Audit of Automobile industry

Topics: Automotive industry, Japan, Renault Pages: 5 (1080 words) Published: April 17, 2014
United Kingdom has been a colossal manufacturer of automobiles in last 10 years. Producing more that 8 million vehicles and engines and exporting more than 80% of these, UK automobile industry stands as a driving force of its economy. The automobile industry generates a yearly turnover of around 55 Billion Pounds and largest value from exports. Nevertheless, the country that has automobile players like, Alexander Davis, Aston Martin, Bentley, BMW, Ford, Honda, Jaguar, etc., is still said to be under a vast influence of dwindling supply chain and its dependence on foreign market. Let us scrutinize the situation of UK automobile industry by doing an internal and external environmental audit. INTERNAL AUDIT

Internal environmental audit is performed to understand the position of industry with respect to its own environment. SWOT is one of the tools used to perform internal audit which is employed for studying the strengths, weaknesses, opportunities and threats of the subject. STRENGTHS

The strengths of UK’s automobile industry:
1. Largest Revenue generating sector
UK’s auto industry yearly contributes around 12 Billion Pounds to the economy of UK by generating revenue of more than 55 Billion Pounds, annually.

2. Diversity in products
Products manufactured by UK automobile industry range from various premium and sports cars to commercial vehicles and engines. Around 80% of this is exported, yearly.

3. Chief employment generator
The automobile industry in UK is a major employment generating sector, offering wide range of employment opportunities in manufacturing and R&D.

1. Disparity between manufacturers
UK’s automobile industry is known for having an austere disparity between its manufacturers, which stands out to be a major weakness of this industry.

2. Depleted Supply Chain
Supply chain of UK automobile industry is going through an appalling phase. A potent supply chain and its capacity is an important factor in determining market expansion and foreign investment. Extensive improvement, in the supply chain of UK automobile industry, is essential.

3. Dependence on foreign markets
As the UK car industry exports around 80% of its produce to foreign markets, it is under the risk of getting directly dependent on economic crisis of other markets. UK motor industry should focus on reaching as many markets as possible to ease risk.

1. Providing eco-friendly vehicles
UK’s automotive industry has been constantly active in innovating new products to provide a safe and eco-friendly environment, hence opening up string of opportunities.

2. Investments by Global OEMs
In the year 2013 many global equipment manufacturers have announced investments in United Kingdom. Through these strategic alliance UK auto industry is believed to benefit significantly.

1. Soaring cost of Raw Material
The cost of raw material has been ever rising; hence, the manufacturers pay more for procuring raw material every year. This eventually raises the price of automobiles.

2. Increasing competition
With new companies coming in UK along with foreign direct investment the competition is bound to soar, ultimately increasing threat for existing companies.

Bottom-line is that in spite of challenges faced by automobile industry in last decade, it is resurging from its downfall and looking forward to producing more number of vehicles this year.

The automobile industry in UK has been tactically working towards creating new opportunities and enhancing technology. It has extensively slogged to make UK more attractive for foreign investors. Through automotive industry’s external analysis, we shall study influence of external factors on the industry. The two major models discussed here are PESTLE Analysis and Porter’s Five Forces’ Model.


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