Bundling all car maker-specific activities boosts Automobile Dacia’s results

by Nicoleta Banila

Romanian car maker Dacia, a unit of France’s Groupe Renault since 1999, posted a turnover of 4.6 billion euro in 2016. In 2016 Dacia brand sales rose by 10.8% to a record-high 415,010 registrations.

Yves Caracatzanis,
Managing Director
Groupe Renault Romania

Dacia has been the top company in Southeast Europe (SEE) in terms of total revenue over the past three years. What are the key factors impacting your performance?

 Indeed, last year Automobile Dacia had a turnover of 4.6 billion euro, while Groupe Renault Romania reached a 5.1 billion euro turnover. In 2016, the result of Automobile Dacia before tax was 111 million euro (506 million lei), higher than in 2015. It was generated by a positive operating result of 532 million lei, up by 15% versus 2015, and a negative financial result of -27 million lei triggered, mostly, by the negative impact of the exchange rate. The excellent dynamic of the operating profit has been indicating a healthy business, with improved operations and efficient use of the company’s resources. We export 93% of our production. Success factors? Groupe Renault Romania, employing 16,700 colleagues, is the only company in the country integrating all activities specific for a car manufacturer, something which has generated a steady economic performance and a wide range of job offers in different fields: market studies, design, engineering, technical centre, manufacturing and supply chain, sales and after-sales, business services and financing. The Global Access range, which includes Dacia models manufactured in Mioveni, is a worldwide success. Our models meet customer expectations: reliability, affordability and modernity. We have in Romania a strong dealer network with a very good country coverage. We have developed in Romania a strong 1,000 suppliers network.

Well, in terms of sales, the Duster sales increased in Europe, with a positive impact on the number of Duster units manufactured in Romania. In addition, we also sell parts to other plants in Groupe Renault that assemble Global Access models. I am referring to engines, gearboxes, chassis and other spare parts manufactured in Mioveni but as well full cars that are sent disassembled to the Oran plant in Algeria, to be built up there. Last year, the volumes for all these increased, and more specifically for the kits delivered to Algeria even doubled.

What are your expectations in terms of net profit and turnover for 2017?

The financial results for the current year shall be announced in the first months of 2018.

What are the highlights of your short and medium-term investment plans?

Since 2000, the total investments Groupe Renault has made in Romania amount to 2.5 billion euro. They were channeled into new products – vehicles, engines, gearboxes, mechanical parts – and into increased competitiveness of the manufacturing processes – working conditions, capacity increase, automation processes, quality and cost reduction. Although the biggest share was, of course, directed to the Mioveni industrial site, the Groupe also remarkably developed in Romania all business units specific for a carmaker: from design and engineering, to testing and manufacturing, and as well sales and after sales.

Last year alone the Groupe invested in its Romanian operations some 200 million euro.

Groupe Renault Romania has proved its high capacity to generate performance, having an essential contribution to the Romanian economy. We want to continue this success. And, let’s not forget that we operate in a competitive industry which evolves extremely rapidly and that we are challenged both externally and internally.

That is why our current focus is on maintaining the competitiveness on a medium and long term, which implies continuous innovation for the development of the Global Access range; quality of production; productivity and competitive manufacturing costs on the long term; improved competencies in manufacturing, engineering, design and services in Groupe Renault. These directions concern both the activities from the Mioveni industrial site, and the ones conducted by our network of suppliers and dealers.

What are your expectations regarding the development of the automotive market in Romania and in the region in the coming years?

In recent years, the automotive market in Romania has seen important fluctuations. In 2007, the new vehicle market was of 350,000, and at the end of 2016, the total new car market was of 132,000 units. Nonetheless, Groupe Renault Romania managed to keep its market leader position with the Dacia brand. Moreover, in only ten years, Dacia has become from a local brand a European one, recognised worldwide.

In the first five months of this year, Sandero is the bestselling model to physical persons in France and second in Europe. Duster comes on the third position in sales to physical persons on the C SUV segment in Europe.

Although the last three years have seen a revival on the new car market in Romania, the import of very old second hand cars reached alarming peaks, especially following the removal of the environmental tax in February 2017. Some figures: strong increase of second hand cars – in the first four months of 2017 for each new car there were some 5.8 second hand cars registered; the average age of the national car fleet is 14; the new car market remains at a three times lower level than in 2007; as much as 73.5% of imported second hand cars are older than ten years. What we are saying is that it is important to have a fair second hand car market in order to guarantee transparency with respect to the car’s technical situation, and thus safety. Of course, this would also support the protection of the environment and tax collection.

Groupe Renault will continue its product offensive in order to meet the customers’ demands in terms of performance and price, while respecting the safety and environmental standards.

Do you think services such as ride-hailing and ride-sharing may curb demand for car ownership in the region in the coming years?

Groupe Renault Romania encourages any form of mobility. In the medium term, I do not think there is a threat coming from this type of trends. In Romania, the car fleet is extremely old.

How do you expect anti-diesel regulations in Western Europe to affect your performance in the coming years?

Car manufacturers, in a way or another, will be expected to permanently innovate in order to offer new solutions to communities. The Renault-Nissan Alliance innovates for the present, but also for the future. We are talking about the car of the future that shall be electric, connected and autonomous. The Renault brand is no. 1 in Europe on the market of electric cars, and Zoe is the bestselling model in Europe. Groupe Renault is in tune with tendencies, and our clients can get cars equipped with petrol, diesel or electric engines.

With demand for electric vehicles growing, do you have production plans in this area?

Not for the moment.

What future do you see for self-driving vehicles in SEE?

Within an open- to- innovation approach, the development of autonomous cars is managed by the Groupe Renault. with the support of best experts. Companies work together to craft the car of tomorrow, integrating infrastructures, connecting cars among them and with the infrastructure (V2X) within the SCOOP European project. This experiment, carried out in France, with autonomous prototypes developed by Renault represents a first phase that shall be extended to other countries as well. With the emergence of adaptive driving aids, and of the autonomous car, tests and simulation become strategic for the automotive industry. Tests and simulation are embedded in the process of autonomous car development. In order to reach the required reliability level, test cars have to run a significant number of kilometers which normally represent years of driving. More than tests in real situation and accelerated testing methods, simulations allow for important time saving and ensure an efficient planning.