PESTLE Analysis of Automobile Industry

Automobile-Industry SWOT

by Shamsul
Automobile-Industry SWOT
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PESTLE Analysis of Automobile


The automobile or automotive industry consists of cars, bikes, and other vehicles. In terms of profit and revenue, it is one of the largest industries in the world. These days, bikes and cars have become an integral part of our lives. They are an excellent transportation mode and add value to our lives and everyday ride. The effect of the automobile industry on the economy and society is really huge. In this post, we are doing the PESTLE analysis of automobile industry.

The automotive industry has some of the biggest and leading names, such as Tesla, Honda, Volkswagen, Toyota, BMW, FIAT, Nissan, Ford, Hyundai, and more. Right now, we are going to conduct the complete PESTLE analysis of automobile industry by exploring its political, economic, social, technological, legal, and environmental factors. They are macro environment business factors, and their impact is enormous on the industry. Let’s get started!


Political Factors | PESTLE Analysis of Automobile

  • Carbon Emission Regulations: 

Government and political groups have identified the rising environmental concern of the general public. They are trying to exploit new opportunities by launching carbon emission regulations and environmental laws. It is a good way to address the environmental concerns of people. Moreover, our cars, bikes, public transport, and other vehicles are heavily dependent on petroleum products such as petrol, gas, and diesel. These vehicles emit carbon that goes into the atmosphere directly. They are responsible for environmental pollution globally. They are causing air, land, and other types of pollution. The politicians and government authorities are showing great interest in this matter. They are building environmental regulations that would decrease the carbon emission rate.

  • Safety Policies:

Cars are vehicles possess a great threat to a person’s life due to the chance of system failure and faulty equipment. Just because of this reason, many governments have imposed strict safety regulations on the automotive industry. These regulations are not only for automobile companies but also for drivers. They should fasten the seat belt and take care of the speed limit while driving. It is hard for automobile manufacturers to introduce new features in the presence of such strict safety regulations, but they are really beneficial for their safety.


Economic Factors | PESTLE Analysis of Automobile

  • Covid-19:

The recent pandemic of covid-19 has just caused a worldwide shutdown and lockdown. They have created different challenges like travel restrictions, social distancing, and more. The pandemic has hit the automobile industry hugely. 

This situation has led to a global economic recession. It also increases the unemployment rate, decreased spending power, and sales. These economic factors have decreased the profit and revenue of the automobile industry.

  • Developing Economies:

Automobile companies can target emerging economies such as Singapore, China, India, Brazil, Malaysia, and Indonesia in order to expand their market reach and market share. These countries offer several opportunities in the form of cheap labor, low product cost, and disposable income. On the other hand, these countries are highly populated, so there is no shortage of customers. Just because of this reason, many multinational automotive companies are opening their manufacturing plants in Asian countries just to take advantage of the above opportunities.


Social Factors | PESTLE Analysis of Automobile

  • Driving Trend:

It is the wish of every customer to drive the latest model of the vehicle. This desire has motivated the companies to manufacture the latest and innovative car designs. They want to have more than one car at the same time. This trend is growing rapidly in Germany, Canada, the USA, France, Australia, UK, and more. These companies know the shopping trend and customer preferences. As a result, they promote or advertise the brand accordingly in order to hit the sentiment of people rightly. Such trends can also increase the automobile industry’s revenue, profit, and market share.


Technological Factors | PESTLE Analysis of Automobile

  • Safe Transport:

Several automotive companies are working passionately to enhance the safety features of vehicles. They are adding different safety features like brakes, airbags, seatbelts, and much more. For this purpose, they exploit new technologies to update the cars consistently.

  • Self-driving Technology:

Companies like Tesla, Toyota, and BMW have successfully tested autonomous vehicles. It is one of the biggest technological advancements of this era. It is because of technological innovation and artificial intelligence. 

They are working hard to make this technology error-free and more efficient. Moreover, they are adding new features in self-driving cars like battery timing, safety, and eco-friendliness. This addition would change the transportation mode completely.


Legal Factors | PESTLE Analysis of Automobile

  • Intellectual Property Rights:

Indeed, intellectual property rights are one of the common problems in the automotive industry. Thus, these companies file copyright, patent, trademark, and design lawsuits on other automotive brands to protect their brands.


Environmental Factors | PESTLE Analysis of Automobile

  • Pollution:

Currently, the automotive industry is facing two main environmental problems, Firstly carbon emission, and secondly air pollution. These factors are hurting the environment indirectly or direct way. Certainly, they are the main cause of environmental change, global warming, and low air quality. Due to this reason, the automotive sector is working heavily on electric vehicles to prevent these environmental concerns.


Final Thoughts | PESTLE Analysis of Automobile

After this in-depth PESTLE analysis, we have a clear idea that the automobile industry is one of the largest industries in the world. However, it is facing various environmental, legal, political, and technological challenges in the form of regulations and restrictions. Moreover, the economic recession is one of the biggest concerns for the automotive industry. It is imperative for automobile companies to focus on the development of electric vehicles, renewable energy sources, and sustainable technologies in order to deal with environmental concerns. In general, there are a lot of opportunities for automobile companies in different countries and markets.


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