Automobile-Dacia SA

1. Short introduction

“Automobile Dacia” is inspired by the historic region which constitutes most of the territory of Romania today. Today, Dacia is a subsidiary of Renault (French car maker), since 1999 when they purchased it with hopes to expand their development in both Central and East Europe. The company provides 1/10th of total Romanian car exports, meaning this Romanian traditional car manufacturing business has been made a fairly well known brand.

Dacia was founded in 1966, under the original name of “Uzina de autoturisme Pitesti” in the area currently known as Mioveni, near Pitesti. During its starting years, nearly 44.000 models were produced of the very first of Dacia’s models, the Dacia 1100. As years passed, it has developed and adapted technologies to better it and further satisfy the customer’s needs.

2. Macroeconomic forces

a. Demographic environment

As demographic factors we consider the population change, age mix, and urban ratio. Also we observe the changes in the average family structure and the change in income levels.

Let’s consider the average family model in Romania: it is constituted of 2 adults and 2 kids, as the ideal model. Due to loans not being widely available, most kids end up spending more than 20 years living with their parents, during which they save money for a house of their own, a car, etc. We also know that Romania has a high divorce rate, of 1.5, ranked above average in Europe (as shown by statistics done in 2010) which leads to families splitting up, needing more than one vehicle(be it a car or not) thus increasing demand.

The average net salary in Romania is 441$ which means that despite other financial offers, the day to day life style most Romanians deal with is not very permissive for great automobile purchases. Even so, during these harder economic times, we can see the light at the end of the tunnel and observe the increase the average salary has had in the past years and wait for it to align to a higher level.

b. Economic environment

Basic data: Region: Eastern Europe & Central Asia

Income category: Upper middle income

Population: 21,390,000 (2012)

The GDP in Romania was worth 179.79 billion US dollars in 2011. The GDP value of Romania represents 0.29 percent of the world economy.

c. Socio-cultural environment

• Religion The majority of Romanians are members of the Romanian Orthodox Church, in fact they make up the second largest population of Orthodox Christians anywhere in the world after Russia. Though their religion was suppressed under communism, it has always played an important role in shaping the way they live. Romanians are very family oriented and communal and place a lot of importance on births, deaths and marriages and their relevant Orthodox celebrations.

• Identity Romanians have experienced centuries of turbulent and difficult times but have made it through to become an emerging republic and presence in Europe. They are proud of their country, and particularly their national heritage. As a result, they tend to be sensitive about cultural and political matters that concern their country but are always thrilled for any opportunity to share Romania with others.

These two factors combined can lead to a strengthening of the national “products” – such as Dacia.

d. Political, legal and regulatory environment

The government protection by using licenses, continuous rationalization of the excise prices,increase in import duties, foreign direct investment; these factors have constantly altered the final price of the manufacturing department and the whole business itself, which is why they must not be left aside.

These factors help the company’s developement in both the long and short run, as well as encourage buyers to look for local cars to purchase instead of from abroad, in hopes to spare money on taxes.

e. Technological environment

After the purchase made by Renault, Dacia has received significant investments to evolve their technologies.

f. Natural environment

Shortage of raw materials – due inflation rising iron ore and coal prices. Increased energy costs – rise in oil prices. Concern for the environement and shortage of funds has lead to experimenting with use of alternate fuels. Once this new technology spreads it may lower pollution rates and save money on gas.

3. Micro economic forces

a. Customers

- sphere of activity: automobile manufacturer;

- set of attributes which distinguishes consumers: income, age, gender;

- potential consumer segments:

• according to income, the targeted customers are those belonging to the middle class or even with a smaller income, the prices ranging from 7 000€ to 12 000€;

 they may not choose Dacia because of the range of substitutes, like Chevrolet Spark, Opel Van, or buying a second-hand car;

• according to age, targeted are young people and in their 30’s;

 they would not choose Dacia because of its image of ”communist”, heavy, obsolete car;

• according to gender, Dacia shifted its marketing towards women, deciding the brand is well positioned in the world of men, seen in the launch of Dacia Sandero, model distinguished by a friendly design and round shapes;

• Dacia introduced a programme called “Dacia Business Solutions” which addresses to large national and international companies, central and local public administrations, small and medium sized companies;

• owners of technologically obsolete vehicles who choose scrapp their cars in exchange for RABLA tickets;

Dacia increased its exports, as the Romanian market contracted and absorbed no more than 10% of the vehicles produced at Mioveni. Dacia’s most recent data shows that 97% of its customers are new, globally, while 3% of them previously owned a Dacia.

According to a study conducted during the past six months by Auto Plus magazine, 32 000 clients of the France automobile market decided that Dacia should be ranked 3rd in the customer satisfaction top, with a percentage of 86.1%. As for models, Dacia Sandero managed to be ranked as 6th overall, with 87.6% degree of customer satisfaction. Dacia Logan ranked 18th (82.2%).

In January of 2013, Dacia Sandero’s market share in France was 2.95%. Technically, every 3rd car sold in January, in France was a Sandero. Overall, Dacia’s growth since January 2012 being of 9.9%.

In Spain, Sandero’s market share in January 2013 was 3.4%.(March 2013)