PARIS - Nine months after buying Dacia for $50 million, Renault faces a series of challenges at its Romanian subsidiary.
Romania has plunged into economic crisis in the past three years. New-car sales dropped 60 percent in the first two months of 2000.
'Only since March has a kind of recovery has started,' said Christian Esteve, Renault's top manager for eastern Europe, including Romania, Bulgaria and Moldavia. Esteve also serves as Dacia's vice president for sales and finance.
Production at Dacia's plant in Pitesti fell from 105,000 units in 1998 to 85,000 in 1999. The target for 2000 is 60,000-65,000 units.
The plant mainly builds the Dacia 1310, a lower-medium sedan and wagon derived from the old Renault 12. It also produces the 1310-based Nova developed by Dacia engineers and launched in 1996, plus light commercial vehicles.
'Our top priorities are to clean up the manufacturing side and to rebuild a dealer network,' said Esteve.
Some major components once made in-house at Dacia, including seats, wiring and transmissions, have been outsourced. Renault's strategy is to deal with about 30 big suppliers that will work with Romanian counterparts to improve Dacia's poor build quality.
Simultaneously, Dacia's work force will be sharply reduced. Dacia employed 26,500 when Renault took over. Already, 2,500 have left. Within five years, Renault expects to have about 8,000 workers at Dacia. Another 7,000 will be employed directly by suppliers.
Dacia's future relies on the introduction of the so-called 'A5,000 car' - a low-cost model due in 2004 that will be sold in emerging markets around the world.
'Development of the car will be done more by Renault than by Dacia,' said Esteve. 'But it's critical for us.'
In the meantime, Esteve said an improved version of the Nova would be Dacia's main model.