Lithia Motors Inc. SWOT and PESTLE Analysis

Strength

1. Significant portion of the vehicles are manufactured outside the United States: A major portion of the vehicles that the company sells is manufactured outside of the United States. Moreover, all the vehicles that the company sells includes parts which are manufactured outside of the United States exposing it to various customary risks such as import duties, fluctuations in the currency, trade restrictions between different countries, transportation costs, fluctuations in the exchange rates, general political and socioeconomic conditions in other countries. Any changes in the costs of the vehicle or vehicle parts increase the price at which it is available to consumers which could negatively impact consumer demand and the revenue of the company. If the increased costs do not lead to increase in prices to the consumers, it will erode the profit margins for the company.

Weakness

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Opportunity

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Threat

1.Natural disasters and adverse weather conditions dent operations: The states and regions where the dealerships of the company are present in the United States are prone to natural disasters and adverse weather conditions. Actual or threatened disasters and severe weather events like hurricanes, floods, earthquakes or extraordinary events have occurred in the past and could even occur in the future which could materially impact the company’s dealership operations and could even impair the value of the dealership property. These events could have significant impact on the results of operations, financial condition and the cashflows of the company. Moreover, automotive manufacturing supply chain spans across the globe. Any disruptions resulting from natural disasters and adverse weather conditions affect the supply chain and could affect the flow of inventory or parts to the company or the manufacturing partners.

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Political

1. Biden’s support for electric vehicle industry could negatively impact the sales of traditional cars: The Biden administration announced a $174 billion plan to spur the development and adoption of electric vehicles which includes money in order to boost domestic supply of materials and retool factories, as well as incentives for electric vehicle buyers and grants, incentives for charging infrastructure. The president is prioritizing a national electric vehicle charging network under his $ 2 trillion infrastructure bill and promises to have 50000 electric vehicle charging network devices installed across the United States by the year 2030. Battery electric vehicles requires less maintenance than traditional cars and trucks and could result in reduced parts and service revenues as well as changes in the level of sales for certain Finance and Insurance products. The overall impact of electric vehicles is uncertain but could result in a decrease of sales of new traditional vehicles.

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Economic

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Social

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Technological

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Legal

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Environmental