In Tough Times, Dacia Is Renault's "Cash Cow"

by Derek Kreindler

Published: January 2nd, 2013

in tough times dacia is renault s cash cow

Renault COO Carlos Tavares may not be exaggerating when he calls Dacia a “cash cow”. A report in Automotive News suggests that the low-cost marque may be as profitable as some premium brands.

Dacia’s operating margin, according to a Morgan Stanley report, is said to be around 9 percent – closer to luxury brands than mainstream lines. By comparison, Renault is said to have an operating margin of 0.4 percent. With most mainstream auto makers struggling to make a buck, the notion that a low-cost car can be profitable is astounding.

Aside from building their cars in developing countries, Dacia employs a number of strategies to keep the cars profitable and the money flowing. In countries where their products are sold as Renault cars, prices are much higher – a Brazilian Renault Duster will sell for at least 20 percent more than an EU-market Dacia Duster, all thanks to the little badge on the hood.

#Dacia #DaciaDuster #LowCostCar #LowCostCars #Nissan #Renault

Derek Kreindler

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PRNDLOL on Jan 02, 2013

I remember back in the mid 80's when I was a preteen there was a showcase of Eastern European cars imported into Canada on display at a suburban Toronto mall. Ladas were available, along with a Skoda or two and a Dacia 1310. I distinctly recall looking under the hood of that Dacia and seeing that the windshield washer fluid resevoir was a glass jar.

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- Adrian Roman on Jan 06, 2013
  
  The glass jar was the reservoir for engine coolant fluid (antifreeze). If the engine overheated badly and the coolant started to boil (not uncommon) the jar could crack and you were stranded on the road. Than you'd go to the first house / flat apartment you found and asked for an empty pickle jar and a canister of water. Such were the joys of motoring in Socialist (and later capitalist) Romania... The windshield washer fluid was in a plastic recipient on the driver's side of the engine bay. I should now, I had a Dacia 1310 in the late 90's.
  
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Marcelo de Vasconcellos on Jan 02, 2013

a Brazilian Renault Duster will sell for at least 20 percent more than an EU-market Dacia Duster, all thanks to the little badge on the hood. It's not that Derek, it's taxes, margins and lack of competition. There's nobody that's ever tried to break it into Brazil by price. Everbody prices their cars like they were made of gold. As Brazilians are lapping up everything on offer, irrespective of price, this sham shall go on for the foreseeable future.

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- Sandu on Jan 03, 2013
  
  Lack of competition can explain some of that 20% but there are other more important differences between EU Market and South America that add to the price: 1. 2.0L engine only in South America 2. 1.6L and 2.0L engines with flex-fuel 3. automatic gearbox for 2.0L engine 4. more options as standard
  
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- Marcelo de Vasconcellos on Jan 03, 2013
  
  @sandu True sandu, but today on TTAC there's an article that helps explain this. Did you see the missing trucks article. 130 days of inventory? 80? Brazilian companies are down to 20 for most models (which is like nothing in the industry). So no one does any incentives (cash on hood, 0% financing). Everything that's built is spoken for. Why reduce margins in such an environment? From a customer stand point, I hate it, but were I a business exec in the industry I'd be raising prices for 2013. The only weak point is the unions. THey could turn up the heat. But being that they are now a member of the ruling coalition of this country...
  
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SV on Jan 02, 2013

At least, at 0.4 percent, Renault is still making money. Dacia's margin is incredible though; are all Dusters/Sanderos/Logans/Lodgys included as Dacias or only the ones badged as Dacias?

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Corey Lewis on Jan 03, 2013

That Duster looks like a messed up last-gen Edge.

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