French group Renault will introduce the 5,000-euro Dacia this week, the first model to sport a brand new design since Renault took over the Romanian carmaker. The 5,000-euro Dacia is the most important Romanian industrial product that will be sold both on the domestic market and abroad, as the French aim to sell 700,000 units by 2010.
After RAV Antivirus, the technology bought in mid-2003 by America's software giant Microsoft from Romanian company GeCAD Software for $10 million, the 5,000-euro Dacia will certainly prompt many of the world's important publications to write stories about the event, which will do a lot for Romania in terms of international image.
"Renault's investments at Dacia have reached 360 million euros this year, but will go up to half a billion euros by the time the retooling process is over," said Constantin Stroe, Dacia vice-president.
The investments exceed by far the plan assumed by the French producer back in September 1999, when it bought the main stake in Dacia. Originally, Renault had scheduled to invest $219 million in the first five years. Initially slated for release in 2003, the 5,000-euro Dacia was the bet that Renault chairman Louis Schweitzer made when buying the carmaker.
However, the real situation at the Pitesti-based plant and the evolution of the Romanian automobile market did not match Renault's estimates, so that additional investments were needed and the launch of the new model was postponed for 2004. The working conditions were more archaic than Schweitzer could have fathomed, there were many cases of theft from the plant and, instead of the 100,000 cars the Renault analysts were counting on, only 50,000 were made in the first year.
Under the circumstances, Dacia's financial results went from bad to worse and the management's goals to cut losses were never fully achieved. Whereas estimates pointed to losses of 40 million euros in 2001, their level actually amounted to 86 million euros at the end of that year. In 2002, the 56m euros scheduled as losses eventually surged to 96 million euros, with the same value logged in 2003. In fact, 2003 was the first year when Romania's biggest carmaker managed to achieve a significant growth in sales - 70,000 units, up 20% from the previous year.
These positive results are almost exclusively due to the Solenza model, which was launched by Dacia last year as the new and improved version of the SupeRNova model. Solenza was also helped by the arrival of some of Renault's traditional suppliers. Moreover, Dacia last October managed to post the first operating income since Renault's arrival.
"In the first five months of the year we have achieved 95% of the goals budgeted for this interval," Constantin Stroe added. The Dacia official had estimated sales of 90,000 automobiles for this year, with the 5,000-euro model expected to sell 11,000 units.
ionut.bonoiu@zf.ro
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