Introduction
The auto industry is among the biggest economic sectors of the global market. It undergoes various shifts and transitions due to influencing factors, which might originate from either an external or internal environment. External forces play an essential role in navigating current trends in the auto industry because technological advancements can have a direct impact on the given sector.
Main body
Software producers and chip manufacturers are acting as a primary external force or a technical environment that makes cars more automated. Many functions that used to be performed manually are now being fully encoded in a car’s central software program (Stanford, p. 199). Another external force is the concept of driverless autos, which are being developed and improved on a daily basis. It can be considered as an economic force because it will reduce the costs of high death and injury rates in car accidents (Kotler and Armstrong, p. 71). For example, Waymo, which is a self-driving car project initiated by Google, is leading the market with innovative solutions (“Technology”). The main goal of this idea is to reduce the inefficiency of traffic and the risks of car accidents.
It is important to note that there are also negative external forces that impact the auto industry. Among them, there are demographic and cultural forces, which allow people to have more trust in others and share their possessions (Stanford 201). For instance, car-sharing platforms enable people to enjoy the benefits of a vehicle without actually purchasing it. These platforms, such as Uber and Lyft, expand the car rental market, which directly decreases the demand for new cars (Stanford, p. 213). Another negative external factor, which can be categorized as the natural and political environment, is the regulations that tax or limit fossil fuel-based cars. Gasoline cars make up a significant portion of auto industry sales, thus, their limit can hinder the sales rate.
Conclusion
In conclusion, the auto industry is affected by positive external factors, such as software development and a self-driving car concept, and by a negative one, such as car-sharing and anti-fossil fuel policies. These influences can be categorized as political, technical, natural, cultural, demographic, and economic.
Works Cited
- Kotler, Philip, and Gary Armstrong. Marketing: An Introduction. Prentice Hall, 1997.
- Stanford, Jim. “Automotive Surrender: The Demise of Industrial Policy in the Australian Vehicle Industry.” The Economic and Labour Relations Review, vol. 28, no. 2, 2017, pp. 197-217.
- “Technology.” Waymo, 2019.