Reprot of Automotive Industry in Uk
1.0 SUMMARY
This report has been requested by the Institute for the Examination of Public Policy (IEPP) to report on the UK government’s newley declared policy on the development of ultra- low emission vehicles. The report explains in details the economic structure of the global mass volume car industry, explains and analyses the government policy of attempting to foster the development of a significant ‘Tier 1’ electric car component supplier in the UK and concludes with our group expert analysis whether this policy is going to lead to the establishment of high added value electric vehicle component industry in the country that will provide significant levels of employment.
2.0 METHODS This report has been created based on various articles, journals, textbooks, online websites as well as economic lectures that would be referenced in the end of this report.
3.0 ECONOMIC STRUCTURE OF THE GLOBAL AUTOMOTIVE INDUSTRY
3.1 MARKET STRUCTURE OF AUTOMOTIVE INDUSTRY- THEORY
The market structure of automotive industry is dominated by a small number of large sellers. This type of market structure is called oligopoly. The seller can change the price of the product, however the reaction of the competitors is not known. The competitors in the act of price change may increase or decrease prices and volume as a direct respond, or as well they could remain stable. Oligopoly in the automotive industry is continuous in product differentiation that means that products are different one from another. Oligopoly allows competition in a major market although the product is mostly identical that leads to usually independent competition. Prices mostly are set up by the market itself and if any of the competitors decide to increase the price of the product that will lead to lose market share and what is more lose of profit.
Automotive industry is very global that contain large centralised factories with suppliers from all over the world. Tier
This report has been requested by the Institute for the Examination of Public Policy (IEPP) to report on the UK government’s newley declared policy on the development of ultra- low emission vehicles. The report explains in details the economic structure of the global mass volume car industry, explains and analyses the government policy of attempting to foster the development of a significant ‘Tier 1’ electric car component supplier in the UK and concludes with our group expert analysis whether this policy is going to lead to the establishment of high added value electric vehicle component industry in the country that will provide significant levels of employment.
2.0 METHODS This report has been created based on various articles, journals, textbooks, online websites as well as economic lectures that would be referenced in the end of this report.
3.0 ECONOMIC STRUCTURE OF THE GLOBAL AUTOMOTIVE INDUSTRY
3.1 MARKET STRUCTURE OF AUTOMOTIVE INDUSTRY- THEORY
The market structure of automotive industry is dominated by a small number of large sellers. This type of market structure is called oligopoly. The seller can change the price of the product, however the reaction of the competitors is not known. The competitors in the act of price change may increase or decrease prices and volume as a direct respond, or as well they could remain stable. Oligopoly in the automotive industry is continuous in product differentiation that means that products are different one from another. Oligopoly allows competition in a major market although the product is mostly identical that leads to usually independent competition. Prices mostly are set up by the market itself and if any of the competitors decide to increase the price of the product that will lead to lose market share and what is more lose of profit.
Automotive industry is very global that contain large centralised factories with suppliers from all over the world. Tier
References: http://www.independent.co.uk/news/business/analysis-and-features/uk-car-market-stuck-in-reverse-1664459.html http://www.smmt.co.uk/industryissues/index.cfm?catid=3725&sid=259&iicatid=P_1002 http://www.berr.gov.uk/files/file51139.pdf