On the eve of 2009 car makers in SEE were tightening their belts to survive what they expected to be the most difficult year in their history. A year later they reported record high output and sales figures, and unveiled plans to start rolling out new models. Government-sponsored stimuli for the sector, however, are expected to expire this year, leaving car makers out in the cold.
Unlike Central Europe, SEE failed to attract greenfield foreign investment in its car manufacturing industry after the end of the Communist era, yet it boasts two factories of France’s Renault, one factory majority owned by U.S. Ford Motor Company, and a joint venture of Italy’s Fiat and Serbia's Zastava.
Renault, the biggest car manufacturer in the region of SEE, expects economic conditions to remain difficult in 2010 with a European market that could contract by 10% versus the total industry volume of 2009. The company plans six new product roll-outs in 2010 to maintain the market share momentum of the second half of 2009 and generate positive free cash flow, it said in its 2009 financial report published last month.
Slovenia-based Revoz, 100% owned by Renault since 2004, said its 2009 performance was very positive. Revoz boosted its 2009 output by 7% to record high 212,680 cars, up 6% from its previous high in 2007. It exported 98% of its production last year, mainly to France, Germany, Italy and Belgium.
"In 2009, Revoz, Slovenia’s sole car manufacturer, to a large extent benefited from the incentives of the European countries for the purchase of new cars, as the number of orders rose mainly in the lower price bracket, where the Renault Twingo and Clio II models belong to," Revoz told SeeNews in a statement.
However, Revoz said it expects orders to start falling as some European governments stop funding new car purchases this year, and the Slovenian plant’s most important model by volume, Twingo, enters the second phase of its life cycle when orders naturally decline.
At the beginning of this year orders remain at a high level and the factory, based in Novo mesto, plans to keep its night shift. Moreover, it plans to launch production of a niche model in the first half of this year. On the European market, the new model will be produced only in Novo mesto but the output will not be high as is the case with niche models, Revoz said.
Revoz estimates its 2009 profit at 20.6 million euro ($28 million) on revenue of 1.28 billion euro, its chairman Ales Bratoz told Ljubljana-based daily Delo earlier this year. The company reported a net profit of 18.7 million euro on net sales of 1.21 billion euro in 2008.
Renault has one more unit in SEE, Romanian car maker Dacia, which sold 311,332 cars in 2009. The Dacia brand offering, fitted well with government support packages, enabled sales to increase by 20.5%, Renault said in its 2009 financial report. Brand sales rose by 91.1% in Europe as a result, and Dacia is now one of the top-10 best selling brands in France, it added.
In the German market that was galvanised by scrappage bonuses, Dacia sales more than tripled to 84,875 in 2009 from 25,624 units a year earlier, Renault said. Last year the German government offered a 2,500 euro premium to consumers who trade in their 10-year-old cars for new, fuel-efficient models. The programme has been criticised by some Germans, saying that it just postpones the crisis in the car manufacturing sector.
Dacia reported a 230.2 million lei ($75.8 million/56.1 million) profit last year, up from 222.2 million lei in 2008, according to a report on the merger via absorption with its subsidiary Auto Chassis International.
Dacia said on March 2 that interested buyers can already place orders for its new low-emission off-road vehicle Dacia Duster. The 4x2 and 4x4 versions will be rolled out progressively from the end of this month in Europe, Turkey, Africa and the Middle East.
Ford Motor Company entered the Romanian market in March 2008, when it wrapped up the acquisition of a 72.4% stake in Automobile Craiova, the sole owner of car maker and distributor Daewoo Automobile Romania.
Nadia Crisan, Ford’s representative in Romania, said that with 300 cars rolled out, Ford Romania has met its production target for 2009.
“Since we took over the plant in March 2008, we were mainly focusing on employee training, quality and standard issues, and not necessarily on the volume of production,” Crisan told SeeNews.
Ford expects to sell 13.0 to 14.5 million motor vehicles in Europe this year, about 10% down on 2009, but there are many risks and opportunities that could either hinder or help the market.
The company keeps its commitments for Romania and the Craiova plant, and a new small car is scheduled to go into production in the near future with the exact timing to be announced at a later date, Crisan said.
In January, the government in Bucharest agreed to issue a guarantee to Ford for a 400 million euro loan from the European Investment Bank (EIB) that the company will take out to expand its Romanian plant. The state guarantee will cover 80% of the loan.
EIB said that the loan will finance investments in the Craiova Ford plant for the facilities and tooling needed for the production of a new B-segment vehicle with a start of production in the near future, and production of the existing model of a light commercial vehicle and a new model scheduled to be launched later. The expanded production capacity will represent an annual output of up to 300,000 vehicles, EIB added.
Fiat also set foot in the region in 2008 through a 940 million euro deal for joint production of its Punto model in the plants of Serbian car and truck maker Zastava. The Italian car maker and the Serbian government formed a 67-33 joint venture, Fiat Automobili Srbija (FAS), for the manufacturing of cars in the plants located in the central town of Kragujevac.
FAS, which launched production in March 2009, sold 16,081 Punto Classic cars last year. In order to boost production at FAS, last year the government in Belgrade offered Serbian citizens to trade in their old cars in exchange for 1,000 euro off the price of a new Punto.
(SeeNews reporter Sabina Kotova contributed to this story)
