The automotive industry has been one of the most profitable sectors of the Romanian economy in recent years. According to the Romanian Association of Car Manufacturers, the automotive industry contributed EUR 9 billion to Romania's GDP in 2010.
The potential for development of the automotive manufacturing industry is higher in Romania than the other countries of Central and Eastern Europe. The production of cars per 1,000 people is 10 times lower in Romania than in Slovakia and three times lower than in Hungary.
The future shape of Romania’s automotive industry will depend on how much of the chain of value added it can capture. It is unclear whether Romania ever will have the kinds of industry tiers of suppliers and sub-suppliers that characterize the auto industry in other countries, or simply host final assembly and a few large suppliers.
To become more competitive, the Romanian automotive sector will have to continue to rely on foreign direct investment. For this, Romanian government authorities must strike an adequate balance between the social needs of the employees in this sector (salary levels) and the conditions required by foreign investors (cost competitiveness, infrastructure).
Romania has a small but growing automotive cluster with a network of suppliers and components manufacturers. Most of the Romanian suppliers work in joint ventures with foreign partners, the Romanian party providing production facilities, utilities and engineering services, while the international car manufacturers bring in their brand, global know-how and services. These JVs produce for both the domestic market (e.g. for Renault-Dacia) and the overseas markets. The two main car manufacturers in Romania are currently Dacia-Renault and Ford.
The domestic Romanian auto market had experienced steady growth, but took a sharp dip in sales in 2009 and 2010. The sector relied heavily on exports in 2010. The domestic market dropped sharply despite the introduction of a “cash for clunkers” program, offering a rebate to entice consumers to trade-in older cars and purchase new models.
Local automotive production hit a record high of 350,000 units in 2010, up 15% over 2009. Among domestic producers, Romanian car maker Dacia reported turnover of around EUR 2.7 billion in 2010 up 26.6 percent compared to the previous year. The company accounted for a large share of Romania’s exports.
Dacia’s introduction of the model Duster SUV was followed by the export of 81,000 units in the first seven months of 2010. Owned by the French group Renault, Dacia has managed to increase its turnover under a declining Romanian economy and a domestic auto market that lost another 25 percent of its volume.
Dacia’s reported net profit for 2010 was EUR 71.2 million, compared to EUR 56.1 million in 2009. The company’s net profitability was 2.6 percent, about the average of global car manufacturers.
The level of car ownership in Romania is two times lower than in Western Europe, and a third lower than in neighboring Central European countries. In Romania, the number of cars per 1.000 inhabitants is 198.6 (the total number of registered vehicles per Romania’s population). In April 2011, the total number of registered vehicles amounted to 5.438.491 vehicles of which 5.182.395 were cars
Despite plenty of room for growth, Romania’s automotive sales will recover to their 2008 level only over the next three to four years. Car ownership is heavily concentrated in and around the capital, Bucharest, where ownership rates are double the national average.
New car registrations are a common way to measure growth in a country’s rate of car ownership. In 2008 Romania ranked 10th in the EU with a total of 285,489 new cars registered, but with the arrival of the regional recession the yearly increase did not keep pace with markets such as the Czech Republic, Portugal, and Greece. By 2010, Romania was ranked 17th in EU, indicating the slow rate of new car sales and registrations.
Romania’s local production grew 18.4% across-the-board reaching a total volume of 350,912 units. Within this category, the production of cars (versus other vehicles) increased above expectations (15.8%) reaching a volume of 323,587 units. The production of commercial vehicles maintained a high level (27,325 units). Around 91% of Romania’s domestic car production was exported which indicates the importance of external demand.
In 2010, the Renault-owned Dacia brand continued to be one of the best performers on the European market. Its exports increased to 314,661 units, which allowed Romania to maintain its identity as a major car-producing country of Eastern Europe, along with Poland, Hungary, the Czech Republic, and Slovakia.
For Dacia, 2010 was the sixth consecutive year in which the company enjoyed double-digit sales growth. This progress allowed Dacia to increase its sales from less than 100,000 cars in 2004 to over 300,000 units in 2010.
Another notable event was the opening of Ford's new automotive assembly plant in Craiova in September 2009, adding a second major producer/exporter to the Romanian automotive sector.
Imports of all motor vehicles dropped 22.5 % in 2010, reaching only 76,078 units, and occurred in the context of a 21.5% decrease in passenger car imports (66,634 units).
The sales of imported diesel passenger cars experienced another substantial drop of 26%, in line with the average decline in the imported car sales.