Romania's Dacia Logan becomes cult car for crisis-hit Germany

By bne IntelliNews March 9, 2009

Graham Stack in Kyiv -

German Chancellor Angela Merkel might have recently blown off emerging Europe's bid for EU direct financial support, but one of the region's countries has benefited from her anti-crisis measures, albeit unintentionally. Romania's carmaker Dacia is seeing exports of its budget model Logan to Germany soar.

To support plummeting domestic car sales - and of course help the environment - Merkel's government introduced an "environmental bonus," paying owners of cars over nine years old €2,500 to junk their smelly old bangers and buy new environmentally-friendlier wheels.

As a direct, but unintended, result, Dacia Logan sales surged six-fold in February. The Logan now enjoys cult status in Germany as an ironic symbol of the crisis.

The reason: German policymakers forgot that owners of nine-year-old cars in crisis conditions aren't likely to fork out for a brand-new Merc, BMW or Audi, even for a €2,500 euro bonus. Rather they gun for the €7,500 Logan. The €2500 euro bonus constitutes a 33% reduction - which car dealers are now writing directly onto price labels.

So Dacia is the cheeky winner of Germany's stimulus plan, proving how difficult such things are in a globalised world.

And the sudden surge in demand from Germany couldn't come at a better time for Dacia. In the last quarter of 2008, Romanian demand for cars collapsed, leading to a production stop at the plant that employs 14,000.

Now the plant will restart production for a month to assemble 30,000 models for export to Germany.

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Romania's Dacia Logan becomes cult car for crisis-hit Germany

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