PESTEL Analysis for Automobile Industry in Europe Sample Essay

PESTEL Analysis for Automobile Industry in Europe

Due to the intricacy and brisk changes noted in the European automobile industry, it is difficult to predict factors that might affect the industry. Though this is the case, PESTEL analysis can be carried out to establish the key drivers used to predict future scenarios.

Political factors

This includes probable government regulations and laws as well as security restrictions and measures applied to the industry. Some of the political factors that affect the European automobile industry include the following:

  • Regulations and laws that have influenced the industry since its very start. These revolve around environmental norms and manufacturers are supposed to be privy to environmental issues while manufacturing cars.
  • Government foreign policies and taxes are crucial for the industry and they help determine the success possibility of the industry in relation to global market.
  • Government subsidies
  • Duty and taxes

Economic factors

These are factors related to economic growth, exchange rates and business setting. These factors include:

  • Production of excess number of cars which increases the marketing revenue and the design of the new product.
  • Diversification
  • Pricing pressure because of new products proliferation and excess capacity
  • Strategic alliance and mergers
  • Economies of scale
  • Decrease in euro exchange rate has also hampered car makers in Europe in a major way
  • Surplus buying power and capital in developing economies such as China and India have made Europe a global market place.

Social factors

This includes changes in demographics and culture noted globally apart from the capacity and buying pattern of consumers. Some of the common factors in this regard include:

  • Changes in taste and fashion
  • Change in the buying pattern of consumers as a result of recession especially in mature markets
  • Changes in customer predilection from the automobile been a status symbol to the need of cars that guarantee fuel efficiency and low emission
  • Awareness of harmful emissions caused by automobiles and increase of environmental issues.

Technological factors

  • Increasing the efficiency of manufacturing plants
  • Boosting safety
  • E-commerce
  • Safety
  • Use of new sophisticated technology to acquire competitive advantage
  • Restriction or modification of technology that causes pollution


  • Increased awareness of global warming awareness, burnout and greenhouse effects
  • Shift in the preferences and tastes of consumers towards cars that are fuel cells, hybrid cars and eco friendly
  • Strict application of EURO norms in curbing pollution in countries

Legal factors

  • Strict pollution laws and restrictions set in the European markets


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