External Factors Facing the Car Industry in the Uk

Topics: Renault, Opel, General Motors Pages: 3 (826 words) Published: September 8, 2013
Evaluate the opportunities and threats in the external environment facing the car industry in the UK

There are many factors that affect the UK car industry. Some are internal factors and controlled by the manufacturer, others are external and cannot be controlled. Some external factors pose threats to the car industry and others present opportunities for manufacturers to adapt their cars to overcome a threat and create a unique solution that encourages the consumer to buy their product. The income of consumers, road tax, fuel prices and the fluctuating prices of commodities are all examples of external factors.

The ever-increasing fuel prices, especially in the UK pose a large threat to the car industry as many people are turning to public transport as an alternative option to cars. This will most likely reduce the amount of cars bought which can be seen in appendix 2 which shows that new car registrations were reduced by 21% from 2007-2009. However, with every problem presents an opportunity and many car manufacturers have decided that there is a huge market for people demanding cars with a high fuel efficiency as consumers can then spend less on fuel. Therefore, even though some people are using public transport to save money, many people are buying from car manufactures that provide cars with a good fuel efficiency and can save them money in the long-term. This means rising fuel costs is an opportunity for car makers to produce cars with a high fuel efficiency to combat this problem.

Another external factor is the price of materials used to make the car, many of which are commodities and have a fluctuating price which cannot be controlled. This poses a threat to the car industry because if prices of materials increase, so too will their costs which means their prices may be forced up if they cannot continue to make of reasonable profit. This may lead to consumers not buying new cars due to the prices exceeding their demand for a new car so they may...
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