Automobile Dacia Pitesti posts $21.2 million loss

Automobile Dacia registered net losses standing at about 21.2 million dollars (420 billion lei) on the fist half of this year, as compared to losses of 1.4 million dollars (18 billion lei) on the first six months of last year. This is mainly due to the drop in sales, amid a general slump of the car market since the beginning of the year.

To sell its cars, Dacia has constantly offered promotional prices, which led to lower cash-ins. On Thursday, the company announced new discounts, ranging between two and three million lei.

French group Renault, which owns the majority stake in the Colibasi-based carmaker, is not disappointed yet with these results, which are in line with the company’s budget on year 2000. The French group has invested 57.4 million dollars in the Romanian company, since it was privatised in September 1999. The concern pledged to pour 219.7 million dollars in Automobile Dacia within five years.

The reasons behind the drop in sales since the beginning of the year are lower purchasing power and the introduction of Euro II norms.

“The negative results posted by the company were due to the falling sales volume, which followed the market’s general trend, and to commercial efforts meant to support sales,” Dana Taras, a communication director with Dacia, told Ziarul Financiar.

“Renault is very confident in the future of Automobile Dacia despite these difficulties, which are of a situational nature, and as a result has continued its investments, observing all pledges made to SOF,” she also said.

Since the beginning of the year, Dacia has suffered a drastic drop in sales, accounted for by several causes.

Thus, since January 1, car prices have risen because of the obligation to adjust all vehicles to Euro II norms, to which was added lower purchasing power.

Moreover, car market analysts take into account an “emotional reason,” in the sense that part of potential customers put off the acquisition of a Dacia unit, waiting for Renault, which has just bought the main stake in the carmaker of Colibasi, to launch a new Dacia model. However, this new model will not appear before 2003. The car market has started recovering during the second half of the year and so has Dacia. Thus, in June, sales were close to sales registered during the similar period of last year. It is very likely that, by the end of this year, sales should continue their ascending evolution, the more so as the new Nova model, which will undergo a face-lift, will be launched this autumn.

To the end of coping with the unfavourable market conditions, Dacia drastically reduced its production in April and May, to a quarter of the previous months’ average and then came back to normal production.