The demand drivers in the industry are affected by the market trends and the forces in the market. But the demand drivers can be analyzed with the PESTLE analysis (Shleifer, Andrei, Vishny, Robert W.,1997):
- Political factors: The European Union has always introduced legislations for the automotive retail industry and will continue doing so, thus, political aspects affect the demand in the industry to a great extend.
- Economic factors: The interest rates keep on fluctuating and this affects the disposable income of the consumers, it reduces the buying power and due to which demand of cars fall. The diversity in taxes has affected global market convergence overall. The garages need to exploit the market for generating new revenues and the latest trend has been sale of car financing.
Social/Demographic/Cultural factors: The UK market is extremely domesticated and now China and Latin America are emerging and growing markets. Around 4.3 million vehicles have been sold in China in 2006. They have replaced Japan as being one of the largest markets for automotives. Prices for cars in the UK have fallen by 10% since 1999 because the manufacturer competition increased immensely and the Competition Commission in UK is responsible for it. The retail industry has faced a dilemma since all new cars are very advanced and much stronger so the maintenance and repairs of cars has reduced thus; garages have come to a halt.
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