“The third carmaker is in the pipeline, but it is looking at the transport infrastructure,” said Constantin Stroe, chairman of the Association Of Automotive Manufacturers of Romania ACAROM at “The Automotive Industry: The Engine of the Romanian Economy” event organized by ZF in partnership with Dacia, Porsche Leasing and Garanti Leasing on Thursday.
The event brought together representatives of the companies in the automotive component, car manufacturing, operating leasing and car rental industries, as well as governmental representatives.
Romania assembled 391,000 cars in its two plants last year, 5% fewer than in 2013. Motor vehicle sales stood at more than 100,000 units last year.
“The automotive industry in Romania has developed a great deal, both in terms of component and car manufacturing,” said Bogdan Vasilescu, a representative of the Ministry of Economy, Trade and Tourism.
“The development vector was the Renault Group and we hope Ford will pursue the same growth. Continuing growth means attracting new foreign investments in the sector and maybe a third carmaker.”
Constantin Stroe says it is not normal to have an average speed for commercial shipments of 24 kilometers per hour on Romanian roads and does not believe in the promises about having the Pitesti-Sibiu Highway completed by 2020.
Enache Jiru, state secretary with the Public Finance Ministry, says the money for highways is there but the fiscal space is not.
“We are in a very good financial position. There is money for highways, there’s never been a money or project funding problem. The problem is the fiscal space. Highways are public property and therefore entered into public deficit. We don’t have the budgetary space. The government has operating costs, too,” Jiru said at the ZF event.
Christian von Albrichsfeld, head of country Continental Romania, the largest local automotive component manufacturer, too, talks about the need for highways in Romania. He says it takes one day for trucks to go from Brasov (central Romania) to the border and only one day from the [western] border to Western Europe.
“Romania is an attractive country. We still have competitive workforce, financial and political stability.”
What has to be done is get the authorities more involved in order cut red tape, they must use the EU funds, invest in infrastructure. They also have to preserve and improve the quality of the workforce, said von Albrichsfeld, who runs a group with EUR2 billion revenue in Romania.
The automotive component industry generated more than EUR7.1 billion revenue last year, according to ACAROM data.
“The highway to western Romania is very important because our products are exported, we have been expecting the promised highway,” said Gheorghe Achim, chief financial officer of Star Transmission, the Daimler AG division that makes transmissions for Mercedes-Benz in Sebes and engine parts in Cugir.
“The decision to put a project in a certain location surely takes into account the transport infrastructure in that area. One always seeks to select the best location in every respect.”
Industry representatives also brought up the issue of labor productivity, which is much lower than in other countries.
“Slovakia made EUR7.9 billion from automotive components with 43,000 employees last year, while Romania made EUR7.1 billion with more than 110,000 employees, so our productivity is really down,” Constantin Stroe said.
Oana Stoenescu, sales director of Garanti Leasing, expects last year’s upward trend of car sales to continue in 2015. The leasing market, too, is seeing growth.
“The entire leasing market grew by 14% in the first quarter on both the auto and real estate segment, while Garanti Leasing only grew by 12% on the real estate segment, but not in the auto or equipment segment,” Stoenescu said.
Hezi Shayd, chief executive officer of New Kopel Group, which provides operating leasing and car rental services, sees the leasing business growing, too.
“We’ve been seeing some activity from companies in the past six months; they started to use leasing to get cars.”
This means companies reached the conclusion that a car is important but does not necessarily have to be an asset. And they also noticed it is best that they focus on their core business and outsource the rest, Hezi Shayd said.
On the other hand, Mihai Ivanescu, head of the auto import division of Tiriac Holding, believes the Romanian market will reach 180,000 to 200,000 new car sales in three to four years.
“Getting to 200,000 cars is not a dream, because with the market very low as it is it is only natural to have double-digit growth and we are positive we will continue to grow, but see healthy growth,” Mihai Ivanescu said.
(English version by Loredana Fratila-Cristescu)