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Volkswagen Heads East or Skoda Heads West Competition in the global auto industry has become increasingly fierce among the dozen surviving major manufacturers in the early 1990s With the dramatic successes of the Japanese leaders Toyota Nissan and Honda both the North American and European industries have become subject to intense rivalry among US Japanese and European automakers If we look at the Table 1 it shows the positions of major competitors in Western Europe during 1990 These conditions have led to calls for protection in the European Community against outside producers as well as responses by the European car companies looking to solidify their positions The increasing intensify of competition in Europe appears to due to several factors First and the most important the Japanese firms expanded their local production aggressively in North America during the 1980s and now they are looking to the European market as the last major target in the global industry where their positions are weak The leading Japanese firms with their high quality and low-cost cars produced growing profits and market shares during the late 1980s at the same time as their US and European rivals broadly speaking have faced declining shares low profits andor losses and generally difficult conditions Second the opening of Eastern Europe that began with Soviet President Gorbachevs policy of perestroika has led to aggressive strategies by several firms to build business in Eastern Europe And third the European Communitys goal of achieving much greater economic integration by the end of 1992 has led to Japanese and US automakers to pursue more extensive local production in Europe These firms want both to benefit from region from region-wide economies of scale that the reduced commercial barriers will allow and to avoid being excluded by whatever protectionism may occur against non-European firms after 1992 One of the most active responses of the European firms has been to pursue business in Eastern Europe in countries of the
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