Factors Affecting Automobile Industry
The automobile industry is considered a dynamic industry across the globe. It is an industry that is involved in the design, development, invention or manufacture, marketing and dissemination of motor vehicles. It is a great candidate for online communities across the globe because, it deals with products that many people are passionate about. Even so, there are factors that affect profitability and growth of automobile industry.
The automobile industry is affected by different factors. For this reason, it is always imperative to analyze the general and competitive environment of the industry. Strategy analysis is crucial because it takes into consideration the internal environment of a business in the industry.
The government often issues regulations on the type and quality of automobiles that should be traded in. this is because of the increasing concerns for safer automotives. Trade barriers and incentives to the general public to buy new cars are some of the strategies used by the government to enhance safety of consumers.
Additionally, the government may want to provide specific goods and services to its citizens. It can also choose the type of automobiles that its people should consider and those that should not be traded in the market. Such measures affect the growth and profitability of the automobile industry.
Economic factors can adversely affect the automobile industry. They include high unemployment rates, disposable income, retail price index, exchange rate, gross domestic product and interest rates among others. These factors affect how an automobile business should operate and how business persons make their decisions. In the end, the productivity and profitability of a business is affected.
Social factors affect automobile industry
There are different social factors affecting automobile industry. They include high population growth rate, age distribution, and emphasis on safety, awareness and career attitudes. Trends in these factors can easily affect the demand of a company’s products as well as its general operations.
Additionally, social factors can easily drive a company to change its managerial strategies to adapt to changing trends. For instance, there is a notion that anyone who drives a nice vehicle is wealthy. Therefore, many people are driven to attractive models just to avoid a negative image in the eyes of other people. Such a move can increase profitability in a company that deals with great car models.
Environmental and ecological factors also affect the automobile industry. They include technology incentives, automation, R and D activity and the rate of technological changes. They affect the quality and the costs of production in the automobile industry.
On a positive note, technological factors can also lead to innovation and more efficiency in business operations. For instance, the internet is highly used across the globe. It is an efficient market place that has given the automobile industry an opportunity to sell its products and services across the globe.
Other factors affective the automobile industry include
- Market share
- New technology
- Organization structure
- Interest rates
- New products or new vehicle models and styles
- Availability of substitutes
- Growth of competitors
- Rising fuel prices
- Pension payouts and
- Increase in health care costs
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