Environmental Analysis of Automobile Industry

This report covers the impact of Covid pandemic on automobile industry, megatrends in automobile industry and survival and success factors in this industry. It discusses the decline in sales of vehicles due to the pandemic, megatrends like digitalization, electric vehicles, artificial intelligence, and more. It also highlights the factors that can help automobile companies survive and gain success in the industry.

Environmental
Analysis of Automobile
Industry

Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
Impact of Covid pandemic on automobile industry....................................................................3
Megatrends in automobile industry.............................................................................................4
Survival and success factor for the automobile industry.............................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

Introduction
Covid pandemic impacted badly upon every industry. Due to lock down, social
distancing and many other government regulations the sales of each company decline with rapid
speed. Every company have to face losses in their business (Maria and et. al., 2020). On the other
hand, due to covid pandemic most of the people have to lose their jobs as the companies are not
going to pay for their employees who are not essential for the company. Hence, due to
unemployment and various other reasons, the purchasing power of people also get decreases and
they prefer to buy only basic products rather than investing upon luxury products like royal cars.
Rolls Royce is a automobile company which manufactures luxury customized cars. It is founded
in the year 1998 and it is headquartered in Goodwood, West Sussex, England, and UK. The
company is having 50,000 employees. The following report covers impact of pandemic on
automobile industry, megatrends in automobile industry and survival and success factors in this
industry.
Main Body
Impact of Covid pandemic on automobile industry
Every industry impacted negative in term of their growth due to Covid pandemic. This is
ongoing global pandemic which spread by corona virus from pone person to another by social
gathering. Hence, to break the chain the government of various countries conduct lock downs,
social distancing and many other regulations to save people life (Ishida, 2020). In context of
automobile industry, their sales decease with rapid speed because here, customers will prefer to
fulfil their basic needs first and then they will focus on buying vehicles. Secondly, due to lock
down no one is allowed to travel for entertainment, hence, this is another reason that why people
are not investing in buying cars especially luxury cars, racing cars and many others because the
events like racing and others get cancelled due to this pandemic to avoid social gathering. In is
found by researchers that in context of UK, their car manufacturing industries have seen a down
fall of 29,3% during covid pandemic (UK car production down -29.3% as corona virus slams
brakes on sector, 2021).
The sales managers of various car manufacturing companies said that the covid
pandemic has become the biggest reason for their downfall of the company’s sales. Due to this
pandemic most of the automobile companies terminate their employees because they are not able

to bear the losses anymore, hence, they terminate those employees who are not essential for their
company and reduces the salaries of existing workers to cover up their fixed charges. Due to this
reason, some of the skilled employees also left the company and hence, this also impacted bad
upon manufacturing cars and two vehicles with good quality and effective solution to each
problem occur during their manufacturing. Hence, the innovation rate in this industry get decline
and companies are facing with the issue of lack of innovation. They are switching to sustainable
innovations to attract huge amount of customers by protecting their environment and society
interest. Due to lock downs and social distancing, the travellers have cancelled their plans to
travel and due to this reason most of the car services companies have also faced loss by
cancelling the booking of their customers.
From the above image it is clearly evaluated that in context of UK, their highest growth
of car manufacturing industries is seen in the year 1972, than the demand get decline from 2009.
From 2016, the manufacturing of cars in UK again seems high growth but in the year 2020
which is also known as the year of covid pandemic, they manufacturing activities of automobiles
get decline with rapid speed and as compared to 2019 growth the growth of 2020 in automobile
industry are very slow. Hence, it is evaluated that the demand of automobiles get decline due to
which companies have to decline their manufacturing units.

Megatrends in automobile industry
There are various kinds of megatrends currently followed by automobile industry and few of
these megatrends are mentioned below-
Digitalization- Most of the automobile companies focusing on adding digital features in
their cars and want to bring a new feature like voice controller and many others in their cars to
attract more customers and satisfy those customers who order for customized cars (Hordeski,
2020). Every car need GPS tracker to analyse which route is having traffic to avoid that route.
Hence, more digital features will help the company to grow well with efficiency. In context of
Rolls Royce, they focuses on this factor and try to deliver those services and products to
customers which will fulfil their demand through adding new technologies and make their car
fully digitalized.
Autonomous driving- This megatrend is followed by Tesla where they have launched a
car which can drive by the technology and the car does not require any driver to drive.
Customers are getting attracted to such cars. Hence, it is one of the most successful megatrends
in automobile industry where companies focus to launch autonomous cars.
Electric vehicle- This is also one of the most successful trends nowadays where
customers are having more demand of electric vehicles which will run with the help of electricity
not with fuels. Hence, this will help to protect the environment (Pelle and Tabajdi, 2021). This is
sustainable trend in automobile industry. These type of vehicles run with the help of battery in
their vehicles and the battery gets charged with electricity. Companies are focusing to
manufacture those vehicles which will have better capacity of battery which means more
kilometres will be covered by the cars. On the other hand, now companies are focussing to
manufacture those electric vehicles which will get charged by solar power which means they will
get charged by sunlight.
Artificial intelligence in vehicles- this type of artificial intelligence in cars will help to
know the driver about their safety measures like in case the driver is forget to wear seat belts
than the artificial intelligence will help to know the driver that wearing seat belt is must by
indicating again and again till the driver wear seat belts. This type of artificial intelligence will
also help the drivers to know about their car insurance information such as when it will get
expired and what next should be done by driver to make their car insured.

Human machine interface- This is another megatrend in automobile industry to make
the productivity and profitability of this industry higher in future (Miglani, 2019). Here, most of
the drivers require to drive those cars which will have a good human interaction machine which
means when a driver communicate and speak something while sitting in a car than the machine
will reply the driver and make them feel like human interaction. The interaction of these
machines will design in such a way which will help the driver to feel that they are not interacting
with machine but they are interacting with another human sitting in car.
Survival and success factor for the automobile industry
Some of the survival and success factor in automobile industry are mentioned below-
Quality- It is one of the biggest factors for the success of an automobile industry. It is
essential for a company to provide quality products to their customers. It should not be there that
customers will face issues of damaged automobile parts every year (Kannan, 2018). Hence, the
quality of engine will be mainly focused by companies to gain higher satisfaction from
customers who further help them to develop the market demand of their products. In context of
Rolls Royce, they are already focused in providing quality to their customers and due to which
they have gained various loyal customers. They are known because of their quality in luxury cars
and their customers are satisfied with the quality of cars they manufacture for them.
Innovation- It is also one of the most essential factors for the success of automobile
companies. Innovation is one of the strong reasons which make changes in the demand of
automobile customers. New and unique design of cars will gain higher attention of customers in
market. The companies launching their new models with new and innovative features will must
have a higher growth in this industry. Customers in this industry are more attracted toward the
cars having more and unique features which is uncommon in other cars. Hence, the Rolls Royce
Company must focus to innovate their car designs and add those features which will satisfy their
customers more and help them to gain competitive advantage.
Cost- It is also essential for the automobile companies to focus on their cost incurred to
manufacture their cars. The cost effective car will always makes good amount of profit to
company. It is essential that the company will incur minimum cost in manufacturing their cars
but did not compromise upon the quality (Ghobakhloo and Fathi, 2019). Minimum cost means
having marketing research and analyse which supplier will provide them good quality of raw
material in minimum cost and start dealing with those suppliers. It is also essential for the

company that they will focus to hire those employees which will be ready to work with minimum
salaries as much as possible without compromising upon their skills and talents for automobile
knowledge. When the cost per unit will be manageable by the company than company will sell
their finished goods in lower prices compared to their competitors with effective quality and this
will further help them to gain competitive advantage and survive in the market.
Digitalization- It is new trend of automobile industry where more digitalized cars are
having more demand in the market. The companies which will identify the need for change for
digitalization and manufacture their cars with some advanced and high tech digitalization
features will survive in the industry and gain higher success. Today’s generation are more
preferred to buy those cars which will not only help them to travel from one place to another but
which will help them to solve their problems like GPS tracker in every car to analyse which
route is having heavy traffic to avoid that route (Han, Kwak and Kim, 2018).
Sustainability- It is also one of the most essential factors for the success of automobile
companies in the industry. Most of the companies are switching to manufacture fuel free vehicles
which will run by electrical chargeable batteries. This is one of the most effective steps to protect
the environment from harmful effects of gasses produced by cars due to fuels. Today, most of the
customers are also switching to buy electrical vehicles over fuel vehicles.
Customized changes- This can help the company to survive in the industry. The demand
of automobile customers is dynamic in nature which means it gets changed rapidly (Streeck,
2018). Hence, the companies which will make changes in their manufacturing process of
vehicles will get survive in the industry because at the end the main aim of the companies is to
fulfil customers demand and wants. Hence, manufacturing cars on the demand of customer’s
needs and wants will help the company to0 gain higher success. Rolls Royce is gaining higher
success in this industry due to this reason that they are manufacturing customized cars which
means they communicate with their customers first and get to know what kind of features and
technology is expected by the customers and then they try their best to manufacture car
according to customers’ needs and wants.

Conclusion
It is concluded that the covid pandemic impacted negative upon the automobile industry by
declining the sales of vehicles. This happen due to requirements of customers and they require to
invest more upon fulfilling g their basic needs first and then they will fulfil their luxury needs.
There are various kinds of megatrends in automobile industry like digitalization, electric
vehicles, artificial intelligence and many others. It is also concluded that few factors will help the
automobile companies to survive and gain success in the industry and these factors are quality,
innovation, cost effective and many others.

References
Books and Journals
Bapeer, S., 2018. An update of the megatrends and their implication for procurement (Master's
thesis, University of Twente).
Ghobakhloo, M. and Fathi, M., 2019. Corporate survival in Industry 4.0 era: the enabling role of
lean-digitized manufacturing. Journal of Manufacturing Technology Management.
Han, M.L., Kwak, B.I. and Kim, H.K., 2018. Anomaly intrusion detection method for vehicular
networks based on survival analysis. Vehicular communications, 14, pp.52-63.
Hordeski, M.F., 2020. Megatrends for energy efficiency and renewable energy. CRC Press.
Ishida, S., 2020. Perspectives on supply chain management in a pandemic and the post-COVID-
19 era. IEEE Engineering Management Review, 48(3), pp.146-152.
Kannan, D., 2018. Role of multiple stakeholders and the critical success factor theory for the
sustainable supplier selection process. International Journal of Production
Economics, 195, pp.391-418.
Maria, N. and et. al., 2020. The socio-economic implications of the coronavirus pandemic
(COVID-19): A review. International Journal of Surgery, 78, pp.185-193.
Miglani, S., 2019. The growth of the Indian automobile industry: Analysis of the roles of
government policy and other enabling factors. In Innovation, economic development,
and intellectual property in India and China (pp. 439-463). Springer, Singapore.
Pelle, A. and Tabajdi, G., 2021. Covid-19 and transformational megatrends in the European
automotive industry: Evidence from business decisions with a Central and Eastern
European focus. Entrepreneurial Business and Economics Review, 9(4), pp.19-33.
Streeck, W., 2018. 5. Successful Adjustment to Turbulent Markets: The Automobile Industry (pp.
113-156). Cornell University Press.
Online-
UK car production down -29.3% as corona virus slams brakes on sector, 2021. [Online],
Available through
< https://www.smmt.co.uk/2021/01/uk-car-production-down-29-3-as-coronavirus-slams-brakes-
on-sector/>