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The Biggest Threat of Current Automobile Business Environment

Essay by   •  November 19, 2017  •  Essay  •  914 Words (4 Pages)  •  722 Views

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Nowadays, most automobile companies in developing country are facing poor policy implementation. For example, Nigeria established their automobile companies based on policy that create by the government. The Nigeria government want to protect and patronize the existing automobile industries in the country (Akiegwe 2010). They established this law to assist and protect the local Automobile industries but government are importing foreign made Automobile rather than patronizing Nigerian made Automobile cars.

The second challenge is high tariff is imposed by the government to those imported cars. Even though the interest rate of purchasing the new vehicle is very high. For example, buying a new vehicle in Nigeria is very high, and most Nigerian cannot afford to buy a vehicle of his choice (Maura, 1997). Besides, Russia reduce 5% interest rate car loan to encourage the local industries by indirectly reducing tax for part of the automobile industries (Alexei, 2017).

The next challenge is the government lack of fund to support their own automobile companies in their country. For example, the cost of automobile industry in Nigeria is responsible by the owners of the companies because their government never try to think a way to support and encourage the local companies, by ensuring or creating a conducive atmosphere for them to operate, but rather creating a way to share in the company’s profit, by increasing the company tax yearly as a way of paying for their existence in the country (Bisiriyu, 2012). Besides, the government of the country has failed to fund automobile industry they are affecting most automobile industries in their own country.

The biggest threat of current automobile business environment is each company are very competitive in current business environment. The competitive reason are product quality and features, innovation and development, reliability, pricing, safety, fuel economy, customer service and financing terms. Increased competition may lead to lower vehicle unit sales and large inventory, downward pricing pressure, and the impact to financial condition and results of operations of the company (Thembani, 2013)

To minimize this threat and maximize the opportunities, automobile company should focus more on their R&D department to expand the product portfolio and improve the functionality, quality; safety and environmental compatibility of its products. The company's R&D efforts are directed at developing new products and processes and improving the capabilities of existing products and it will help the company in incorporating newer features to its existing range of products and also in bringing out latest technologies in the varied areas and also allows it to uphold the technological leadership in most of the product segments, this can help company expanding new products, increase company sales (MarketLine, 2013)

Besides, automobile company can form a partnership with other company to develop a fuel cell system, joint development of architecture and components for a future vehicle, collaboration on power-train electrification and joint research and development on lightweight technologies. These partnerships will help the company boost the technology knowledge of the companies and develop unique products to increase revenues in the long term, save cost, and boosting the operational margins thus minimize the threat and maximize the opportunities (MarketLine, 2013).

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