Auto Industry News: Romania Becomes Dynamic Auto Production Country 2009


On the Road – 2005

Romania Becomes Dynamic Auto Producer- to Reach 10% of GDP
2008 –

After 60 years of automotive tradition, Romania, with an optimal positioning in

Central and Eastern Europe for increasing demand and automotive production, has a

strong automotive industry with a modern and diversified supplier network. A new

opportunity to develop further has arisen after Ford’s takeover of the Daewoo

Craiova plant. The Romanian automotive sector has known an important

development during 2001-2007, mainly due to Renault’s involvement at Dacia and its

suppliers’ investments. Following on their footsteps, more and more significant

automotive suppliers decided to create production facilities in Romania. Taking into

account that Renault decided to increase Dacia’s production capacity to 400,000

vehicles per year and the CKD 800,000 collections (equivalent of 400,000 vehicles) that

will be shipped to other Logan production facilities all over the world, and Ford’s aim

to produce 300,000 vehicles per year, growth of the automotive sector is assured, and

Romania will manufacture the equivalent of 1.1 million vehicles in 2011.
Key figures
With a population of 22 million, Romania ranks as the second largest of the new EU

member states, after Poland. The car fleet (in 1000) is 3,603, and the car density per 1000

inhabitants is 167. The Romanian automotive industry employs approximatively 120,000

people (direct employment only). Local motor vehicles production has faced an extremely

important growth over the last years. In 2007 it rose by 16% to 241,712 units, compared to

2006, and during the first 8 months of 2008 there was an increase of 13.6%, compared to

the first 8 months of 2007. The export of passenger cars went up by 41.1%, for the first 8

months of 2008 reaching 101,126 units, figure that represents a growth up to five times

compared to the whole year 2004. After an important increase of the automotive market of

21.6% up to 348,342 units in 2007 compared to 2006, the forecast for 2008 is that the

automotive market will stabilize at a level of around 340,000 – 350,000 units. In March

2008 Ford took over the ancient Daewoo plant in Craiova, and plans to invest € 650 million

for upgrading and increasing the plant’s production capacity up to 300,000 vehicles per

year. The production will start in the second half of 2009; therefore 2008 will be influenced

only by the production figures of Dacia.
Foreign direct investments
Renault remains the main investor in the automotive sector, with a total amount invested in

Romania of € 1.4 billion. More, Renault Technology Romania, the new investment at Titu

means another investment of more than € 100 million and will create 3,000 jobs, out of

which 2,300 are for college graduates. Ford’s announced plans to invest € 650 million in

the Craiova plant and the wave of suppliers that will follow Ford will bring new

investments in order to create their own facilities in Romania. Meanwhile, the main foreign

suppliers already established in Romania have announced investment plans in order to

increase their production capacities and also to create new research centres – Ford,

Continental, Siemens. Even though the labor costs have started to increase, they are still at

1/10 compared to the cost of one labour hour in Western Europe, so Romania continues to

be attractive as a foreign investment target.

Today the number of suppliers for the automotive industry exceeds 500, with a total turnover of around € 6.5 billion. A significant number of these suppliers are gathered in ACAROM – The Association of Romanian Automotive Manufacturers, the representative association in the automotive sector. Besides the Romanian suppliers, brands like Johnson Controls, Valeo, Trelleborg, Delphi, ACI, Siemens, Continental, Pirelli, Hella, TRW, Faurecia and many others, are producing in Romania for western OEMs. ACAROM’s

forecast shows that for the horizon of 2010-2011, there will be an increase of the total

turnover for automotive component business (increase of current activities, new production

facilities of the traditional suppliers of Ford), which added to the turnover of the two

manufacturers DACIA and Ford, will lead to a total of approximately 10% of the total GDP

of Romania.
The R&D linked to the automotive industry has started along with the development of the

automotive industry in the 1960’s. Now, the main pillars in R&D in the automotive sector

are supported by two other pillars: academic research in the 11 technical universities and

private research that has started to develop particularly as from 2005. In Romania,

companies like: Continental, Siemens, Ina Schaeffer, etc have invested in R&D centres.

With the newly created Renault Technology Romania, the R&D activities will substantially

grow, bringing an added value to the production activities. With the perspective of DACIA

and Renault vehicles being designed for the entire Central-Eastern Europe area at Titu as

from 2009, and the funds being allocated by the Romanian authorities to the R&D in the

automotive component sector, Romania will become a key player regarding R&D activities

in the region.

On the Road
Romania, Volume 73


The week saw an announcement from Automobile Dacia (Renault) that it would be expanding both its output and product range within Romania in the years to come.

“Before the end of 2007”, Constantin Stroe, the vice-president of company’s Administration Board told reporters January 11, “the total amount [of investment] will reach $838m, taking into account a significant change of American currency’s quotation in comparison with the euro.”

Dacia was taken over by the French Renault group back in 1999 under a deal which stipulated some 628.7m euros of investment in the company during the 2003-2007 period. This looks likely to be achieved, mainly through the development and expansion of the company’s Pitesti plant. Production capacity there is due to be boosted from the current 150,000 cars to 200,000 by the end of this year.

The company will also expand its product range. “Dacia will not remain a mono-product factory,” Stroe added. “We are now working at a strategy meant to diversify products offered by the company. Funding will partially go to new car development and production – the Logan Break, Pick-up and Logan model with diesel.”

The investment plan comes on the back of some healthy looking sales figures. For 2004, figures from Renault show unit sales were up 38.6% on the previous year, with the Logan and Solenza models leading the way. Launched last September, the Logan took around 40,000 orders by the end of the year – busting clean through its sales target. The car was also launched in Croatia, Serbia-Montenegro, Macedonia. Slovakia, Hungary, the Czech Republic and Turkey.

For 2005, the company is confidently predicting a boom in sales of over 70%, year-on-year, as production of the Logan increases from the current 300 units per day to 600 by April. This will meet an expected jump in demand when the car goes on sale in Western Europe (Spain, Germany, Italy and France), Eastern Europe (Slovenia, Poland, Ukraine and the Baltic countries) and the Middle East (Syria and Lebanon) during the coming year.

Yet Dacia was not the only one having a good year in 2004.

Ford‘s dealership in Romania, Romcar, also announced this week some healthy looking figures. The company reported sales of Ford vehicles up 44% year-on-year, at 4710 vehicles, and marking a new company sales record. The Ford Focus was the best seller in terms of cars, with Transit leading the pack in terms of pick-ups.

Meanwhile, AutoItalia, the general importer of Fiat, Alfa Romeo, Maserati and SsangYong vehicles, reported a 62% sales hike, year-on-year. The company announced this week that it had sold some 4150 units in 2004, with Fiat accounting for 2275 of these – an unprecedented 131% rise.

With these kinds of results, the Romanian market is naturally enough attracting interest from around the world. On this score, Chinese auto producer Chery Vehicles is now reportedly scouting locations in Romania as part of a major European launch expected soon, news source reported early January.

The general mood in the country’s auto industry is currently pretty upbeat, as sales continue to rise. The hope is that as incomes also climb, in the run up to European Union membership, car sales can only get better.