This report first investigates the challenges and opportunities exist in the UK car market from both demand side and supply side perspectives. Then, it describes several examples of human resources management practices that UK car manufactures adopted in order to tackle the challenges ahead of the UK car industry. 2.
Part A: SocialTechnologyEconomicEnvironmentPoliticalLegalEthical Analysis This section describes the microeconomic environment of the UK motor car market in order to understand the challenges and opportunities exist in the UK motor car market for a car manufacturer. The STEEPLE analysis of this report is structured as follows: section I examines the demand side drivers of the UK car market. Section II focuses on the UK automotive industry and the supply side challenges of the UK car market. Section III describes the environmental issues and policy context regarding the Green Mobility in the UK. Section I: Demand Side Drivers
On the demand side of the households/companies decide whether to buy a vehicle(s) or not and decide on type and make of cars in order to meet their travel needs. Figure 1 shows changes in the pattern of household car ownership between 1995/7 and 2005/7. Many factors influence the demand for vehicles and households’ car ownership decisions including demographic factors, socio-cultural factors, economic factors, legal factors, and changes in the labour market. Here we examine these different factors comprehensively within the context of UK car market. Demographic Factors:
Demographic changes such as population growth, aging of the population (and slower rates of deteriorating health in advanced age), increased rates of migration, the shift from the nuclear family unit to alternative household arrangements, etc. are amongst factors that affect the demand for cars. Socio-cultural Factors:
Socio-cultural factors also play an important role in the current and future demand for cars in the UK. For instance, cycling is becoming increasingly popular as mode of travel in the UK, which is likely due partly to policies such as cycling routes and economic factors such as high fuel prices, but also partly to cultural changes and the rise of postmodern lifestyles. On the other hand, increasing participation of women in the economic activities, as in the case of the UK, could potentially increase the car demand. Economic Factors:
Since there is a strong relationship between economic activity and individual mobility (see Dargay and Gately, 1999), increase in aggregate economic activity (e.g. typically measured as GDP) will result in increase in the level of individual mobility and the demand for cars as a consequence. Economic factors such as high fuel prices also influence the households’ car ownership decisions, and therefore, the demand for cars. The general macroeconomic conditions also affect the demand for cars. Factors such as interest rates (i.e. affect car financing and personal loans markets), salary levels, unemployment rate, and inflation indeed influence households purchasing powers and therefore the demand for cars. Legal and Regulatory Factors:
Legal factors such as raising the driving age, imposing control on new drivers, and increasing the cost and making the process of getting a driving licence harder could also change the demand for cars. Road tax, fuel tax, parking provisions, etc. are other legal and regulatory factors that affect the demand side of the car market.
Figure 1- Changes in Household Car Ownership (Source: Le Vine and Jones (2012) )
Section II: Supply Side Challenges
The UK has been on the forefront of world automotive industry with world-leading brands like Rolls-Royce, Bentley, Jaguar and MG. The UK has been also a major centre for engine manufacturing and in 2008 around 3.16 million engines were produced in the country (SMMT, 2011). By 1983 UK car production had reduced by 50% (from 2 million vehicles per year to 1 million) after its...
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