COMMENT: Harmonize car prices across Europe to put an end to the reimport epidemic

Franz W. Rother is Editor-in-Chief of Automobilwoche

The Opel dealer in Warsaw already is rubbing his hands in anticipation of the fantastic business he will have from German customers. In Slovakia, car dealers are preparing for a rush of potential buyers from Austria.

One does not need to be clairvoyant to see that the European Union expansion eastwards on May 1 will give the reimport trade new momentum.

Price differences of as much as 30 percent and low margins in the domestic new-car market are just too much for many dealers to ignore.

Not so long ago ZDK president Rolf Leuchtenberger, in his role as spokesman for authorized dealers, called the selling of reimports a sin.

But now the top functionary of the German auto trade tolerates such practices. He even encourages his members to use the price gaps between the EU countries for their own advantage.

Leuchtenberger explained that he prefers sales of reimported new cars to the ever-increasing "discountitis."

The lobby group for German Opel dealers is even more explicit: The group invites its members to sell reimports.

In Germany alone around 15,000 dealers earn money selling new cars that are being transported and sold all over Europe as a result of overcapacity. Among those are an increasing number of authorized dealers and authorized repair shops.

Other auto traders have even returned their dealer contracts to focus their businesses on reimports. They do not have to worry about the high trading standards demanded by automakers or about investing in new showrooms. They use, for example, the Internet auction platform eBay to sell cars at bargain prices.

Auto manufacturers are now finding it increasingly difficult to find qualified partners for their sales networks. They often have to finance the construction of expensive sales outlets themselves.

It's a crazy world that the new block exemption rules and the automobile manufacturers themselves have created.

For many manufacturers, the reform of the sales regulations that the EU commission forced on them was a welcome excuse to push the dealer networks toward more profitability. They got rid of unprofitable businesses and difficult partners.

But they still find it comparatively difficult to adjust their price structures to new competition.

Harmonization of all plant retail prices over Europe would immediately put an end to the reimport epidemic. And it would take a heavy load off those dealers who are still loyal to their brands and stick to their contracts.

Instead, the prices in some countries have been and still are being subsidized.

Some automakers are just now, on the eve of the EU expansion toward the east, trying to turn around the price spiral. Unfortunately it will have no effect because of all the discount battles that are currently being fought.

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