New entrants (Very Low)
High barriers to entry and exit (-)
High R&D costs (-)
The threat of new entrants to the Market is likely to be fairly low. This is because of the fact that car dealerships require a large amount of initial investment of up to 11 million (Kimmons, 2015). This shows that the barriers to entry within the firm in terms of initial capital very high. To add to this the majority of car manufacturers run independently to car dealerships. Therefore it would take a fair amount of time for newly starting up car dealerships to take advantage of current economies of scale. Furthermore there is a large geographical constraint with the associated with the growth of new car dealerships as a population of up to 240,000 averages out to have 90 dealers with up to 1million investment each (Kimmons, 2015). This shows that there is very high saturation in the market in terms of car dealerships and therefore limiting the threat of new entrant.
High cost to change (-)
Suppliers are likely to have a very high cost of changing whom they sell their product to. This is because of the fact that the UK automotive market as a whole is dominated by leading brands such as Toyota. Car manufacturers who make specific designs for car models will have high cost of changing clients, as the designs for the products they make are specific to the company, which they will be selling to. This growth in manufacturing, ...