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Renault’s no-frills Romanian Dacia brand offsets falling salesBack

DaciaCost-savvy European drivers propped up Renault’s growth in the first half of 2014, as its low-cost Dacia brand offset falling sales in emerging markets.

Renault’s no-frills Romanian brand has chimed with belt-tightening consumers in recent years to defy a sluggish European car market and rescue its French parent from turbulence in much-vaunted markets such as India and Russia.

Europe’s fastest-growing car brand saw sales rise 24 per cent in the first six months of the year, making up the entire 4.7 per cent rise in the Renault Group’s total global sales.

Renault’s own brand also saw sales rise 13 per cent in Europe, but fell elsewhere.

Europe, where car sales fell to a two-decade low last year, has been the bane of the global car industry over the past few years, as high unemployment, stagnant economic growth and low consumer confidence has sapped demand for cars.

Ford, General Motors, PSA Peugeot Citroën and Fiat Chrysler have all lost billions of euros in the region over the past two years, as underutilised factories and huge discounts erode their profitability.

But Dacia’s models, including sport utility vehicles which sell for less than £10,000 and use minimum customisation to keep costs down, have struck a chord with cash-conscious drivers.

Renault does not release separate financial details for Dacia, but executives say its margins are at least as good as mass-market Renault models.

Renault restated its 2014 goals of gaining market share in Europe and increasing its global sales, forecasting a 3 to 4 per cent increase in European sales in the second half of the year.

Like many European carmakers, Renault has invested in markets outside the continent to offset the decline at home.

But headwinds are increasing overseas. The French carmaker saw sales fall 9 per cent in its markets outside of Europe during the first half of the year, as demand plummeted in markets such as Turkey and Argentina.

Source: FT

Posted by Sue Robinson on 11/07/2014