Renault’s success with Dacia highlights changes underway in European auto markets

Consumer demand


Dacia Jan16

You never meet a shy and retiring car salesman.  They are always bursting with confidence, about to sell you a tremendous deal.  So we have to expect that the companies are always going to be confident about the future – even when it looks unpromising to everyone else.  2008 is close enough, that we can all remember GM and Chrysler claiming everything was fine, almost until they had to be rescued by the US government.

Similarly today, we have to make our own judgements about the underlying health of the European auto market:

  • Fiat Chrysler’s sales were up 14% in 2015 in Europe, but it made hardly any profit there
  • Ford surprised itself by making a small profit in Europe in 2015, but only after losing money since 2011
  • Ford and GM together have lost $4.6bn in Europe since 2012

VW, of course, is under threat  as the emissions scandal continues to grow.  Europe’s market leader has been a major beneficiary of the cosy collaboration between regulators, governments and companies.  Now the European Commission is proposing that tests be carried out by independent assessors – rather than by laboratories paid by the companies.  And it wants the power to do spot checks on the roadside.

Plus there is the ever-growing threat from new business models, as we discuss in the new 5 Critical Questions Study. Car-sharing models such as Uber and BlaBlaCar, as well as those initiated by companies such as Mercedes and BMW, could well reduce car sales very substantially over time.

Even more certain is that the overall market is in decline due to demographic factors.  Older people drive very much less that when they were younger, and today’s younger people no longer share their parents’ “love affair with the car”. They worry about the environmental impact of auto pollution, and they can now communicate with friends via social media – so they have less need to drive anywhere.

But this doesn’t mean that manufacturers and suppliers to the industry should simply give up.  Instead, they need to develop new business models to replace those that are no longer working.  The chart illustrates one successful route taken by French company, Renault:

  • It launched the low-cost, no-frills Dacia range in 2004, and it is now the fastest growing brand in Europe
  • Sales reached 382k in 2015, up 3-fold since 2008, whilst the overall European market fell 10%

The secret of their success is keeping it simple, as the company’s website says:


“We’re Dacia. We make cars. Cars that favour function over frivolity. We’ve made an enemy of the unnecessary.  Because we believe you should only pay for what you need.

“We make a simple range of cleverly designed, quality vehicles. Our prices are clear and straightforward, whether you buy online or at our nationwide retailers. Our range starts at only £5,995 (€7900, $8600).

“Maybe that’s why we’re the fastest growing car brand in Europe and have been since 2004.”

They are the low-cost model of the auto industry, and its most successful brand.  Their customers just want functionality and the cheapest possible price, which means suppliers have to adjust their business models to compete successfully.  But any company able and willing to supply essential components to Dacia, without frills and special features, is assured of a growing market.

Dacia, like Ryanair and EasyJet in the airline business, and Aldi and Lidl in retail markets, are growing and profitable. Its success with the low-cost business model highlights an important opportunity for others in Europe’s auto industry.


Global GDP sees record fall in 2015 as world hits "demographic cliff"


Central bankers remain in Denial about the failure of their stimulus policies. ...

Learn more

Common sense continues to elude central banks as they battle demographic cliff


Central banks are in a losing battle, as they try to reverse the inevitable slow...

Learn more
More posts
The Top 5 pandemic paradigm shifts

The Covid-19 pandemic has accelerated the fundamental changes which were already underway in global ...

Hertz goes bankrupt as non-essential consumer demand disappears

The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 10...

Smartphone sales head into decline as affordability becomes key

The smartphone sales decline accelerated in Q1, as Strategy Analytics report: “Global smartpho...

China’s plastic ban and recycling launch marks end of ‘business as usual’ for plastics industry

Paradigm shifts start slowly at first, and it is easy to miss them. But then one day, they suddenly ...

Automakers face stiff headwinds in big emerging markets

Brazil, Russia, India and China disappoint as manufacturers face investment demands of EVs © Bloomb...

Portugal shows the way to climate neutrality by 2050

“If you don’t know where you are going, any road will do”. The Irish proverb’...

The next billion phone users will be buying $10 smart feature phones, not $1000 iPhones

Smartphone sales plateaued in Q3, down 9% since Q3 2017’s peak of 1.55bn, as the chart shows....

Companies ignore the Perennials 55+ generation at their peril

Nearly a third of the the world’s High Income population are now in the Perennials 55+ generat...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more