Auto Industry Pricing Differentials in the EU
1. What are the sources of significant price differentials in teh EU automobile market? One of the core challenges of free trade, globalization and the establishment of intra-continental unions is the inherent difficulty in facing up the inherent incongruity of the aligning markets. The European Union has served as a prime example of this, matching a widely varied set of nations in a single economic pact. The result is that in many contexts, visible distinctions remain even economic policy is set with the collective in consideration. In a discussion on the legislation impacting the European auto industry in recent years, it is important to recognize that there are certain core causes for the continued disparity in auto pricing owing almost entirely to the distinctions amongst member states in terms of domestic production economies. (Kirman & Schueller, 69) In contexts where high costs of production, operation and retail have persisted, so too has the price differential impacting the consumer. 2. In a pure single market would these prices differentials exist? By what process might price differentials be eradicated? It is difficult to resolve that a pure single market is a feasible ambition. Suggesting that it is, it
is the largest market-place in the EU. However, current conditions suggest that the gap separating some of the most developed-and therefore already most standardized producer nations-and the least developed of nations is perhaps too wide to be eliminated thusly. What do you think will happen to price differentials in the EU automobile market under the new regulations that took effect in September 2005? The implications of the new legislation are stated, first and foremost, to be positive for the consumer. With that in mind, there is also an intended impact on price differentials which will help to equalize the playing field. Myriad characteristic differences have created a circumstance, for instance, where one car model will cost a U. (Madslien, 1) Domestic market difference and differing consumer buying power potentials will be only further highlighted as the European Union admits increasingly less developed states such as those former Soviet and North-of-Africa nations seeking admission. For those who had developed hybrid and fuel efficient cars with the foresight to recognize the inevitability of current policy initiatives, the cost differential gap's contraction will certainly be beneficial. Profitability will be damaged by a rise in price which eliminates opportunities for lesser endowed consumers and simultaneously does nothing to improve the producer's profit margin. These factors dictate a certain behavior on the part of the auto industry, which can both recognize the opportunity inherent in high consumer buying power and which must make their own adjustments according to such costs. This should help to bring pricing more into line with nations where costs are already high due to such prohibitive factors as existing environmental standards. This type of policy change will raise costs of domestic automobiles for consumers, causing them to consider the valid opportunities for cross-border purchasing. These will "add $1,000 ([pounds sterling]550, E820) to the cost of each new car.
Common topics in this essay:
Kirman Shueller,
Kirman Schueller,
European Union,
EU Moreover,
,
Soviet North-of-Africa,
Greece Madslien,
United Kingdom,
price differentials,
auto industry,
eu automobile,
automobile market,
eu automobile market,
pure single market,
european union,
fuel efficient,
pure single,
market profitability,
single market,
competitive intensity,
consumer buying power,
|
Acceptance Essays
