Porter’s Five Forces Analysis of Automotive Industry 

The automotive industry deals with business areas involved in the production and manufacturing of vehicles. They’re like modification, repairing, selling, marketing, manufacturing, development, and design. Today, we’ll discuss Porter’s five forces analysis of automotive industry; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

• Areas of Automotive Industry
• Repair and maintenance
• Accessories and automotive parts
• Used cars trading
• Automobile dealers
• Electrical and electronic equipment used in the vehicles
• Body Manufacturing

Porter’s five forces analysis would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s automotive industry Porter’s five forces analysis of automobile industry as follows;

Porter’s Five Forces Analysis of Automotive Industry 

Let’s discuss Porter’s Five Forces analysis of automotive industry as competitive forces in strategic management as follows;

Bargaining Power of Suppliers in Automotive Industry

The bargaining of suppliers is lower in the Automotive Industry as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the retail Automotive Industry Porter’s five forces analysis of automobile business are as follows;

I-Many Suppliers

There are many suppliers available in the automobile industry and often they are small and very few of them are large. Easy availability of raw supplies and materials like spare parts, electrical and electronics components, plastic, metal, paint, rubber, nuts, bolts, and many others. However, they aren’t rare items and the automobile companies could easily find them locally and globally.

II-Alternative Material

In case of unavailability and shortage of one particular type of material or supplies; automobile manufacturers have the option of using the alternative material like plastic for method or something else. The availability of alternative options further decreases the bargaining power of suppliers.

Bargaining Power of Buyers in Automotive Industry

The bargaining of Buyers is moderately high in the automobile business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of buyers in the retail Automotive Industry five forces analysis of automobile industry are as follows;

I-Big Consumer Market

The automobile user market is very large in various countries across the world. Usually, they are highly price-sensitive when it comes to purchasing the vehicle. In the high-income and developed countries, customers prefer luxury and premium-priced vehicles. On the other hand, customers would economical and affordable vehicles in the lower income and developing countries.

II-Large Fleet Orders

Usually, one automobile user has limited bargaining power. However large corporations, governments, and countries procure large fleets of automobiles, and it increases their bargaining power. In order to regulate the automobile industry, governments and countries introduce laws and taxes for automotive companies to manufacture safe and efficient mediums of transport.

III-No Switching Cost

Ordinary buyers and customers have multiple automobile brand options in both premium and affordable price range categories. They can easily find their required vehicle relevant to their budget and needs, and it increases the bargaining power of buyers.

Threat of New Entrants in Automotive Industry

The threat of new entrants is Lower in the clothing business and retail textile industry as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the automobile business five forces analysis of Automotive Industry are as follows;

I-High Capital Investment

When it comes to manufacturing the automobile, the production of vehicles requires heavy capital investment. It comprises various types of costs and expenses like; tools and equipment, workforce, regulatory compliance costs, research and development, marketing, branding, and other running costs and expenses.

II-New Idea or Technology

The new entrants in the automobile industry are only possible if the new firm comes with the latest technology or unique design and idea that would bring revolutionary changes in the automobile industry. Just like Tesla Motors did in the early 2000s with the idea and development of electric vehicles; it gave them a unique competitive edge and made their entry possible.

III-Market Saturation

There are multiple automobile manufacturers in the market. They all have earned a significant portion of the customer market with years of trusting services. It is highly difficult for the new automotive company to compete against all the existing manufacturers and win the market share.

Threat of Substitutes in Automotive Industry

The threat of substitute products and brands is moderately lower in the retail automobile industry and automotive business as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the textile industry’s five forces analysis of the Automotive Industry are as follows;

I-Compromise on Something

There is no doubt that customers could easily switch from one automotive brand to another without incurring any cost. In fact, they could easily find low-cost, affordable, and premium alternative vehicles depending on their needs and requirements. But they always have to compromise on one factor like; space, quality, premium class, or worth.

Competitive Rivalry in Automotive Industry

The competitive rivalry among retail automobile businesses is higher in the automotive industry as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in the retail automobile business five forces analysis of Automotive Industry are as follows;

I-Competition

The automobile industry has become highly competitive in recent years. There are various automotive manufacturers in the market; they invest a significant amount of capital resources in research and development to gain a competitive edge. Currently, they are investing in the development of efficient electric vehicles.

Conclusion: Automotive Industry Porter’s Five Forces Analysis |Five Forces Analysis of Automobile Industry 

After an in-depth study of Porter’s five forces analysis of automotive industry; we have realized that automotive industry is the world’s leading business industry. If you are learning about automotive five forces of automobile industry; then you should keep in mind the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.