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The Big-Car Problem February 28, 2007

Posted by breichen in Auto's, Consumers.
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Germany is a country known for producing some of the finest automobiles in the world, regarding both performance and luxury. Top German automotive brands include Audi, Mercedes-Benz, BMW, and Porsche. Problems may be on the horizon for these automakers however. Earlier this month, the European Commission proposed a new set of emissions standards. This announcement resulted in a great deal of uproar, especially from the German chancellor, Angela Merkel. The emissions ceiling was raised to 130 grams of CO2 per kilometer, which would have to be met by these automakers by 2012.

What is problematic about this change in emissions standards is that the organizations responsible for producing these fine German Automobiles have a lot of work to do. Within in the European Union there are only six car models made by German organizations that meet the new target, but 34 models made by competitors in other European countries already do meet the standards.

The automobile industry is Germany’s biggest, employing 1 out of 7 members of the manufacturing workforce. Germany is also a country that prides itself on the attention paid to environmental affairs, leaving the country in a bit of a bind. It is speculated that German carmakers should benefit by “spreading their escalating research and development costs across a greater volume of vehicles,” although German attempts to delve into the mass market have been relatively unsuccessful as DaimlerChrysler is facing collapse and the takeover of Land Rover by BMW had horrendous results.

Don’t fear, the German car market does not seem to be suffering yet. Volkswagen recently announced a 52% increase in operating profits for the 2006 fiscal year, not too shabby. German cars undoubtedly dominate the performance parts of the luxury market, although it is clear that buyer’s tastes are evolving, especially with aspects of cars that affect the environment. This can by seen in the American market with a decline in the SUV market, which can be attributed to Chrysler’s decline.

[Audi,Porsche, BMW and Mercedes Benz thrive in a domestic market where almost one out of every three cars sold is a premium model. This compares with little more than one in ten cars sold in America.

It will be interesting to see how the luxury German automakers react to these requirements in the near future, and the effects that they will have on the Brands and organizations themselves.

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Comments»

1. Mercedes Parts Blog - February 28, 2007

Most car buyers tend to buy imported cars because of their mind set that high cost cars has higher quality. Even in purchasing auto parts, they tend to import it. Back then when I was looking for an Mercedes Benz brakes, someone told me to buy imported ones because it has more life span than locally made one… hope this is not true for the reason that I know that this mindse of american car buyers kills the american car manufacturers…

2. silviamocanu07 - March 1, 2007

I believe that although the new EU emissions regulations will affect car manufacturers in the near future. As the regulations are implemented, all of the manufacturers will have to comply and make their car models more environmentally-friendly, which will also imply an increase in cost. However, part of this cost will most likely be passed on to consumers. As people are more aware of the importance of protecting the environment, they have also become more willing to pay more for products that are environmentally safe.


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