The general manager of Renault Nissan Romania foresees tighter competition on the domestic car market amid a market decline after the boom seen in recent years.
“The question I”m asking myself is whether we”ve reached a market maximum. I believe that at 250,000 new cars sold, considering the population dimension, the level reached by financing and the degree of indebtedness, this figure cannot continue to grow very much, especially as the psychological impact of the additional revenues generated by the single taxation quota has now vanished,” suggested Nicolas Ianculescu, head of operations with Renault Nissan Romania.
In this context, the commercial battle felt during the past year through the numerous promotional packages on offer will get tougher because a share increase on a stable market can only be achieved by gaining the market share of rival firms.
“Romania will witness a much fiercer battle, between the dealers of a brand, who might sacrifice margins related to the sale of new cars to achieve volume premiums. This is however a double-edged weapon, since a zero margin in the context of an imbalanced financial and operational structure is a false target,” Ianculescu believes.
The reduction of prices by just a few percentage points would be particularly appealing for the purchasers of medium and superior category cars.
“In the case of a 20,000-euro car, two percentage points would mean a 400-euro reduction, a sum that might lead to an upgrade in optional extras. The prices increase in the case of more expensive cars, so that I believe it would be possible for a customer in Bucharest, having decided on a car, to also phone dealers in Cluj, Brasov or Iasi. This might not happen for the moment, but I see no reason why in the medium term Romanian customers should not act as the Europeans do from this point of view. This has happened in France, it”s happened in Germany and I see no reason why it should not also happen in Romania,” Ianculescu believes.
A slump on the car market this year would follow a period of boom, with the sales of new cars having tripled over the past five years.
“It is not very often that one comes across such an opportunity. Dealers drew up a plan and some prognoses at the beginning of last year, but they almost doubled their initial predictions at the end of the year,” the Renault Romania official stated.
Facing a declining market and lower margins derived from the sale of new cars, dealers are forced to develop several activities so as to diminish risks, he suggested.
“This is the case with car servicing or used car sales. While the profitability of new car sales is reduced, this is offset by servicing or used car trading,” Ianculescu added. ionut.bonoiu@zf.ro