Renault's investment in Dacia continues to pay off in the showroom and on the balance sheet. The low-frills brand set new sales records worldwide, in Europe and in France last year, which is why the Romania-based carmaker will not be "reinventing the wheel," commercial director Francois Mariotte told Automotive News Europe. That means Dacia plans to keep making upgrades to its lineup without boosting prices for its refreshed models.
Last autumn, for example, Dacia introduced redesigned versions of four key models, including its top-selling Sandero, but kept prices the same. Despite this, Mariotte is confident Dacia will remain a money-maker for its parent, but he, like all executives at Renault, refused to divulge whether analyst estimates that Dacia's profit margin is as high as 10 percent are correct.
"Are we making a lot of money? Let's keep a level head -- our models are for the subcompact and compact segments and prices remain affordable so we don't have margins like some premium carmakers do," Mariotte said. "But at the end of the day, we are certainly adding profits to Renault."
A key to Dacia's success is its appeal to budget-conscious buyers in Europe, where sales increased 11 percent to a new high of 415,010 vehicles, Renault reported last month. That growth rate was nearly double the pace of the overall European market, which rose 6.5 percent to 15.1 million vehicles, according to data from industry association ACEA.
Dacia's No. 1 market is France, where it had 112,000 sales last year and where it ranks as the No. 4-selling brand to private customers, Renault said.
While many mass market automakers rely on less-lucrative fleet channels to maintain their high volumes, Dacia has largely built its reputation on sales to private customers, who represent more than 80 percent of its buyers.
Mariotte said Dacia customers are cost sensitive but getting value for money is what is most important to them. "Sandero Stepway and Duster customers also tend to opt for pricier options," Mariotte said. "They are looking to make intelligent purchases and are not necessarily looking to just buy the cheapest car possible."
Through 11 months of 2016, the Sandero and Duster model lines were Dacia's No. 1 and No. 2 sellers in Europe. Sandero sales were up 16 percent to 155,803 while demand for the Duster rose 11 percent to 127,079, according to market researcher JATO Dynamics.
Globally, Dacia boosted sales 6 percent to 584,219 vehicles thanks to a strong contribution from Morocco, where its volume increased 16 percent to 43,408 units last year. Dacia and the Renault brand have a combined market share of 37.8 percent in Morocco, where they produce cars in Tangier and Casablanca.
Dacia is confident that sales will remain strong this year as it plans to roll out the new-generation Duster. Other than that, however, it will mainly rely on its recently refreshed lineup to meet demand. Some of the upgrades include new front lighting, improved engines and the addition of a dual-clutch transmission to the Duster.
Market watchers say that Dacia has succeeded by keeping its prices attainable, especially for customers in EU markets hit hardest by the last recession.
"We are still seeing a lot of customers renewing vehicles after a hiatus. For customers wanting a new car, Dacia is one of the cheapest ways to achieve this," Ian Fletcher, a senior analyst for IHS Automotive, said. "These types of customer are less likely to care how recently it has been replaced, which makes the age factor less relevant."