Dacia says rising compact car prices create opportunity for growth

PARIS -- After winning record market share in Europe in 2022, Dacia is preparing for a leap into the compact segments, where the brand's top sales executive believes that rising prices will leave an opening for new models such as the Bigster SUV.

Global sales at Renault’s low-cost brand increased 6.8 percent to 573,800 units last year. Registrations rose 16 percent in Europe, Dacia's main market, making it one of the fastest-growing brands in the region, according to figures from Dataforce.

Market share in the EU countries was at 4.2 percent, Dacia said, representing a high-water mark for the brand, which Renault acquired in the late 1990s. The previous high was 3.7 percent in 2019, when global sales were about 735,000. Outside of Europe, Dacias are sold in Mediterranean markets such as North Africa. 

"We do not have ambitions to grow geographically," said Xavier Martinet, senior vice president sales and marketing. "Our big conquest market is the C (compact) SUV segment in Europe."

Martinet said increasing safety and pollution regulations will mean a significant price increase in the compact SUV segment, which he said has the largest profit potential in Europe.

A few years ago, he said, most mainstream compact SUVs cost about 25,000 euros, but with the coming Euro 7 pollution regulations and GSR2 safety rules, "you will see prices of C SUVs climbing deep into the 30,000 euros and even into the 40,000 euro" range, he said.

Dacia models such as the Duster small SUV, the Spring battery-electric minicar and the Sandero small car undercut their competition by thousands of euros. Dacia says it offers unbeatable "value for money," with a design-to-cost ethos that combines off-the-shelf Renault technology and low labor costs at its factories in Romania and Morocco.

Even though Dacia models have very low base prices – the Sandero starts at about 11,000 euros in some markets – a majority of customers opt for higher trim levels, helping the brand achieve margins that Renault Group CEO Luca de Meo has confirmed are about 10 percent. De Meo has set a target of 15 percent margin for 2030, in line with current returns at premium brands like Mercedes-Benz and far higher than the Renault brand.

As prices increase, whether a result of regulations or inflation, he said, some compact buyers are going to balk at paying that amount and will take a look at Dacia’s offerings in the segment, which will include two more vehicles by 2027 or 2028. 

"This where Dacia has an asset," he said. "We can keep attracting our historical customers as well as those from other mainstream brands who do not want to pay more for their vehicles."

Martinet would not comment on the two compact vehicles that will be launched after the Bigster in 2025. A replacement for the Duster, on the same CMF-B platform as the Sandero, will arrive first, expected in the first half of 2024.

Martinet said it was a "very delicate balance" to maintain Dacia’s price position while upgrading the brand to increase profits and attract compact buyers.

"We still want to remain the best value for money proposition, but we do not have plans to have the same pricing as the other mainstream brands in Europe," he said. 

"It requires making choices every day," he added. "We have had discussions about items that cost 50 cents, but if you save 50 cents over thousands of cars, or over several years, it adds up to a certain amount of money."