Macro Events Affecting The USAto Industry

Using the PESTL framework we are able to analyze the macro events affecting the U.S. auto industry. To start, there are several political and legal aspects influencing the auto industry, mainly the regulations on emissions and trade restrictions on alternative fuel sources. For example, California passed a mandate in the 1990’s introducing zero-emission vehicles, which affects what types of cars can be produced for sale in California. In addition, the U.S. government has barred biofuels produced in Brazil from being imported into the U.S. to protect domestic producers. This means that this alternative fuel source, which is not able to be sustainably grown in the U.S. or imported from another country, can’t be an option for U.S. consumers.

The number of cars sold in the wake of the recession dropped dramatically, from 18 million in 2000 to 11 million in 2008. This means that the auto industry was not creating enough revenue because people were simply not purchasing cars. The whole recession had an effect on the industry, and when wages, jobs, and consumption slowed down, this greatly affected the auto industry. The rising price of oil also had a large effect on the auto industry, since consumers couldn’t pay for the high costs to fill up a tank, so they didn’t want to purchase cars that were not fuel efficient. In terms of jobs, the auto industry was running out of money to pay employee benefits and retirements. Due to rising healthcare costs, the funds that paid the full cost of health insurance premiums became depleted, and compared to foreign automakers, U.S. companies had to cover legacy costs for employee healthcare, as well as pensions. Finally, the automakers had to make large concessions to the Unions (which can be seen as a political force as well) and this drove up hourly wages and benefits. In the end, all of these economic factors hurt the profits of the

auto industry is attractive, although there are a few factors that don’t make it as attractive as it once was. There are not many companies entering the market, and the ones that do are creating differentiated products, such as only being electric or hybrid. Although substitute alternatives do exist, such as public transportation, bikes, and airplanes, automobiles are still an efficient way to travel and many people rely on them. This means that there will always be a need for cars, at least in this century. Finally, rivalry among competitors can be beneficial to consumers because this means that prices will be lowered and the innovative products will be developed in order to be the best company on the market and gain the most market