What Are The Reasons For Increasing Foreign Competition In The European Automobile Market?

The single European Act become law among the member states of the European Union on January 1, 1993. The goals of the act was to remove barriers to cross border trade and investment within confines of the European Union thereby creating a single market instead of collection of distinct national markets. Among the benefits claimed for this act were an increase in competition and a corresponding reduction in prices. The move toward a single market received another boost. When the majority of the European Union member states, formally adopted the Euro as a common currency as a common currency.

In the automobile market the reality has been some what different. By the end of 2002, significant variations remained between the prices of the same automobiles in different countries. According to the European commission, in November 2002 there was 32 percent differential between the price of a Volkswagen Golf in the cheapest and the most expensive national market in the Euro zone. The reason for entering into the European market is that the European market consumers have potential to buy costly cars and many companies are entering into the market and selling their cars at the highest rates to the consumers. So this is one reason for the attraction of the car makers to enter in the European markets.