Key Issues in the UK Automotive Industry

This report discusses the key issues affecting the automotive industry in the UK, including the increase in demand for vehicles and unemployment. It categorizes these issues using PESTLE analysis and explores their impact on businesses.

Report

Table of Contents
INTRODUCTION...........................................................................................................................3
Key issues....................................................................................................................................3
Categorizing the issue with the help of PESTLE analysis...........................................................4
Impact on the businesses..............................................................................................................5
Reflection.....................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................7

INTRODUCTION
Automotive sector is consisted of the different types of organizations and companies that
are involved in producing, designing, manufacturing and selling motor vehicles. It is considered
as one of the largest economic sectors in terms of revenue (Bailey and De Propris, 2017).
The Report will outline key issues that are affecting the auto-mobile industry in UK. It
will further categorize the key issues with the help of PESTLE framework, impact of key issues
on the business and reflection etc.
MAIN BODY
Key issues.
There are various types of issues or challenges that are faced by auto mobile industry of
UK. These are described below.
Increase in demand :
One of the major issue is increase in the demand for the auto mobiles. The industry is one
of the biggest exporter of cars across the world. United Kingdom has special relationship with
auto mobile industry. The brands of auto mobiles that are originated in UK hold standing around
the world. Although, the industry of auto-mobile has been affected by economic recession the
automotive industry of UK has made a strong recovery (Mazur, C., and et.al, 2015). In year
2017, the industry has contributed 20.2 billion pounds to the overall economy of the country. It is
approximately double of the turnover in year 2010. Further, as per the provisional results the
industry of motor vehicle had generated nearly 70 billion euros in overall sales in year 2017. For
example - The demand of auto-mobiles has increased due to which brands such as Jaguar Land
Rover, Nissan both has manufactured approximately 1.52 passenger cars in year 2018. The fact
is that the growth in electric vehicles is more as compared with the growth in demand of sports
utility vehicles. In Europe, the sales of sports utility vehicles is approximately 34%. The reason
of increase in demand lies in status that is advertisement such as muscular dynamism rather than
due to specific capabilities or price which sports utility vehicle can offer. From past two years
there is a sharp increase in the demand of SUV's (The UK Automotive Industry, 2019).
Unemployment :
The condition of unemployment happens when the individual is actively finding the job
is unable to find work. The basic measure of unemployment is the rate of unemployment. There
are various factors due to which the level of employment in automotive industry is declining in

UK. Such as Bridgend ford is closing its engine plant, Swindon Honda has been closing its plant,
Sunderland Nissan has pulled the production of a new vehicle, Jaguar Land Rover has planned to
cut down jobs. Due to various reasons the level of employment is stagnant in the country. In year
2018, only 168000 individuals are employed in manufacturing of the vehicles. Moreover, in auto
industry only 823000 people get employed in different countries (Graham, G., and et.al, 2016).
The automotive industry has been one of the major outspoken in last year over Brexit.
Approximately more than 100,000 jobs in a death due to a thousand cuts. Further, Honda has
announced that, it will shut down its Swindon Factory in year 2021 Moreover, Ford will be
closing its Bridgend engine plant in South Wales in September 2020. This will result in loss of
nearly 1700 jobs. Skilled and talented workforce is a major factor required for producing
vehicles in auto-mobile industry. If not, companies should look for the support from government
to safeguard the jobs. In year 2019, 44,500 people are employed in six major car manufacturing
companies such as Toyota, BMW, Nissan, Jaguar Land Rover and the rest are coach makers and
bus makers, other suppliers, engine factories etc. So far thousands of job have been lost such as
1700 at Ford in Bridgend, 3500 at Honda in Swindon, 4500 at Jaguar Land Rover etc.
Categorizing the issue with the help of PESTLE analysis.
PESTLE analysis -
It can be defined as the framework that is used for monitoring and evaluating the factors
that are existing in macro environment that may affect the performance of the business. With the
help of PESTLE analysis, the above issues can be categorized into political and economic factors
(Sabet and et.al, 2019).
Political factor :
According to Britain's motor society, leaving the European Union will make the progress
of past decades reverse and may also wipe out small suppliers. This will affect the level of
employment in the country. Most of the manufacturers of auto mobile has fear of competitors in
the industry that may put a risk due t departure of Britain from European Union. This has
affected the level of investment in the industry that are facing multi-million pound bill for
developing plan for consequences of Brexit (Jetin, ed., 2015). Due to Brexit various companies
have to shut down plant and this has created negative impact on unemployment. Further, there is
a lack of skilled and talented workforce in the country which is also a major factor which is
influencing automotive industry in UK. Moreover, uncertainty created by Brexit has drive the

loss of jobs across the country. The number of people working in manufacturing industry has
been decline as compared with past four years. Further, labour market has revealed the decline in
employment of nearly 56000 jobs to the end of August 2019 as compared with previous quarter
and it is the biggest fall in four years. Due to these reasons, the issue of unemployment is
categorized under political factor.
Economic factor :
The increase in demand of the vehicles such as electric vehicles, sports utility vehicles
etc. is categorized under the category of economical factor because demand of vehicles is also
influenced by these factors such as purchasing power of customers, rate of interest in borrowing
funds, demographic factors etc (Bharadwaj, 2018).
One of the major factor is purchasing power of buyers that affects the demand of
vehicles. From year 2017 and 2018, there is an increase of 0.7 % in the purchasing power of
people living in UK. England is having the highest unadjusted disposable income with 19878
pounds. Further, the increase in wages and due to the rate of inflation remain muted, households
are expected to promote the economic growth of the country. All these factors has resulted in
increase in the demand of electric vehicle within next 3 years. It means that the country will have
to secure investment to ensure consistent supply of batteries in the future.
Impact on the businesses.
The key issues that are increase in demand and unemployment will impact the operations
of companies operating their business in auto mobile sector. The positive and negative impact of
the issues are described below -
Positive impact -
There are various positive impacts of increase in demand of vehicles on companies
operating in automotive sector.
For Example -
Nissan : It belongs to automotive industry. It offers various types of vehicles. The parent
company of Nissan Motor Manufacturing, UK is Nissan. It was founded in year 1984.
Headquarter of company is located in England, UK. The demand of the vehicles offered by the
company has reached up to 93.52 million vehicles in fiscal year 2017 from fiscal year 2016
(Annual Report, 2018). Further, in year 2018, the demand of vehicles of the company is expects
to increase faster as compared with other companies in the industry (Jacobs, 2019). The increase

in demand has created a positive impact on the turnover of organization. In year 2017, the total
sales volume of Nissan vehicles in Europe was 756 thousand units. Net sales of the group has
increased by 1.97 % from year 2016 to year 2017. Further, there is an increase in gross profit of
the group by 4.15% from year 2016 to year 2017.
Negative impact -
Businesses are affected by the rate of unemployment in the country. It will have negative
impact on sales, profit and growth of companies that are involved in auto mobile sector
(Guidolin, Orlov and Pedio, 2018). For Example - Toyota : The company operates the business
in automotive industry. Headquarter of the firm is located in England, UK. The parent company
of Toyota is Toyota Motor Corporation. The issue of unemployment will impact the sales and
revenue of the business in negative way. In year 2017, 1.56 million people are classified as
unemployed. The rate of unemployment in UK is 4.7%. Lack of skilled employee's will impact
the growth prospects of Toyota. Therefore, management will have to conduct training
programmes for unskilled workers to improve their current level of skills. This will increase the
expenses of the company.
Reflection.
I have faced various challenges and barriers while preparing this Report. I have faced
major challenge in writing introduction and conclusion of the Report. I have make efforts to
include all the major points regarding the content of the report in introduction part. So that, it
will engage the readers to read the content. Further, I have focus on writing conclusion in
effective way by writing it in summarized manner (Rawlinson and Wells, 2016).
Another major challenge I have faced while preparing the Report is related with the
structure. My tutor has supported me to present the content in right format that includes
introduction, main body with heading and subheadings, conclusion etc. It helps me to write the
content in coherent and logical manner and also in consistent way with conclusion supported by
evidence. Another major challenge I have faced is while collecting the facts and figures related
with purchasing power, demand of auto-mobiles, sales of vehicles of the company Toyota and
Nissan etc. from all the relevant sources (Martin and et.al, 2017).
Furthermore, after gathering the relevant details regarding different topics I have
analysed that whether I can support my views and answers with the figures and information or
not. I have realized that, the method adopted by me has supported me in writing the answers in

appropriate manner. Another thing I have focused on is to minimize the level of Plagiarism. I
have made various efforts to reduce the level of plagiarism such as I have not copy paste the
matter from any source. Moreover, I have identified that what things are to be cited and which
things are not required to be cited. Other than this, I ensure that there is no grammatical mistakes
in sentences of the content.
Further, I have also read various types of books, magazines and journals related with
automotive industry in UK. My friends and family members has supported me a lot in writing
the Report in own words without plagiarism. I have realized that I lack certain type of skills and
abilities. Firstly, I have analysed that I lack effective communication skills, research skills etc.
Moreover, I have analysed that I also possess certain skills. To improve my communication skills
I have read books, magazines based on English language that has helped me a lot to improve my
communication as well as writing skills both. Moreover, I have also attended classes of English
subject in my college. The support of faculties, tutor, friends and family members help me a lot
in writing this Report.
CONCLUSION
From the above Report it has been concluded that the major issues that automotive sector
is facing is increase in demand of vehicles and unemployment in the country. Further, the
turnover of auto mobile companies has been nearly doubled as compared to sales in year 2010
(Bailey, 2017). It has been analysed that, the increase in demand of electric vehicles is more as
compared with the growth in demand of sports utility vehicles. Further, the Report has described
that there are various companies that will shut down their plants in near future. This will also
affect the level of employment in UK. Further, the two issues has been categorized into political
and economic factors.
REFERENCES
Books and Journals -
Bailey, D. and De Propris, L., 2017. Brexit and the UK automotive industry. National Institute
Economic Review. 242(1). pp.R51-R59.
Bailey, D., 2017. Brexit, the UK Auto Industry and Industrial Policy. Regions Magazine. 306(1).
pp.4-5.
Graham, G., and et.al, 2016, October. How is Big Data Transforming Operations Models in the
Automotive Industry: A Preliminary Investigation. In Proceedings of the Eighth International

Conference on Emerging Networks and Systems Intelligence (pp. 65-68). International Academy,
Research, and Industry Association.
Guidolin, M., Orlov, A.G. and Pedio, M., 2018. How good can heuristic-based forecasts be? A
comparative performance of econometric and heuristic models for UK and US asset returns.
Quantitative Finance. 18(1). pp.139-169.
Jacobs, A.J., 2019. EU Expansion, Brexit, and Near-Term Prospects for European Car Plants. In
The Automotive Industry and European Integration (pp. 405-444). Palgrave Macmillan, Cham.
Martin, N.P.D., and et.al, 2017. Emissions, performance, and design of UK passenger vehicles.
International Journal of Sustainable Transportation. 11(3). pp.230-236.
Mazur, C., and et.al, 2015. Assessing and comparing German and UK transition policies for
electric mobility. Environmental Innovation and Societal Transitions. 14. pp.84-100.
Rawlinson, M. and Wells, P., 2016. The new European automobile industry. Springer.
Reinhardt, R., and et.al, 2017, June. Macro environmental analysis of the electric vehicle battery
second use market. In 2017 14th International Conference on the European Energy Market
(EEM) (pp. 1-6). IEEE.
Sabet, E., and et.al, 2019. A strategic and global manufacturing capacity management
optimization model: A scenario-based multi-stage stochastic programming approach. Omega.
Online -
Annual Report. 2018. Online Available Through :
<https://www.nissan-global.com/EN/DOCUMENT/PDF/AR/2018/AR18_E_All.pdf>
The UK Automotive Industry. 2019. Online Available Through
:<https://www.statista.com/topics/1982/the-uk-automotive-industry/>