Automobile industry was started in 1890s when technology was at the stages to combine steam engine and road wagons after long efforts of many decades and produce cars commercially in United States and Europe. However it was early 1900s when car sales witnessed first boom. France dominated the automobile industry during first boom and became largest manufacturer and exporter of automobiles. One of the biggest reason of France`s dominance of automobile industry was hesitation of other countries to invest in automobile sector at that time. However Britain and Germany overtook the position of France as biggest automobile producer and exporter during economic recession of 1908.  United States also followed the trend and also started producing automobiles. France and Germany remained the largest manufacturer and exporter of automobiles till 1980s. The automobile originally manufactured to cater upper middle class became need of every house hold in 1980s. (Hillary, 2015) The automobiles technology kept evolving and there was race to produce automobiles in least possible cost to make it affordable for middle class.

Today`s automobiles are more safe, durable, convenient and less costly as compared to the past. The automobile industry currently entering into new era of technical innovation by producing smart and driver less automobiles.   Automobile industry like any other industry is affected by macro environmental factors like Political, Economical, Social, Technological, Legal, and Environmental factors.  The Analysis of these factors can help businesses in developing appropriate strategies in order to minimize the effects of these factors on business. (Campbell & Craig, 2005)

Political Factors

The automobile manufactures in developing countries are continuously under pressure by Government. To make automobiles more affordable for common man despite increasing costs. Automobile sector has been big source of revenues for Government. Around the world that has made it difficult for automobile manufacturer to remain competitive globally. 

Furthermore increasing middle class in developing countries has resulted in increased demand of automobiles however political instability and corruption has been big hurdle for automobile manufactures that has made car manufacturer to avoid investing in those countries despite growing demand. (Kochhar, 2015).Globalization has resulted in open access to other market that has resulted in both opportunities and challenges for automobile manufacturers. The Challenges in the terms of competition and opportunities in the term of access to larger markets. (Campbell & Craig, 2005)

Economical Factors

Automobile industry is highly affected by economic conditions. There has been number of economic crises in the past and each of them adversely affected the sales of automobiles especially in developed countries. However increasing level of income globally especially in developing countries has resulted in boost in sales of automobiles. (Sivak, 2009)  Although automobile sales in developed countries are stagnant as most people there already own automobiles however innovations in automobile industry may boost the sales of automobiles again in developed countries.

Social Factors

The automobile industry has revolutionized the whole society. The automobiles that were initially produced for upper class is now became need of every one. Hundreds of thousands of people globally are associated with automobile business. it has changed our lives in many ways. Automobiles industry had played vital role in progress and growth of economies globally. 

Automobiles are now important part of society.  However People in developed countries has now started to believe that automobiles has adversely affected their health and environment. (Booze, 2015) That`s why people in United States and Europe are turning towards healthier alternatives like cycles to travel short and medium distance

Technological Factors

Automobiles has gone through different stages of innovation since first produced.  As customers are becoming more and more aware of technology they expect automobile manufacturers to equip automobiles with latest accessories and features that has became one the biggest challenge for automobile manufacturers. With some companies experimenting with smart, driverless and flying cars it has become difficult for automobile manufacturers to keep up with the pace of technological advancements.  Another factors affecting automobile industry is internet, customers are now aware of latest technological innovations in automobile industry through internet and it has become difficult for automobile manufacturer to not to follow global trends. (Sivak, 2009)


Automobile safety has been biggest concern for law makers globally. Therefore there has been global trend of imposing different rules, regulation and quality standards for automobiles. The automobile manufacturers are continuously under pressure to comply these rules, regulations and law. Furthermore there are different laws in different countries that does not allow manufactures to increase prices without govt`s approval that sometimes makes it difficult for them to operate in those countries. Although automobile sector in developing countries is growing rapidly but most of these countries have laws related to automobile sectors that make it difficult for new companies to start business in these countries.

Environmental Factors

Automobiles sector is concerned as biggest culprit that is damaging to environment. With increased knowledge of environmental issue customers are concerned with effects of automobiles on environment (Booze, 2015).  As result car manufactures has started to produce environmentally Fridley cars but market share of these automobiles is very less. However there will be growing demand of environmentally friendly automobiles in future.


Booze, A. (2015). Challenges Facing the Global Automotive Industry. Retrieved 16 December 2015, from http://Challenges Facing the Global Automotive Industry

Campbell, D., & Craig, T. (2005). Organisations and the business environment. Amsterdam: Elsevier Butterworth-Heinemann.

Kochhar, R. (2015). 6 key takeaways about the world’s emerging middle class. Pew Research Center. Retrieved 16 December 2015, from

Sivak, M. (2009). FUTURE DEMAND FOR NEW CARS IN DEVELOPING COUNTRIES: GOING BEYOND GDP AND POPULATION SIZE. The University of Michigan. Retrieved 16 December 2015, from

T, H. (2015). Automobiles – Facts & Summary – Retrieved 16 December 2015, from

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