“In making a cover story in June on the French industry, I discovered Dacia profitability level and this moved me to this new story. The Logan was a developing market car with limited appeal in Western Europe. After the Sandero Stepway and particularly the Duster, potential and sales of Dacia grew considerably,” Luca Ciferri, editor-in-chief at Automotive News Europe, told ZF.
As for the potential of the Romania brand in Europe, Luca Cifferi, one of the best-known auto analysts in Europe, believes Dacia could grow even to 2.5%-3% of the market “if it continues to launch better products still at reasonable prices.” So, from a 1.8% market share at present and around 240,000-250,000 cars sold per year in Europe, Dacia could grow to over 360,000 cars sold every year in Europe alone.
Considered a risky bet at first, Dacia became a profit machine after a few years, writes Automotive News Europe.
On the European market, Dacias are perceived as cheap, entry-level cars, competing with used cars. However, they are not only sold in Europe, having gained a worldwide appeal. Often they are sold under the Renault brand at a higher price than in Europe and fetch a handsome profit, the publication also writes.
Dacia, Renault’s goldmine
This year, Renault expects sales of its low-cost M0 platform of between 950,000 and one million units, up from 813,000 in 2011, according to Automotive News Europe. Two thirds will be sold under the Renault badge and the rest as Dacias.
“Dacia is really a cash cow for the company,” Renault Chief Operating Officer Carlos Tavares told Automotive News Europe.
Renault doesn’t report separate financial results for each brand, but Morgan Stanley analysts estimate that Dacia has an around 9% operating margin, more common for premium brands, such as BMW, Audi and Mercedes-Benz.
This is good news for Renault because the French carmaker has an operating margin of just 0.4%.
The turnover of Automobile Dacia, the company that manages the Romanian Mioveni carmaker, went up 15.5% last year, from EUR2.7 to EUR3.1 billion. Net profit was up 8% to EUR65 million, so the company’s net profit margin was around 2% last year.
“There seems to be a common misconception that average sales price for the Dacia business are extremely low, in the range of about EUR8,000,” said Laura Lembke, a financial analysts at Morgan Stanley in London, as quoted by Automotive News Europe. That is not the case. Dacia models branded as Renault in international markets sold at least for 20% more than Dacia-brand models in Europe, Lembke said.
In Brazil, Renault sells the Duster small SUV for EUR21,000 to EUR27,000, compared with a price range of EUR12,000 to EUR19,000 as a Dacia in Europe, Lembke estimates.
Before the launch of its Logan model, Dacia used to be an unknown brand outside of Romania. But currently over 250,000 Dacias are sold in Europe per year, according to data from the industry association ACEA. Dacia has also become a global brand, with sales on 36 markets.
Magazine website: http://europe.autonews.com/
(English version by Daniela Stoican)