Dacia's Fourmont: NBR rate cut indispensable to our survival

The raise of the monetary policy rate from 7.5% to 10.25% operated by the National Bank of Romania last year was one of the factors that caused Dacia’s sales to plummet on the Romanian market, Francois Fourmont, general manager of Automobile Dacia told ZF in an interview.

At the same time, the restrictions imposed by NBR on lending to individual customers that came into force last fall, too, have left a significant part of Dacia clients off the list of credit beneficiaries. “The interest on loans in RON our clients used to take went up from 10.5% in January 2008 to 17-19% last autumn, so that instalments increased accordingly. Our clients are not among the richest in Romania. They usually take out an eight to ten-year loan. Most could not put up with a 30% rate increase,” Fourmont explained. The manager of Automobile Dacia says that financing in RON is very important to Dacia’s clients considering 70% of Dacia’s acquisitions are made with loans in RON. The increase in interest rates on RON loans, along with the new auto tax introduced in July 2008 (which allowed massive imports of second hand vehicles from the EU) and the decline of the foreign financial markets in October (which induced a feeling of insecurity, causing acquisitions to be postponed) led to the abrupt decline of car sales in the last few months of last year. “Such a combination of negative factors was hardly predictable. Nobody expected it. This is the worst period of my professional life,” Fourmont confessed. Everything started when the US government allowed the Lehman Brothers to collapse, last September. From that moment on, everything changed. Banks stopped granting loans to each other and loans to customers became significantly more expensive. Dacia’s sales continued to go down in January, 70% compared with the same time of last year, after a 40% decline in November and a 50% decline in December. If the pace compared with the same time last year maintains, Dacia will drop the third shift, that is one third of its 14,000 employees. “We will wait until February or March and in case we see the situation does not change we will have to drop the third shift. We will not be the only ones affected, our component suppliers will be affected, too, as well as the dealer network. Just think that if our sales are down to half, theoretically half of the dealers’ staff will be unnecessary,” said Fourmont, explaining the most optimistic forecast about this year’s performance.