Pestle Analysis Of Automobile Industry

Facts & Figures

Automotive industry grew at the rate of 14.4% over the past decade, making India the world's sixth largest producer of automotives in terms of volume and value.

The sector employed 12.5 million people (about one per cent of India's population), directly and indirectly, and contributing nearly five per cent to India's GDP.

Currently, India's share to global production of automobiles is 4.9 per cent, making it the fifth largest producer after China, Japan, Germany, and South Korea. Government of India aims to make automobiles manufacturing the main driver of 'Make in India' initiative, as it expects passenger vehicles market to triple to 9.4 million units by 2026, as highlighted in the Auto Mission Plan (AMP) 2016-26.

Business

This slowdown is a result of a combination of factors including slowing economies, but principally because of higher oil prices that affect both the type of vehicles purchased and the amount of discretionary funds available to buyers. This trend has reversed temporarily in 2014-2016 due to the sharp decline in oil prices that resulted in a surge in car sales notably in North America. The question is how long the oil prices will remain depressed? The Economist Intelligence Unit indicates several areas of growth, or potential for growth, in the industry. Clearly, there will be losers as a result of these bleak conditions, but the winners will be those that can refocus their resources to create and exploit comparative advantages in the face of increasing

3D printing may allow us to build better, safer, but not as long-lasting bodies for our cars, allowing more economical accident repair, while artificial intelligence (AI) could help us ensure the security of data.

2) Changing value chain in the automotive industry: Compete or cooperate?

Not only will companies have to reimagine their opportunities for realizing revenue in an agile way, but they will also be forced to think about how they compete, and who they compete with. The auto industry hasn’t fundamentally changed since the first cars were manufactured: there are a handful of major carmakers that make profit by selling cars and other (hardware) products, and some services. With the automotive revolution that the above trends outline, it’s inevitable that new, non-traditional players will enter the market.

To compete with these new entrants, carmakers will have to redefine their role in the auto industry, and either assume new business models, or gain new competences. For instance, as software becomes increasingly important, they will need to build solid proficiency in software development, or partner with a tech company that has the necessary