PESTLE

ANALYSIS OF
AUTOMOBILE
INDUSTRY
POLITICAL
P
E

ECONOMICAL
S

SOCIAL
T

TECHNICAL

ENVIRONMENT
E
L

LEGAL
 The PESTEL analysis of the automobile industry shows how
political issues can impact the automobile industry such as:​

Ø Promoting Domestic Manufacturing​

Make in India- Creating jobs approx. 19lakh directly and
indirectly as per IBEF(India Brand Equity Foundation).​
POLITICAL Ø Encouraging EV's & Hydrogen Vehicle's​
The FAME (Faster Adoption and Manufacturing of
Electric Vehicles) scheme in India offers subsidies for EV purchases .​
Tax offers, purchase subsidies, low carbon emission.​
Ø Emission Norm's​
Bharat Stage(BS) norms Indian version of European Regulations.​
Ø Improving Road safety​
Airbags, Anti-lock braking system, Seat-belt reminders in cars,
Connected car's.
 The lifestyle of people is dependent on the economy of a country. Therefore, it can also
impact the automobile industry in ways like:

Increase per
capita Increase disposable
income
Increase in demand of
car's

ECONOMICA income
L
Increase in Increase in car price's
Decrease in demand of

luxury Tax
luxury vehicle's

Resale Impact sale of EG.-

value
vehicle's SKODA, VOLKSWAGEN
 The socio-cultural conditions work on the businesses of a land.
Social trends gravely impact the production of cars.
• Cars are not only vehicles but are fashion statements. Hence,
the companies need to consider the choice of people while
manufacturing new cars. Otherwise, it may go out of fashion
and may not get a good sale.

SOCIAL • Population distribution of a country also impacts the sales of

cars. A state with a dense population and large families tends
to have a good sale of big cars like SUVs.
• The culture and tendency of communities also affect the
automobile industry. For example, the countries which have
well-connected bus services may see less number of people
owning cars. There is also a tendency of developed countries
to possess one or more cars.
 Technological condition immensely impacts the sales of
automobile companies. Here are some technical issues which can
work on the business of the automobile industry :
• The automobile industry is hugely dependent on innovative
technology to ensure the safety of the people. Companies need
to upgrade their technologies to make their cars as safe as
possible.

TECHNICAL • The companies need to concentrate on the reduction of

emissions. They can use modern technologies to keep the
emission rate in check.
• Self-driven cars are already out in the market. Hence in the
future, they may get high demands. The company needs to
promote these self-driven cars and electric vehicles, which
may gain them more customers.
 The automobile industry can get deeply impacted by ecological
issues. The PESTEL analysis of the automobile industry can
identify as:
• As emission from the vehicle is a concern for the
environmentalists and government. The companies can use
their latest technology to manufacture battery-driven or
electric cars, which can help in decreasing the rate of emissions.
• The governments of the countries are more willing to take up
ENVIRONMENT environmental policies to decrease the pollution level, and the
automobile manufacturer needs to abide by the rules. It may
lower the profit margin for automobile manufacturing
companies.
• The research unit of the automobile companies needs to be
strict with the testing. They should debut a unit in the market if
only it can pass the strict pollution tests.
 The laws and regulations of the countries can affect the business of the
automobile industry. Most of the countries have laws for automobile
companies. Here are some legal issues which can work on the business of
the automobile industry:
• Many countries have strict laws to decrease the number of vehicles on
the street, which can help them to lower the air pollution level.

LEGAL • During the forensic test of an accident, if it is proved that there was any
problem with the faulty parts or airbags, the company may have to face
legal proceedings.
• If a vehicle company operates in an international market, the company
must take care of the tax laws and environmental laws. If they fail to do
so, the company may get banned in the country.
As the lifestyle and economic conditions of
the countries are changing, the automobile
industry has the potential to see rapid growth
in the future. However, there are safety and
environmental concerns which they need to
take care of to sustain stability.
The PESTEL analysis of the automobile
industry shows that the automobile industry
should successfully cushion its potential
threats. Only then can they expand their
business in both developed and developing
countries.