Does Dacia's success threaten the Renault brand?

The Romanian Günstig subsidiary is growing extremely fast and some products compete with those of the parent company

By: Juan Felipe Munoz

Mar 7, 2024 at 7:14am ET

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Renault bought Dacia from the Romanian government in 1999, probably not realising at the time that the brand would become an important pillar of the French group 25 years later. A clever move that enabled Renault to have its own centre for automotive development in Eastern and Central Europe. Romania was slowly awakening after years of communist rule and there was a great demand for vehicles.

Renault was able to breathe a sigh of relief and maintain its independence, especially thanks to Dacia. By selling affordable and competitive models, the French company found a way to increase its presence outside Europe and earn more money. However, Dacia's power within the group has grown to such an extent that one wonders whether the brand could become a threat to Renault itself.

Like a rocket

In 2000, the first full year that Dacia was under Renault's control, sales from the Romanian market accounted for only 2 per cent of Renault's sales. Outside Romania and Eastern Europe, Dacia was an unknown brand with a very old product line.

As a company that had long been run according to communist economic rules, it was bureaucratic, inefficient and completely disconnected from reality and the needs of European customers.

The same could be said of other car brands. Think of Oltcit in Romania, FSO Polonez in Poland, AvtoVAZ (Lada) in the Soviet Union, ZAZ in Ukraine and Zastava in Serbia. The Czech company Skoda also belonged to this group, but despite Renault's efforts, it was taken over by the Volkswagen Group in 1991 and turned a profit.

The sales development of the Dacia brand since its takeover by Renault (*estimated figures)

Thanks to Renault, Dacia's worldwide sales tripled in just five years, reaching 150,000 units in 2005 following the launch of the first generation Logan, designed by Renault not only for Romania and Eastern Europe, but also for emerging markets such as North Africa and Latin America.

Dacia's share of the Renault Group's global sales (excluding Lada)

In 2008, after a full year on the market with the Sandero, Dacia sold nearly 260,000 units, representing 11 per cent of the Renault Group's volume. In the same year, Renault Brazil began selling the Sandero under the Renault brand, so Dacia's total sales were higher in real terms.

In Germany, the basic Sandero, which cost around €7,000 at the time, benefited massively from the "scrappage scheme" in 2009.

In 2011, the first full year of the Duster, the volume rose to 343,000 units. Dacia's total sales totalled 814,000 units out of the Group's 2.72 million units.

Market share of Dacia products (including Renault Sandero, Renault Logan, Renault Duster, Renault Dokker, Renault Lodgy, Renault Oroch, Renault Kwid, Renault Taliant) and the Renault brand in global Renault Group sales

Internal competition too

Dacia's rapid growth has helped improve the French group's financial results with a fairly simple formula: Dacia positions itself as a low-cost brand and offers competitive cars that utilise the technology of previous Renault generations. This has facilitated production and reduced costs, which has helped to offer the new vehicles at very attractive prices.

The problem is that Dacia is now the fastest growing brand and sometimes products within the same group compete with each other, think of the Sandero against the Clio in Western Europe or even the Duster against the Captur.

What do you think?

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Comments

The positioning of each brand is certainly different, but as the Dacia brand cars are getting better but are still significantly cheaper, many people are inclined to buy them. In emerging markets, Renault's image now even mirrors that of Dacia, which has a larger range. So will we see more Dacia than Renault in the near future? Only the future will tell...