Challenges Facing the Automotive Industry PDF

Key issues in the
Auto-mobiles sub-
sector in the UK

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Identify any two key issues which affect the sub sector of Auto-mobiles industry................3
2. By using PESTEL model evaluate the key issues...................................................................5
3. Discuss the impact on business................................................................................................6
4. Reflation...................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Auto-mobile industry is a essential part of the UK country where economy accounting
more than £82 billion turnover and £20.2 billion value added. Almost 186000 people directly
employed in manufacturing and 856000 across automotive industry (UK Auto-mobile, 2019).
Total export of goods from UK is about 12% and government of this nation yearly spend £3.65
billion in the research & development for Auto-motive sector. This report cover various topics
such as key issues which impact the auto-mobile company and by using PESTEL model analyse
its impact. In addition, describe the positive as well as negative impact on business and evaluate
challenges which faced at the time of preparing this report.
MAIN BODY
1. Identify any two key issues which affect the sub sector of Auto-mobiles industry
Overview of UK Automotive industry: In the UK, there are almost 3000 companies
involved in automotive sector. Such a big brand names of this industry are Bentley, Jaguar Land
Rover, Rolls-Royce and construction equipment makers such as JCB. Almost 10% people
employed in the UK are from EU and work in the automotive industry. In a single day in UK,
1100 EU trucks deliver to UK which include the Car or engine plants. 6400 cars manufactured,
10500 engine manufactured, 13000 cars distributed to UK dealers etc.

Overview of organization: Bentley Motors Limited is British luxury car manufacturing
company and it is an subsidiary of Volkswagen Group from 1998. Bentley founded in 1919 by
H.M Bentley & W.O Bentley. It is engineering, manufacturing and distribution company which
served their services worldwide.
There are various issues which required to focus because it impact the automotive
industry of UK. Some of them discussed below:
 Single market: In order to achieve automotive precedence on tariff free trade and
reduce the impact of non tariff barriers, government have to develop secure future trade
agreement with EU (Brockway and et.al., 2014). All the benefits enjoyed by the people
who perform under single market because they do not follow trade or tariff barriers
which impact their productivity or profitability.
 Customer: In the UK auto mobile industry, government pass the new customer
agreement with EU where free flow of goods at the border area applied in order to avoid
cost, competitiveness or support just in time process.
 Regulation: Government need to demonstrate that how existing automotive regulation
fit within business plan. Issues will arise in the future when UK automotive industry
expand and it will create non tariff barriers when vehicle approve to enter in European
market.
 Trade: Organization required clarity where they have to treat EU free trade agreement
and those agreement which is under negotiation. Trade barriers become issues for the
domestic as well as internation organization. It is important to clarify and discuss
regulations between EU and other key markets.
Above mention key issues impact the organization and its business operations. Trade or
regulations are the two key issues which impact Bentley Motors Limited along with productivity
or profitability.
In context of Bentley Motors, company face the issues regarding regulations and trade.
Company worldwide deal so they have to follow regulations regarding trade or tariff which
impact the business strategies and productivity or profitability.
 Trade: As UK leaves the EU, country establish Trade Bill which introduced on 07th
November 2017. It include various provision for those organizations who deal
internationally and have to develop trade agreement (Burke, Byrnes and Fankhauser,

2019). It is prepare for the collection or discloser of trade related information. Bentley
Motors have to ensure that they follow all the trade provisions otherwise they enable to
trade in the international market.
 Regulations: UK introduce new tax policy for cross border trade and it comes under
Taxation Act which revived Royal Assent on 13th September 2018. It also include tax
related measurements which every automotive business have to follow such as Bentley
Motors. These measurements include the new tariff rates, import duty, custom duty etc.
New UK trade remedies include the additional custom duty in some certain
circumstances. As per the WTO report, 10% tariff on Export or Import in the UK and it
has to be follow if they wanted to continue their trade in this marker.
2. By using PESTEL model evaluate the key issues
Political: This factor include the governmental intervention which include political
stability, Govt. policy, foreign trade etc. In context of Bentley Motors, trade or tariff duty
negatively impact the company because they trade international. This factor impact the
production or profitable for the company (Byers, Gasparatos and Serrenho, 2015). On the other
hand regulations of UK will impact the business operations. New taxation policy will reduce the
profit margin of the company.
Economic: This factor have significance impact that how business perform in order to
get profit. It include inflation rate, exchange rate, interest rate etc. Company affected because of
trade policy or change in the regulations. So manager of Bentley Limited have to formulate their
strategy through analysing these issues which impact productivity or profit margin of the
company. High tariff on import of export will reduce the profit margin as well as tax on trading
foreign country also impact the profitability of the company.

Social: This factor impacted due to different culture of countries and it include the belief,
attitude or common interest of population. UK contribute around 12% of automotive industry
goods to satisfy customer needs. Along with this, there are various big brands which popular in
this market and also liked by the customer. So the issues can be resolve through generating more
profit or targeting right customers to sell their products. Trade or tariff and change in regulation
will impact the cost of product which automatically affect the demand of customers.
Technology: Change in the technology can help in improving production or increase the
interest of individual. Bentley manufacture luxury cars through targeting premium class
customers. Company sell their products outside UK so they have to pay all type of taxes or
custom duty. It will directly impact the cost of product that's why the price of their cars are very
high or middle class people enable to afford.
Environmental: This factor impact the supply chain, product usage or availability of
resources. So Bentley address the following factors through concentrating on quality of their cars
which increase the interest of people and provide sustainability. due to change in regulation and
trade barriers will impact the business operations. So manager of the company have to analyse
these aspect before developing strategies or decision making process.
Legal: This factor analyse that how legal system influence the company and business
operations. It include the health, safety, equal opportunity, rights & laws, product safety etc.
Issues related with them will effect or impact the performance of Bentley organization (Carter
and Jacobs, 2014). Change in the tax regulation will increase the burden where they have to pay
high tax on exporting goods. It will directly impact or reduce the profit margin of the company as
well as it can reduced the demand of product due to high price range.
3. Discuss the impact on business
Above mention issues will impact the organisation in terms of productivity or
approachability. Because every issues will impact positively as well as negatively on
organizations. So, there are two organizations will be taken to identify positive or negative
impact on business of above mention issues. It will be discussed below:
a. Discuss positive impact on one business:
Trade policies are the big issues for those organizations who internationally trade such as
Bentley. Another organizations such as AC which known as Auto Carriers Ltd does not impacted
due to these issues because they deals in the domestic market. This issues positively impact the

domestic company and negatively impact the mutational company because they have to adopt all
policies regarding trade in foreign countries. Bentley have to pay high duty which increase the
cost of product but companies like AC Ltd, they not effected because they targeting domestic
customers (Das, 2014). Those customers who enable to purchase big brand cars then they prefer
to purchase small band products. These trade polices and tariff will positivity impact the
company which only deals in the UK nation or does not sell their product outside the boundary
due to these complications.
b. Discuss negative impact on one business:
Every issues in context of organization will negatively impact the production as well as
their profitability. In context of Bentley Motors Limited, company face the issues regarding new
regulation of Taxation Act and Trade Bill. Due to change in the rates, company have to pay more
which increase their overall cost as well as increase the price range on cars. So it is important for
multinational organization to analyse these issues and develop strategies accordingly (Holtgrewe,
2014). In order to pay off all the duty or taxes, manager have to analyse market and understand
customers needs, requirements and desires. Product will be develop according to the demand of
customers because it helps in generating demand and further beneficial to increase productivity
or profitability. Above mention issues negatively impact the Bentley because of import tariff,
export of certain goods, custom duty etc. It will also lead the competition from abroad and
increase unemployment because companies will expand their business in foreign which create
job opportunity in the other nation.
4. Reflation
At the time of preparing this report I already face various difficulties because it is not
easy to find specific information on Automotive industry and the key issues which impact the
whole industry as well as organization. Some of the challenges discussed below:
Insufficient content: In order to produce report as per the requirement, so I have to
arrange information through various sources such as internet, books, online journals etc. But
most of the time it happen that we enable to found content relevant to our topic. For example:
when I am searching about Auto-mobile industry so I found various information but that was not
sufficient to fulfil the criteria of questions which teach ask to do (Pinder, 2017). I have to done
intense research in order to make this report professional or provide required understanding

which helps me to clear pass criteria. This is the main issues which I faced at the time of
collecting relevant information in order to address learning objectives of this report.
Arrange data in understandable form: After lots of efforts I found content which helps
me to complement my task and make me able to complete my report. After facing one challenge,
I have to work on another challenge to arrange data and make sure that, people understand the
content and achieve passing criteria (Pye, Usher and Strachan, 2014). I order to make my project
report more effective I try to give my efforts and put some fact based pictures along with online
or offline references by using Harvard referencing style.
Above mention challenges faced by me at the time of preparing this report but it will also
provide some good experience which enhance my learning as well as skills. This experience
would be used in the future when I going to handle another project but yes, it also provide good
experience with various learnings points which always remember by me.
CONCLUSION
From the above discussion it has been concluded so which impact the Auto-mobile
industry. Every country have certain rules and regulations which organization have to perform in
order to continue their trading process in the worldwide area. Trade policies and regulations are
changed as per time so every business have to updated with each & every legislation. In context
of organization, they have to formulate their strategies according to the situation of that country
and their trading policies. It will be possible with the help of PESTEL analysis which helps them
to identify positive or negative impact of those issues on business.

REFERENCES
Books & Journals
Brockway, P. E. and et.al., 2014. Divergence of trends in US and UK aggregate exergy
efficiencies 1960–2010. Environmental science & technology. 48(16). pp.9874-9881.
Burke, J., Byrnes, R. and Fankhauser, S., 2019. How to price carbon to reach net-zero emissions
in the UK.
Byers, E. A., Gasparatos, A. and Serrenho, A. C., 2015. A framework for the exergy analysis of
future transport pathways: Application for the United Kingdom transport system 2010–
2050. Energy. 88. pp.849-862.
Carter, N. and Jacobs, M., 2014. Explaining radical policy change: The case of climate change
and energy policy under the British labour government 2006–10. Public Administration.
92(1). pp.125-141.
Das, K., 2014. Globalization and Standards: Concerns in a Large Transforming Economy, India.
In Globalization and Standards (pp. 3-20). Springer, New Delhi.
Holtgrewe, U., 2014. New new technologies: the future and the present of work in information
and communication technology. New technology, work and employment. 29(1). pp.9-24.
Pinder, J., 2017. National industrial strategies and the world economy. Routledge.
Pye, S., Usher, W. and Strachan, N., 2014. The uncertain but critical role of demand reduction in
meeting long-term energy decarbonisation targets. Energy Policy. 73. pp.575-586.
Online
UK Auto-mobile Industry. 2019. [Online]. Available Through:
<https://www.smmt.co.uk/industry-topics/uk-automotive/>