Eicher Motors Limited is operating in India in the automobile industry since 1982, providing the customers with a range of vehicles. The company mainly focuses on manufacturing of motorcycles but has also expanded in the domain of heavy vehicle production. The discussion entails the PESTLE Analysis of Eicher Motors, using this framework.

PESTLE Analysis of Eicher Motors

The below section covers the external analysis of Eicher Motors using the PESTLE analysis framework. The external factors include political, economic, social, technological, Legal and environmental forces which could have positive or negative impact on automobile industry.

Political Factors

The political instability due to riots and protests as well as global political turmoil constitutes a significant threat to Eicher Motors. Chenai and Tamil Nadu are the central regions where the manufacturing facilities have been set up by the company. Any disturbance in these regions in the form of riots or protests can affect the business operations.

The supply of different parts required to manufacture the vehicles is also influenced by the political climate of the supplier countries. The Russia and Ukraine war has resulted in issues with the supply of semi-conductor, while uncertainty in Europe impacted the commercial vehicle segment. This threatened the efficiency of company operations and manufacturing output (Eicher, 2023).

Favorable government policies can support the business to grow, as the investment in the country’s infrastructure can promote the higher requirement for commercial vehicles. Furthermore, the decisions made by the government officials related to GST and subsidies affects the price structure of the vehicles.

Trade relations are supported by positive policies of the government, along with stable political environment on a global scale. The company has achieved significant growth over the years due to the policies that facilitated its development. However, the recent disruption in the international market has resulted in a decline in exports made by Eicher Motors.

Economic Factors

The inflation has exerted pressure on the company in terms of the raw material, operational cost and manufacturing (Jethmalani, 2021). The prices of raw materials as well as the energy has increased which has added to the financial requirement for managing operations. Though the economic growth of India is significant, the inflationary pressures are unfavorable for businesses.

There was also a shift observed in the consumer behavior of the people, as inflation made it difficult to spend on the vehicles. The disposable income decreased which made it difficult for the consumers to purchase vehicles, while managing their spending on necessities. The company also had to deal with increasing cost of labor as increments were offered to the workers.

Covid-19 has also disrupted the economic stability of the country, which ultimately effected Eicher Motors sales. A rising interest rate added further complication industry dynamics. The sales achieved by the company have increased as the pandemic induced economic slowdown reduced, indicating positive development in the economic environment.

Social Factors

There are certain social trends that effect the production and design related decisions taken by the automobile companies. Eicher Motors has recognized the emerging potential of the mid-weight motorcycle demand and has invested in bringing improved features to the market. This increase in demand is related to the expanding market of the young people.

In addition, the positive economic trends such as better income prospects have made it easier for the customers to purchase the two-wheelers. The potential customers are also taking benefit from the availability of credit options which has facilitated the increased buying behavior among the target market.

Another social factor that carries implications for Eicher Motors is the rising demand of E-mobility, which is supported by the government initiatives. Taking this increased emphasis on eco-friendly vehicles, the management has made efforts to develop its sales capacity in this domain through creating collaboration with Amazon (Livemint, 2023).

Technological Factors

The manufacturing of high-quality vehicles that have up to date features and also give optimal performance is achieved through the incorporation of relevant technology in the company. Eicher Motors has been focusing on the development of electricity-based technology to offer its buyers with environment friendly commercial vehicles.

The management has also recognized the potential that AI and machine learning holds for the organization. These tools are being utilized for understanding the market demand patterns and using the forecast to handle the production process. The organization also understands that in order to stay relevant to the market needs, it has to invest in technology driven R&D (Eicher, 2023).

Another notable example of the application of technology in vehicle manufacturer is the introduction of Eicher Live. This feature is beneficial for the commercial vehicles as it analyze and provides data related to the performance of the vehicle along with information that helps in improving fuel efficiency (Eicher, 2020).

Legal Factors

The company adheres to the laws and regulations that are applicable on the automobile manufacturing sector. Maintaining quality of the vehicles in accordance to the outlined standards is of prime importance to the organization. For instance, the emissions generated by the vehicles need to be within the permissible limits.

Employee safety and employment terms and conditions formulate another key area for Eicher Motors. The selection of supplier is also based on the analysis of their degree of compliance to the legal framework. Furthermore, the collaboration and joint ventures other companies, such as the venture with Volvo needs to be aligned with the relevant legal guidelines (Eicher, 2023).

Environmental Factors

The environmental initiatives by the company include manufacturing eco-friendly commercial vehicles and motorcycles that use alternate source of energy. The company has also incorporated updated technology to reduce the emissions of the vehicles to follow with the related guidelines. Moreover, the emissions related to company operations have also been curtailed.

The management has also started shifting towards solar energy, for instance, the plant based in Vallam is deriving more than 50% of the requirement through renewable energy sources (Eicher, 2023). In addition, emphasis on sustainable logistics and production through procurement of recycled material supports the environment friendly approach of the company.

Conclusion

Eicher Motors is operating in a highly favorable business environment as the political, social and technological factors are supporting the business to achieve high sales. The above analysis indicates that economic factors and the pandemic has lowered the sales, but the company has been able to increase its productivity and sales in the post-pandemic time.

References

• Eicher (2020). 100% Connected For 100% Performance. Retrieved from https://www.eichertrucksandbuses.com/blog/100-connected-for-100-performance
• Eicher (2023). Integrated Annual Report. Retrieved from https://eicher.in/content/dam/eicher-motors/investor/financial-and-reports/annual-reports/Annual%20Report%20Financial%20Year-2022-23.pdf
• Jethmalani, H. (2021). Rich valuations, margin pressures may make it a bumpy ride for Eicher shares. Live Mint. Retrieved from https://www.livemint.com/market/mark-to-market/eicher-motors-down-4-margins-hit-by-cost-inflation-speed-bump-11613018438112.html
• Livemint (2023). Eicher Partners and Amazon to introduce electric trucks for middle and last-mile deliveries. Retrieved from https://www.livemint.com/companies/news/eicher-partners-and-amazon-to-introduce-electric-trucks-for-middle-and-last-mile-deliveries-11691631790373.html