Nearly 9 years ago, a small car from an obscure, nearly-defunct Romanian brand was launched with little fanfare. The Dacia Logan was – and still is – a basic vehicle designed to be sold for very little money and provide honest, basic transportation for emerging markets. Few would have predicted that in nearly a decade of sales, it would spawn Renault’s top-selling nameplate while bringing in profit margins that were once reserved for premium marques.
September 10th (9 years and one day after the introduction of the first Logan) will bring about the launch of an all-new Dacia Duster, currently the top-selling vehicle in Renault’s portfolio. With its low price, solid dynamics and contemporary styling, the Duster has rode the worldwide compact SUV boom to rise to the top of Renault’s sales charts amid critical and consumer acclaim. The fact that North Americans would likely reject such a vehicle as a cheap, nasty car for credit criminals is immaterial. The Duster, along with the rest of Dacia, is helping to keep Renault afloat even though its own lineup is tanking, along with most of Europe’s car market.
Dacia has managed to do what was once thought impossible in the auto industry; sell small cars at a big profit. Dacia’s operating margins are said to be around 9 percent, which puts them on par with some of the better luxury brands in the auto world. By comparison, Renault’s is said to be in the neighborhood of 0.4 percent. By using old technology (that first-world customers would likely consider outdated) that has long been paid off and packaging it well, Dacia is able to make money even at prices far below mainstream auto makers. The fact that their cars are made in low-wage countries like Morocco, Algeria, Brazil and Russia doesn’t hurt either.
Currently, Dacia’s cheapest cars sell for about 8,000 euro, but Dacia is looking to introduce a 5,000 euro car next year, which will likely share technology with Renault-Nissan’s new Datsun line. Dacia’s success is not without controversy, with critics accusing it of everything from cannibalizing Renault sales and outsourcing labor to former colonies at the expense of French jobs. Even though Dacia may be hurting one of France’s domestic darlings, a prolonged economic slump in Europe and falling car sales have put Dacia in an enviable position – one that many auto makers seem eager to emulate.