Renault is planning to employ an additional 500 people in Romania in engineering, services and production, the French automaker announced on March 25. This follows news from US car manufacturer Ford on March 22 that it plans to invest up to €200mn to produce the Ford EcoSport small SUV at its plant in the southwest Romanian city of Craiova, starting in autumn 2017.
Renault is one of the biggest employers and exporters in Romania and the new jobs offered by the company are proof that it plans to grow in the country. Together with the production of the new model at Ford, this will boost the Romanian car production industry, which accounts for almost half the country’s exports.
Renault is offering 300 jobs in research and development (R&D) and another 200 in the supply-chain, post-sales and market research sectors, it said in a statement. In addition, Renault is offering 100 internships.
The French car giant holds a 99.43% stake in Romanian car manufacturer Dacia and has invested over €2.2bn in the country. Today, it is Romania’s largest company by turnover. Renault acquired a 51% stake in Dacia when it was privatised in July 1999, five years after losing out to Volkswagen in the race to acquire fellow east European carmaker Skoda, in the Czech Republic. Through its acquisition of Dacia, Renault gained a base in Southeast Europe, and access to a workforce that is cheaper than in either Western Europe or other Emerging European countries such as Poland and Slovakia, even after Romania’s entry to the EU.
Renault also owns in Romania Renault Technologie Roumanie (RTR), the only complete automotive engineering center in Eastern Europe and the Mediterranean region and the largest Renault engineering center outside France, with approximately 2,300 engineers.
Ford has been present in Romania since 2008. So far, it has invested more than €1bn in its Romanian manufacturing operations, according to the group’s representatives. Ford currently produces the Ford B-MAX multi-activity vehicle and the 1.0-litre EcoBoost engine at its Craiova plant. It said it will continue to seek opportunities to build further products in Craiova so that it can fully utilize the facility’s capacity and assets.
German automaker Daimler is also reportedly considering Romania for a new plant, though other CEE countries such as Slovenia and Hungary are also possible destinations.
Romania manufactured 62,875 vehicles in the first two months of this year, 9% down compared to the same period last year, according to data from industry association APIA. Out of the total, 53,234 were produced by Dacia and 9,641 by Ford. Broken down by car model, Dacia Duster saw the largest number of produced units in the period (30,380, 11% up on the year), followed by Ford B-MAX (9,641 units, 10.4% down y/y) and Dacia Sandero (8,2013, 14.9% down y/y).
Most of the vehicles produced in Romania, 92.9%, went to foreign markets. 58,421 vehicles were exported in January-February, but the number went down 7.9% on the year. The most popular models for export were Dacia Duster, Ford B-MAX and Dacia Sandero.
At the same time, car sales in Romania rose 17.9% y/y to 14,960 in the first two months of the year of which 77.1% were sales of passenger cars (+12.2% up y/y). The number of commercial vehicles sold rose 42.1% y/y.
Broken down by brand, the most popular passenger car brand sold in January-February was Dacia with a 28.2% market share (5.5% down on the year), followed by Volkswagen with a market share of 11.8% (35% up on the year) and Skoda with a share of 10.7% (+8.7% y/y). Ford came next with a market share of 6.7% (+19.7% y/y). Broken down by model, the most popular was the Dacia Logan with 1,469 units sold on the domestic market. It was followed by the Dacia Sandero and Skoda Octavia.
There are some concerns about the future competitiveness of Romania as a manufacturing location. Dacia Renault Romania’s former director general, Nicolas Maure, warned in October that labour costs in the southeastern country have been rising and that has made the company to look for higher value-added activities to remain competitive.
Maure has also voiced concerns about the extra costs related to Romania’s poor road infrastructure. He estimated that a motorway connecting the Dacia plant with the Sibiu-Nadlac motorway in the western part of the country, and further with Hungary and western Europe, would help the company save €30 on each car it produces in Romania. Around 5,000 members of a trade union at Dacia protested on March 7, unhappy that the authorities have not started work on a motorway connecting the southern part of the country with the central city of Sibiu, as they feared that the authorities’ lack of action could put their jobs at risk.
Meanwhile, imports of second hand passenger cars rose significantly in January-February, by 11.1% y/y. Executives at both Dacia and Ford have been lobbying the Romanian government to introduce restrictions on used car imports, to give local manufacturers more opportunities to sell to the domestic market.