal financial, emotional and political power. The industrys approach to dealing with political institutions has not always been brilliant. It tends to be good on technical issues, although it has not always fully presented the longer-term options, in order to make the choices and their implications clear. Economic For much of the developed world, and increasingly from the developing world, the automotive industry is a pillar industry, a flag of economic progress. Without an automotive industry, it is impossible to develop an efficient steel business, a plastic industry or a glass sector other central foundations of economic progress. The automotive industry has been a core industry, a unique economic phenomenon, which has dominated the twentieth century. However, the industry now suffers from a series of structural schisms and has become riddled with contradictions and economic discontinuities. For the capital markets and the finance sector, it has lost a lot of its significance, as a result of ever declining profits and stagnant sales. The proliferation of products means that it has become hopelessly wasteful of economic resources. While all these and more sound like a very gloomy assessment of such a vast economic phenomenon, the industry is not in the end despondent. A different future is possible for the industry, a highly desirable one. Social The worlds automotive industry affects the society as a whole. It employs millions of people directly, tens of millions indirectly. Its products have transformed society, bringing undreamed-of levels of mobility, changing the ways people live and work. The social value of the additional mobility that this industry brings involves the value of the people being able to commute over longer distances easily, among many others. For most of its existence the motor industry has been a model of social discipline and control and it is not just that the auto sector offers a pillar of something else. There are, on the other hand, particular social issues to address in many developing countries, often those that are the result of an undertone of religious faith. The automotive industry has the role to play in helping develop the mobility of such countries and it can be achieved at an acceptable social cost of the country is prepared to learn the necessary lessons from those who have traveled this route before it, and to make the necessary investments. Technological The automotive industry works on a scale so awesome and has an influence so vast that it is often difficult to see. The level and diversity of technologies that it must deploy are increasing, which imposes both new investment burdens and new uncertainties and risks. Roughly a million new cars and trucks are built around the world each week they are easily the most complex products of their kind to be massproduced in such volumes. The industry uses manufacturing technology that is the cutting edge of science. But still, the potential for developing coordination skills, intellectual capabilities and emotional sensitivities through electronic technologies remain far from fully exploited. There are numerous additional near-term technological opportunities to adapt the automobile to changing energy availability. The possibilities suggest that automotive technology is unexpectedly robust and provides a powerful defence against energy starvation even if the real price of oil climbs steadily during the next couple of decades.