Low-cost Dacia boosts sales 15%, as EU market declines 10%

EU autos Apr13.pngOne volume car manufacturer in Europe achieved a 15% volume increase in Q1 with one of its major brands. The same brand is also achieving margins of around 9%. Who was it?

Regular blog readers will know the answer. Renault’s low-cost Dacia was the only major brand to increase Q1 sales apart from Mercedes – which was up just 1%. And although Renault doesn’t break out brand margins, its were probably higher than the luxury carmaker’s.

Everyone else in the European auto market is going in the wrong direction. As the chart shows:

• Overall Q1 EU sales (red square) declined in each month versus previous years
• Sales were 10% below 2012 levels (green), and have now declined for 18 consecutive months
• All major markets apart from the UK saw >10% declines: Germany was down 17% in March
• UK sales are up 7% as people spend bank mis-selling payments worth £25bn ($38bn)

Dacia’s sales are now around 1m worldwide. Originally it was designed for emerging markets, but its enormous price advantage now makes it a car of choice for many westerners as well.

Renault have also been clever with the positioning of the model. It appeals to a middle class in Europe that continues to lose purchasing power as a result of the Eurozone crisis. In addition, its basic value proposition of being a reliable, basic car allows it to target both male and female buyers. Plus, as its French sales director notes:

“Buyers have other priorities for their money. They like Dacia because we don’t do rebates, and they don’t have to negotiate. People are reassured by the transparency of the offer.”

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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