European Malaise Not Slowing Down Renault’s Dacia

PARIS – Renault begins refreshing its Dacia line of entry-level cars eight years after the 2004 launch of the Logan. Prices remain unchanged despite additional equipment, thanks to a policy of carryover and parts-sharing on a single platform.

The Logan sedan and its 5-door Sandero hatchback platform mate get a revised engine compartment to house the new 0.9L, 3-cyl. TCe gasoline engine as well as two small diesels and 1.2L gasoline and liquefied-petroleum-gas engines.

The Sandero, its best-selling Stepway version and the Logan now share everything ahead of the B-pillar, and 80% of the components in the vehicles are the same. More than half of the parts are carryover, says Arnaud Deboeuf, entry-level program director for the Renault-Nissan Alliance.

The rear-end chassis, for example, is borrowed from the original Logan, and much of that already had migrated from the first-generation Clio introduced in 1990. Much of the front end, including the radiator and other under-hood components, are carried over from the Dacia Lodgy, a van introduced at the Geneva auto show that uses the new small engines.

Thus, the M0 platform, slightly upgraded, continues its life as the basis for Dacia products after having passed 2 million units of production.

Volume is the key consideration in keeping costs low, Deboeuf says, adding, "And where there isn't volume behind an idea, it won't work." He says that means it is unlikely there ever will be a Dacia coupe.

Dacia programs are the descendents of the $6,000 car that then-Renault CEO Louis Schweitzer wanted to develop. Having seen Ladas sell in Russia for that price in the 1990s, he decided it would be strategically good to develop a modern, robust car that would be affordable in emerging markets.

When Renault took over Romanian auto maker Dacia in 1999, his idea began to take shape. Although prices exceed $6,000, Dacia has been a greater success than Schweitzer had imagined, with Western Europe now accounting for about half its sales.

With the higher volumes and consequently less-expensive parts and amortization, the new Dacias could have been sold at a lower cost than their predecessors, but Renault chose to add features to the cars and hold the line on the price.

"Lowering the price by €300 or €400 ($380-$500) wouldn't help sales as much as giving people what they want," says Alain Lehmann, sales director-France.

David Holderbach, product director-entry range, notes that “with all the used cars that are more and more equipped, we anticipate a rise in what our customers coming into the market will demand, principally in the area of comfort.”

Requests passed on from dealers to product developers include cruise control and a way to display the outside temperature. Both now are standard on the models, which start at €7,700 ($9,800) for the Logan and €7,900 ($10,000) for the Sandero.

The cars are modern but not gadget-laden. Rear windows are raised and lowered with cranks. The ignition uses a standard key instead of electronics. The handbrake is a lever between the front seats.

Owners want reliable and inexpensive cars, Lehmann says. Whereas Renault-brand models in France earn five stars, the highest rating from the EuroNCAP vehicle-safety program, the Dacias likely will get only three. Customers don't want to pay for more, he says. Still, features include two side airbags and Isofix connections for child seats.

The chrome-accented instrument panel is better-looking than in first-generation Dacias.

"The instrument panel is always under the eyes of the driver," Deboeuf says. "It is there that you have to spend money."

The new Logan has benefited from a facelift, sharing the sleeker look of the Sandero’s front end. The first-generation Logan looked boxier, somewhat dated and less appealing than the better-looking Sandero, which was developed for Brazil.

All trim levels now have hydraulic power steering, and new to the lineup as an option is a €250 ($315) 7-in. (17.5-cm) touchscreen with icons for radio, telephone, map, music, GPS navigation and settings, introduced earlier on the Dacia Lodgy and Dokker people-movers.

The Dacia brand accounts for 17% of Renault’s volume in Europe. The same cars are sold under the Renault brand in countries including Russia and India. Deliveries of Dacia and Renault vehicles built on the M0 platform will approach 1 million units this year, compared with 813,000 last year.

The availability of reliable, basic cars has caught on with a middle class in Europe that was losing purchasing power. In France, Dacia is the fifth best-selling brand to individual buyers. It rose to 4.2% of the French market in 2010 when government incentives helped boost deliveries of B-segment cars. Its current share is 3.7%, even with the first-generation Logan and Sandero at the end of their runs.

Lehmann says Dacia purchasers in France fit the profile of all B-segment buyers. For the overall segment, 51% of buyers are male and the average age is 51. For the Sandero, 50% are men, with an average age of 50. Of buyers in the overall B-segment, 37% are salaried workers and 27% are retired. For the basic Sandero, 49% are salaried while 17% are retired.

The Sandero Stepway, which is 1.6 ins. (40 cm) taller even before the roof rack is added, attracts a wealthier, more masculine (55%) audience with an average age of 52 and more retired and self-employed customers than the segment average.

Lehmann describes Dacia's French customers as family-oriented, not necessarily unable to afford a costlier car, but decidedly against spending more. "They have other priorities for their money," he says.

"They like Dacia because we don't do rebates, and they don't have to negotiate. People are reassured by the transparency of the offer."

For all customers in the B-segment, style is the most important factor in the choice of a car, followed by cost, cited by 29% of buyers. Among buyers of Dacia’s Sandero, price is the biggest consideration, at 71%.

The Sandero has a number of trim levels, including several Stepway versions, and each new level includes more features and options as standard. At the Prestige trim level, the price is €13,590 ($17,250), and the only remaining options are a €99 ($127) GPS map for the whole of Europe and a €120 ($150) spare tire.

More than 80% of Dacia customers in France buy the spare tire, Lehmann notes.

Dacia's policy of price transparency and its avoidance of sales to rental fleets creates a financial advantage at resale time, Lehmann says, adding, "Our residual values are eight to 10 (percentage) points higher than other cars in the segment."