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How EU policy affects the European Automotive Industry - Essay Example
The automotive industry is one of the biggest of all industries. It manufactured nearly 60 million cars and trucks a year and employs several million people around the world. It is a key indicator of economic growth and a main contributor to the gross domestic product (GDP) of several Member States and the EU (EMCC dossier)…
However, during the last five years, there has been a slowdown in economic output across the EU, and, while the forecasts are positive, modest growth of 2.0%-2.3% is expected in 2004. Weak growth has led to reduced consumer and business confidence. Industrial production has decreased, including the production of durable consumer goods. Levels of private consumption have fluctuated during early 2003, following modest growth in the previous two years. This is partly due to poor labor market conditions, with EU unemployment rising during 2003. Economic indicators are weak in some major EU economies such as Germany, France, Italy and Spain. Only the United Kingdom (UK) has managed to resist these trends (Trends and drivers). This has greatly affected the car industry, given the car's status as the ultimate consumer and fashion item, as well as the importance of engineering and design in the manufacturing process. Average profit margins have declined from around 10% in the 1960s to less than 5% today, and some volume car makers are actually losing money (EMCC dossier).
Despite increasing competition worldwide, European automotive has maintained a strong position in exports and global sales. ...