Renault has made a big splash with their el-cheapo Dacia in the European market. In the first 4 months of this year, 17 percent of Renault’s sales came from Nicolae Ceausescu’s former auto works in Romania. France’s PSA doesn’t want to take it any longer, and now plans for their own low-cost line.
Their cheap car won’t come from low wage Eastern Europe, it will be made in PSA’s existing plant in Vigo, Spain, says Automobilwoche [sub]. Low cost cars don’t mean low investments: PSA will have to invest €1b into the plant to bring it up to speed. Making cheap cars that make money isn’t easy.
PSA seems to have big plans for the little cars: With a capacity of 384,000 units annually, Vigo is the largest of PSA’s plants, bigger than PSA’s lead plant in Sochaux, France (275.000 units.)
PSA is a little late to the game. The big sales successes for cheap cars in Europe were cause by scrapping bonuses. However, PSA plans on big sales in emerging markets.