Dacia battles to keep prices down as CO2 pressure rises

Dacia is a huge success in Europe for parent Renault Group because it delivers on its “value-for-money” philosophy. However, the cost of achieving emissions compliance, especially with electrified powertrains, could pose a threat to the low-cost brand’s profits and sales. Philippe Buros, a veteran of Dacia in Romania who is the chairman of Renault’s Europe region, talked with Automotive News Europe Correspondent Peter Sigal about how Dacia will manage this transition.

Does Dacia need electrified powertrains in Europe to bring down CO2 emissions and how will you do this?
First of all, our CO2 emissions are global for Renault Group, including Dacia. The main selling point for Dacia is “value for money,” and as part of that Dacia takes technology that Renault has, but after a delay. So, Dacia will pick up everything that Renault has in terms of electrification, because we will be required to electrify the brand, either with full-electric cars or hybrids. It’s true that Dacia is not electric today but there are many brands in Europe that aren’t electric, either. I think that everyone will have to go electric because it’s an underlying trend.

Do you think Dacia should have lower emissions for environmental reasons?
Yes, and our customers will be asking for electrification. When Dacia started to grow most of our customers in France lived in rural areas, but today we have a lot of buyers in cities such as Paris. They will want an electric Dacia. But, they will want one that is less expensive than an electric Renault.

Will Dacia get a version of the Renault Zoe EV?
Maybe, but it would have to be the same price difference as between a Dacia Sandero and Renault Clio [small hatchbacks]. Today, one of the ways we are reducing emissions is with LPG [liquefied petroleum gas] options. When you do LPG it lowers your emissions and it’s also a dual-fuel system. It’s especially popular in Italy, Poland, Spain and Switzerland. We are the only brand that offers the whole range with LPG versions. In Italy we have the highest share of the LPG market, ahead of Fiat. For the Duster, more than 50 percent of sales in Italy are LPG and that is growing.

When will the cost of a full-electric vehicle come down enough for Dacia to have one?
I think in two or three years we will electrify Dacia.

In general, the cost of all vehicles is going up because of emissions regulations. Can Dacia continue to offer “value for money” as its main selling point?
The problem with the regulations is that you are adding 1,000 to 1,500 euros to the cost. When it’s a 100,000-euro car, it’s easier to absorb. When it’s one that costs 8,000 or 9,000, that is 10 percent or more. That is why there is a delay [in Dacia using Renault technology] and why we are trying to wait as long as possible to amortize the technology.

Safety regulations such as new NCAP testing will add to costs. How are you dealing with that?
Prices everywhere will go up, but we have to ensure that the price gap between Dacia and the rest of the market, which is about 20 percent less, is maintained. Otherwise, volume will go down. But we have to continue to offer “value for money” and a relatively high level of equipment but at a lower price. It’s not just a car with four wheels.

Do you plan to use other technologies from the Renault-Nissan alliance, such as lane keeping or adaptive cruise control?
Yes, but our customers aren’t asking for that. Their needs are simpler: to get from Point A to Point B. For this they want air conditioning, electric windows, power steering but they don’t want a self-driving car because they know they will never get a self-driving car at 10,000 euros. When we are required to put it in, we will do so. But we will try to do it as late as possible, otherwise it will break Dacia’s business model.