Abstract:

The paper provides a view of the real impact of the European Single Market on the car industry. It contrasts the political ambitions to achieve an open market with the divisions and differences that still exist in the environment for selling and marketing cars. In car manufacturing, the Single Market has largely reinforced changes that were set in progress during the 1960s. In practice, car manufacturers are well ahead of political structures in creating an integrated production system encompassing the former EFTA countries and Eastern Europe. The political weight given to the creation of a large barrier free Market has encouraged major Japanese investment in European car manufacturing. This has, however, stimulated new pan European trade restrictions rather than a move to "one Europe". Although technical regulations had achieved a high level of harmony several years ago, it will take until 1993 to achieve single type approval. On a critical area of harmonisation, emission controls, Europe has lost a major opportunity to introduce standards designed for European cars and motoring conditions. There are little signs of the political initiatives needed to create a European environmental framework for the motor car in the next century. In the field of taxation, much remains to be done. Cars are subject to a widely differing range of special sales taxes, with no consistent treatment for the growth areas of multipurpose vehicles and minivans. Fuel tax differentials between petrol and diesel, usage taxes and the tax treatment of company owned cars all differ widely. There is no integrated approach to resolving fiscal structures for cars. The franchised dealer system continues to be regulated by provisions predating the Single Market initiative and is coming under close scrutiny. There are political pressures to blame the franchise system for perceived price differences between markets, whereas the main causes are lack of action to remove market barriers. The report argues that a lack of real achievement can be attributed to a low political profile for the car industry. It suggests that all stakeholders in the industry should be more active in political lobbying and understanding the decision making process. They may need to establish a new forum, representing interested parties, from manufacturers through to dealers, to help the industry promote policy solutions to the European Commission.