"Over 120,000 jobs in Romania depend on Dacia. Unlike Dacia, dealers don’t export cars, they sell them in the country, and the sharp fall in new car sales following massive used car imports might force many dealers into cutting jobs, and, if things get worse, some might be driven out of business,” Dacia general manager Francois Fourmont told MEDIAFAX Friday.
He said several suppliers that depend on Dacia’s orders are in a similarly sticky situation.
"Our lowered production target affects both dealers and suppliers,” Fourmont said.
One example is car part maker Leoni, which operates on Dacia’s platform in Mioveni, southern Romania, and which said early November that it would lay off 10% of its employees.
Fourmont said Dacia will keep its hiring plan for 2008 unchanged, but jobs in 2009 will depend on the carmaker’s sales. He added investment plans are being reconsidered in the context of “great uncertainty”, and investments that may be postpones will be postponed.
The main reason for the decline of the Romanian auto market is, according to the Dacia official, the massive import of used cars that started after July 1, when the government introduced a new car tax, which is very low for used cars compared to that perceived for new ones.
"Dacia is not afraid of competition. But competition is not the issue when you see how Romania has been literally invaded by imported used cars after July 1. (…) Go visit areas in western Romania and when you see the cars on the side of the road on in people’s yards that are waiting to be registered, you’ll understand that competition is not an issue here, but that Romania is quickly becoming Western Europe’s junkyard," Fourmont added.
The number of used car registrations in Romania more than doubled in the first ten months of the year from the same period last year, to 205,086 cars, while new car registrations decreased 2.4%, to 252,935 cars.
Asked what measures Dacia is considering to boost new car sales, Fourmont said the company’s price policy will remain unchanged, without giving further details.
"We’re not planning to change our commercial policy. For the past two years, our prices in euro have remained unchanged,” Fourmont said.
He added that although exports are on the rise, they can’t fuel higher production as both the local and European markets are declining.
"Our market share is on the rise in all our export markets (…) But, as markets decline sharply, as the case was in October, and the trend will continue in the following months, our increase in market share can’t compensate for the general decline in auto markets. To give just one example, in October 2008 we sold 6,664 cars in Romania compared 9,094 in October 2007 (36.4% less – e.n.), but our market share was up to 29% from 28% in a market that declined 30%," Fourmont explained.
Dacia’s car and commercial vehicle sales were up 17.6% on the year worldwide in the first ten months of the year, to 218,630 vehicles compared to 218,630 vehicles in the same period last year.
In October alone, Dacia exported 23,805 vehicles worldwide, up 20.2% from 19,804 vehicles in October last year, while the global auto market declined by 9%, according to company data.
In Romania, the carmaker’s sales were down 8.9% in the first ten months, to 76,399 cars from 83,912 cars in January-October 2007.
Last year, Dacia’s revenues increased 24.5% on the year, to 7.2 billion lei (EUR1=RON3. 7379), and its net profit was up 17.2% on the year, to RON442.34 million.