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Originally Posted by Flyin Ryan
All the workers would get paid the same in euros. The overhead costs of the shop and equipment remain the same unless the equipment is imported. Any systems they import would go up (like a gearbox), but there are eurozone-domestic alternatives they could always go with if need be. Raw material costs and shipping may go up an amount but that's really about it - I imagine you're talking a float of 10% either way in the end. The costs of your cars are pretty static.
Read up on the Japanese carry trade and its effect on Japanese export manufacturers.
And if the cars do get really cheaper, that means the barrier of entry is less and more people can afford a car, which increases sales.
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That's all well and good if your economy is fine but if there's a run on the currency, raw materials and shipping costs go up as the value of your currency has fallen.
By barrier of entry do you mean trade tarriffs? The problem with exporting cheap products, is that you can run into the problem of dumping. Dumping is selling goods lower than the cost of producing them. There looks like there's the beginning of a tarriff war with China and the US, as each accusses the other of dumping cheap exports.
China is launching an anti-dumping investigation into American chicken and auto products, due to complaints that these products are being sold in China at below-market prices due to huge subsidies received from the US government. This is in retaliation to the US decision to impose sanctions against cheap Chinese tyre imports.
Quote:
Originally Posted by Flyin Ryan
And Europe is a key driver for the global economy and consumption, just like the U.S. is. If Europe is down, that hits everywhere.
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But not all of Europe is in the EC and not all EC countries are in the Eurozone.