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

Consumer demand

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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.”

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