PARIS -- Renault is targeting even bigger margins for Dacia, its "value for money" Romanian brand that has been a profit engine for the group.
Dacia margins are now 10 percent, CEO Luca de Meo said Tuesday in his "Revolution" strategic plan update, and the brand will reach 15 percent by 2030. That level is similar to what premium brands such as BMW and Mercedes-Benz are now achieving.
Renault acquired Dacia in 1999 and used it as a platform to launch the Logan project, a "design to cost" small car that would sell for under 5,000 euros.
The Logan and subsequent models have drawn from existing technology from Renault-Nissan and benefited from lower production costs in Romania and Morocco. A haggle-free pricing policy and focus on retail sales help to keep distribution costs low (Renault says they are 50 percent below the Western European average) and margins high.
Dacia is now poised to attack the more-profitable compact segment, starting with the seven-seat Jogger crossover this year. A compact SUV, the Bigster, is due in 2024, and it will be followed by two more compact models by 2030.
Read more: Why Dacia is reworking its winning sales strategy
"Dacia will boldly enter the C [compact] segment, where margins are at least twice as high as where it plays today," said de Meo, who describes Dacia as Renault’s "golden nugget."
"This will give Dacia the chance to double profit pool coverage from 15 billion euros to 30 billion euros, and increase turnover per unit by 50 percent," he added.