Pile them high

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Nov 20 2008, 23:04 IST

Tags: Special Report | Cars In Emerging Markets

When in 1999 Renault spent $50m to acquire a controlling stake in Dacia, a sickly Romanian carmaker formerly owned by the state, it was unimaginable that it would become one of the jewels in the French car firm’s crown. This year, at its factory in Pitesti, not far from Bucharest, Dacia will churn out more than 300,000 Renault-Dacia Logan saloons and its cousins. In 2009 the number is expected to rise to 400,000, including kits exported to other Renault assembly plants. Five months ago the millionth Logan since its launch in 2004 rolled off the line.

The chances are that it was a car from Pitesti, the Logan’s “mother plant”, but it could have come from any one of seven other production sites in Russia, India, Iran (with two), Morocco, Brazil or Colombia.

Conceived as a low-cost car for emerging markets, the boxy-looking Logan has become one of Renault’s most profitable vehicles. Whereas Renault’s margins across its range are an anaemic 3%, the Logan earns at least twice as much. By 2010 Renault expects to be making more than a million Logans a year, despite its failure to find a partner in China to build them. No wonder most global manufacturers are jostling to get into the low-cost game.

But what exactly is a low-cost car? Mark Bursa, the emerging-markets commentator of Just-auto, a car-industry website, argues that the term can include anything from Fiat’s rather upmarket Linea saloon and the Logan to “legacy” cheapies such as the ancient Lada

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