Pestel Analysis

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PESTEL Analysis of UK Motor Industry

PESTEL Analysis of UK Motor Industry

Motor Industry in UK

The automotive industry plays a key role in the productive sector of national economy, as the production and sale of vehicles support a large number of other industries that include engine components, garage repairs and maintenance, financial services, both directly and indirectly, by different suppliers in the steel aluminium, rubber, plastics, textile and chemical industries.

This industry is one of the largest employers in the UK labour, estimated at about 1.5 million people, and provides the most popular form of transport for people and for cargo movement. Nevertheless, despite its importance to the economy, road infrastructure is already totally inadequate in most parts of the current volume of traffic. This will be overwhelmed in the near future, according to the transport analysts, if the basic scheme for the widening of the road is implemented to cope with expected future growth in traffic.

Car and commercial vehicle production in the UK is almost entirely dominated by foreign groups, with only MG Rover Group is currently working as a fully independent British-owned company vehicle production after its separation from the group of BMW (Timothy, 1999, p. 67). Specialist, low volume production of cars and mostly foreign-owned after the acquisition of the majority of the most famous British brands such as Jaguar and Aston Martin from Ford Motor Company, Rolls-Royce from BMW and Bentley by Volkswagen Group. Similarly, in the commercial vehicles sector, only LDV and Dennis independent British producers.

Market Trends

New car market in the UK received a substantial increase in sales in 2001, after the introduction of a new system of registration of motor vehicles, increased sales of import low-cost parallel through independent traders to the Internet, and falling prices for franchised distributors. Although the total number of parallel import cars from continental Europe is small (about 50.000 per year), their lower prices focused 'attention to the discrepancy in producer prices of producers of private buyers dealers for similar models in the UK.

Parallel importers, along with highly unfavourable publicity about the high prices charged for cars in the UK compared with other EU countries had a significant impact on pricing structures in the UK for nearly all models, which are not in short supply, including luxury cars. Discounts are available free and are now more transparent to the buyer. The focus of British strategy of pricing may lead to the EU, not renewing the block exemption, which allows the automotive industry and their franchised dealers from obeying the rules on competition are applied in other industries. This exemption is due for renewal in September 2002. Oversupply and lower prices cause severe financial losses for many of car manufacturers in the UK. This led to the closure of the car as the Ford assembly plant in Dagenham and Vauxhall car assembly plant in Luton.

To eliminate or reduce losses, control of all factories used a lot of pressure on components suppliers to lower their prices or to meet competition ...
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