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Dacia-The budget car company taking the UK by storm
Renault, the French automotive manufacturer, has done well in recent years and has weathered the storm of the on-going recession period better than some of its US or Japanese counterparts, with good revenue growth in both 2010 and 2011 for the group. Despite a marginal drop in overall revenues in 2012, the company produced double digit revenue growth in 2010 and 2011, a sign that its business has continued to push new revenue streams even in periods of difficulty. Renault has been successful, not only in its traditional markets in Europe, but also in new and fast developing market such as Brazil, Russia, Algeria and Iran.
There are a number of explanations for its stability, including its solid development and manufacturing partnerships with Nissan, but recently one of the key elements is the development and roll out of the Dacia brand. Dacia is an automobile company that currently produces a small range of vehicles aimed at the low cost end of the market. It has been the fastest growing automotive producer in Europe since 2004, its cars have been very successful in France and in the last few years the company has expanded in to the UK.
Dacia is an ex-Romanian state owned vehicle company that Renault bought in 1999. The plan for the modernization of the brand has been simple, to undercut rivals with a very cheap and reliable product that can be sold anywhere. An example of the result of this plan is that the brand has been able to produce cars at a significantly cheaper price than its other rivals, aiming at the low cost end of the market and producing the cheapest car on sale in the UK at £5,995.
The Dacia business model is based on a few key elements, simple functional vehicles, proven Renault technology, undercutting rivals significantly and rolling out on a global scale due to Renault’s vast dealership network. This has allowed the company to undercut rivals with a product that on the face of things, doesn’t appear to be poorly constructed or likely to be unreliable, which are problems similar companies have faced in the past when attempting this business model. This means that the company is spreading globally and has been very successful in recent years, upon entry to new markets.
Dacia has formed a good product package which has allowed it to rapidly expand in Europe and other regions. It does face issues for the future however in terms of threats from rivals copying its business model and the potential damaging of the Renault brand by providing budget cars alongside more premium options.
To read more about the Dacia Company follow this link to our in-depth case study on the subject of Renault and Dacia’s recent success: Dacia, The no frills automotive brand, that is becoming a serious world contender.