UCLL 5000 euro car - Dacia case study (students).pdf

# Introduction to globalization and Dacia This section introduces the overarching theme of globalization within the automotive industry, specifically focusing on the Dacia case study, and provides context for the analysis of Dacia's operations and strategy [1](#page=1) [2](#page=2). ### 1.1 Globalization in the automotive industry Globalization in the automotive industry refers to the increasing interconnectedness and interdependence of national economies through trade, investment, and technology. This phenomenon has profoundly impacted how car manufacturers operate, from design and production to marketing and distribution [1](#page=1) [2](#page=2). ### 1.2 The Dacia case study Dacia serves as a prominent case study to examine the effects of globalization on an automotive brand. The document outlines an analysis of Dacia's strategy and results in the context of global automotive market dynamics. The central question explored is the outcome of Renault's new policy for the Dacia brand [13](#page=13) [1](#page=1) [2](#page=2). > **Tip:** Understanding globalization's impact on industries like automotive is crucial for analyzing company strategies and market positions. Dacia's trajectory offers valuable insights into how established brands adapt and thrive in a globalized environment. ### 1.3 Context and objective of the study The material is presented as a lecture by Attila TURI, a Lecturer in Logistics & Supply Chain Management, at Politehnica University Timişoara and UCLL University of Applied Sciences. The date of the lecture is December 2, 2025. The core objective is to analyze the results of Renault's policies concerning the Dacia brand within the broader framework of automotive industry globalization [13](#page=13) [1](#page=1) [2](#page=2). --- # Dacia's production and sales evolution This topic examines the growth trajectory of Dacia's production capabilities and its expanding global sales network over time. ### 2.1 Historical and current production capacity Dacia's production capacity has seen a significant increase since its early years. In 1995, Automobile Dacia produced 76,000 units with a maximum capacity of 110,000 units. By 2024, its production had risen to 309,492 units, with a maximum capacity of 350,000 units. The utilization rate also improved from 69.09% in 1995 to 88.40% in 2024, marking a 19.31% increase [52](#page=52) [56](#page=56). Dacia's production is distributed across key sites. In 2019, the Automobile Dacia plant in Mioveni, Romania, produced 349,466 units, focusing on more expensive Dacia models. Concurrently, the Renault-Nissan plant in Tanger, Morocco, produced 303,558 units, concentrating on cheaper Dacia models [45](#page=45). ### 2.2 Global sales evolution Dacia's global sales figures have shown a consistent upward trend. In 2022, total internal production and global sales reached 573,800 units. This figure grew to 658,321 units in 2023, representing a 15% increase. Projections for 2024 indicate a further rise to 676,340 units [16](#page=16). A significant aspect of Dacia's sales strategy is its high export rate. In 2024, the export rate stood at 93.23%. Correspondingly, international sales for Dacia in 2024 were 630,611 units, while total sales amounted to 676,340 units [56](#page=56). > **Tip:** The high export rate highlights Dacia's successful penetration into international markets, making it a significant player beyond its home country. ### 2.3 Market performance in Romania The Romanian market plays a crucial role in Dacia's sales landscape. In 2022, Dacia sold 40,179 units in Romania, an increase of 5%. In 2023, this figure rose to 46,124 units, a 15% increase. The market share proportion for Dacia's national sales in Romania has been represented in figures, indicating its significant presence [24](#page=24) [25](#page=25). ### 2.4 Market performance in Morocco Morocco is another key market for Dacia. In 2022, Dacia's sales in the Moroccan market reached 38,885 units, despite a 7% decrease. In 2023, sales declined further to 33,830 units, a 13% decrease. However, a rebound is projected for 2024, with an anticipated 16% increase to 39,330 units. The proportion of Dacia sales on the international market, which includes Morocco, is substantial, reaching 93% [26](#page=26) [34](#page=34). ### 2.5 Dacia's strategic evolution Dacia has undergone a profound transformation since its inception. In its early state, Automobile Dacia in 1995 was characterized by low-cost, outdated quality, a price range of 3,500-4,500 euros, and a distressed financial status. By 2024, the brand has evolved significantly. Production has increased, capacity has expanded, and quality is now recognized as "best value, modern". The price range has shifted to 16,000-32,000 euros, and the financial status is described as stable growth [52](#page=52). This evolution is underpinned by Renault's strategic vision, which includes a "design to cost" approach, strategic management, and positioning Dacia as a "cash cow". The implementation of a Just-In-Time (JIT) production system, encompassing the plant, suppliers, and distribution networks, further enhances operational efficiency [56](#page=56). > **Example:** The shift from a low-cost, basic vehicle manufacturer to a brand offering modern, value-for-money cars with a broader price range exemplifies Dacia's successful strategic repositioning. --- # Dacia's strategic decisions and operational changes This section details Renault's strategic decisions concerning Dacia, focusing on production capacity expansion, cost analysis, workforce, taxes, incentives, and the evolution of Dacia's production and logistics systems. ### 3.1 Production capacity expansion Renault's strategy involved extending Dacia's production capacity through both existing infrastructure and new investments [18](#page=18). #### 3.1.1 Mioveni, Romania The Mioveni plant in Romania represents an expansion of existing infrastructure. This site is identified as the Automobile Dacia plant [18](#page=18) [19](#page=19). #### 3.1.2 Tangier, Morocco The Tangier plant in Morocco is a greenfield investment, established as a Renault-Nissan plant [18](#page=18) [19](#page=19). ### 3.2 Corporate costs analysis A comparison of corporate costs between the Mioveni (Romania) and Tangier (Morocco) plants reveals significant differences in various aspects [40](#page=40) [41](#page=41). #### 3.2.1 Workforce and salaries The net salary in Mioveni is approximately 750 euros per month, while in Tangier it is around 350 euros per month. The Mioveni plant employs approximately 14,000 employees who are described as highly qualified and well-trained, making them very productive. In contrast, the Tangier plant has about 8,600 employees who are qualified but require training, leading to slower productivity [42](#page=42). #### 3.2.2 Labor relations Mioveni experienced a significant cost due to labor disputes, with a two-day strike costing Dacia 20 million euros in 2013. Tangier has had no recorded labor incidents to date [42](#page=42). #### 3.2.3 Taxes and customs Romania has a corporate tax rate of 16%, an average earning tax of 45%, and 19% VAT, with no customs duties due to EU regulations. Morocco has a higher corporate tax rate of 30%, an average earning tax of 12-40%, 20% VAT, and customs duties apply as it is outside the EU [42](#page=42). #### 3.2.4 Incentives Dacia in Romania has benefited from various incentives, including funds from the Ministry of Environment (2000-2002), a scrapping program (since 2005), state aid (until 2007), corporate tax exemption (until 2007), and deferral of VAT payments for cars sold nationally. Additional incentives included support for the Titu technical center and state aid for the Tangier platform [42](#page=42). The Tangier site received substantial state aid, around 523 million euros, from the Deposit and Management Fund (CDG) for its investment. This included corporate tax exemption for the first five years and a reduced rate for the subsequent 20 years, along with customs facilities and state-covered training infrastructure costs [42](#page=42). #### 3.2.5 Political and logistical environment Romania's political status is described as stable but with weak logistical support and low predictability. Morocco, in contrast, has a stable political status with very good logistical support and higher predictability [42](#page=42). ### 3.3 Evolution of Dacia's production system Dacia's production system has undergone significant evolution, moving from a less efficient model in 2000 to a more optimized one by 2005 [53](#page=53) [54](#page=54). #### 3.3.1 Production capacity and utilization Maximum annual production capacity increased from 110,000 vehicles in 2000 to 220,000 vehicles in 2005. Capacity utilization also rose dramatically, from 50.17% in 2000 to 78.19% in 2005 [53](#page=53). #### 3.3.2 Equipment and automation Machinery transitioned from obsolete to new, and tools from outdated to modern. The level of automation remained basic and manual, but setup frequency shifted from random to planned, and process/work flow became faster. Cycle times were standardized, and planning efficiency improved, moving away from backlogs to stable scheduling and production leveling (heijunka) [53](#page=53). #### 3.3.3 Quality and standards Quality standards tightened, with scrap rates decreasing from below 3% to below 1%. Quality checks became more integrated into the process, moving from multiple checks to one or none, with a focus on minimizing idle time and scrap [53](#page=53). #### 3.3.4 Production system and inventory management The production system transitioned from a "push" (Just-in-Case) model to a "push-pull" transition, moving towards Just-in-Time principles. Ordering systems were modernized, and inbound logistics focused on reducing incoming parts. Supplier performance began to be tracked against agreed cost and delivery targets, and inventory levels (Work-in-Progress) decreased, leading to reduced storage space requirements and carrying costs. Warehouse Management Systems (WMS) evolved from manual to digital records [54](#page=54). #### 3.3.5 International sales and delivery International orders as a percentage of total exports increased significantly from 4.11% in 2000 to 29.72% in 2005. Delivery lead times shortened on average [54](#page=54). #### 3.3.6 Warranty and service Warranty periods were extended from 1-1.5 years (or 95,000 km) to 2-3 years (or 100,000 km), and warranty claims became average rather than frequent. Dealership service costs also became more average, moving away from expensive repairs associated with unreliable service [54](#page=54). #### 3.3.7 Workforce development Employee induction transitioned from a lack of formalized training to specialized training programs, and the workforce became more competitive and motivated, with reduced absenteeism [54](#page=54). ### 3.4 Standardization and modernization of Dacia vehicles Dacia's product strategy emphasized standardization, functionality, and modernization. This was achieved through using existing platforms common with other Renault models (B0 platform), a "design to cost" approach for simplified design and production, and a single-part design methodology for simplified pipework and circuitry [55](#page=55). #### 3.4.1 Component strategy Dacia vehicles feature 50% fewer parts than top-range Renault models, leading to reduced weight. Shared components from proven designs with amortized R&D costs were utilized. Small engines (1.4 and 1.6 MPI, and 1.5dCI) were preferred, and parts were designed for simplicity (e.g., basic flat windscreen, symmetrical mirrors, single-piece bumper and dashboard) [55](#page=55). #### 3.4.2 Vehicle features Dacia vehicles are characterized by engines designed for lower quality fuel, simple maintenance, robust suspension, and spacious interiors and boot space. The interior design is minimalist, with features like ABS, ESP, and power steering not being standard initially. Soundproofing is limited, resulting in a louder ride with noticeable engine, road, and wind noise. Electronic devices were also limited, with features like stereos and power windows not being standard. Simplified features meant basic equipment without central locking or air conditioning as standard, though air conditioning was available as an affordable optional extra [55](#page=55). ### 3.5 Dacia's operational infrastructure and development Dacia's operational infrastructure in Romania has seen significant updates and expansions. The Automobile Dacia manufacturing plant is located in Mioveni, Arges [55](#page=55). #### 3.5.1 Production capacity and facility upgrades Production capacity was updated to 350,000 units. Industrial facilities were re-technologized, and the workflow and ergonomics were re-designed. Quality compliance procedures were improved, IT systems were renewed, and personnel training was enhanced. Competitive salaries were offered to the workforce [55](#page=55). #### 3.5.2 Key Dacia entities and centers Several key entities and centers were established or operationalized to support Dacia's operations and development: * Dacia Assembly Plant (UAVD, 2005) * Dacia Powertrain Chassis Plant (UMCD, 2006) * Spare Parts Center (CPS, 2003) * International Logistics Network (ILN, 2005) * Renault Technologie Roumanie (RTR, 2006) * Dacia Design Center (DDC, 2008) * Technical Testing Center (TTC, 2010) ### 3.6 Logistics management and interconnections Dacia's logistics network involves a complex web of road and rail interconnections, with significant operations at both the Mioveni and Tangier plants, as well as key ports [30](#page=30) [32](#page=32) [36](#page=36). #### 3.6.1 Romanian logistics The Automobile Dacia plant in Mioveni is connected to the Port of Constanta in Romania for exports. This port handles significant volumes of vehicle loading (150,000 units/year) and CKD kits (250,000 units/year). Dacia also utilizes GEFCO/GFR for domestic logistics, with a distance of 350 km and a duration of 12-24 hours, transporting 10-15,000 cars per month via 50 trains. For longer distances, GEFCO/Lazăr is used, covering 2,000-2,500 km over 2-4 days, transporting 12-16,000 cars per month via 2,000-2,500 trucks. Infrastructure in Romania includes 873 km of motorways and extensive paved roads, but the railway network is described as unreliable [32](#page=32) [39](#page=39). #### 3.6.2 Moroccan logistics The Tangier Med plant is strategically located just 32 km from the Port of Tanger Med, with a travel time of 40 minutes. This allows for efficient loading of 25-30,000 cars per month and facilitates international exports, handling 180,000 vehicles per year with a loading duration of 45 minutes. Morocco has a more developed motorway network (1,839 km in 2018) and a higher percentage of paved roads compared to Romania. The logistics in Morocco are characterized by reliable times, moderate traffic, and increased safety, offering close, easy, and fast access to main markets [36](#page=36) [39](#page=39). #### 3.6.3 Market analysis comparison (Romania vs. Morocco) The car markets in Romania and Morocco present different dynamics. Romania's market volume has shown a descending tendency since 2007, with contractions and periods of growth. Morocco's market is emerging, with significant growth experienced between 2007 and 2017. Dacia holds a leading market position in both countries, with a 32.4% share in Romania and 29.5% in Morocco in 2018 [39](#page=39). Infrastructure in Morocco, particularly the proximity to the Port of Tanger Med and its integration with the West-European motorway network, provides a distinct advantage in terms of shipping and access compared to Romania's less reliable railway network and longer distances to ports [39](#page=39). --- # Dacia's market position and competitive advantage Dacia has established a strong market position as a low-cost, smart-buy automotive brand, leveraging a strategy of cost optimization and value-for-money offerings to achieve significant sales growth and market share [57](#page=57). ### 4.1 Market performance and sales dynamics Dacia's sales dynamics have shown a significant shift towards the international market, with exports accounting for a substantial majority of its sales. In 2024, the export rate was 93.23%. Overall Dacia international sales reached 630,611 units in 2024, contributing to a total of 676,340 units in total sales. This international focus is a key driver of its market presence [56](#page=56). * **National vs. International Sales:** While specific proportions are visualized in figures 3, the trend indicates a dominant reliance on international markets for sales volume [25](#page=25) [26](#page=26). ### 4.2 Evolution of production and capacity Dacia has undergone a remarkable transformation in its production capabilities and capacity since its early days. * **Production Volume:** Production has grown exponentially from 76,000 units in 1995 to 309,432 units in 2024 [52](#page=52) [56](#page=56). * **Maximum Capacity:** The maximum annual production capacity has increased from 110,000 vehicles in 1999 to 350,000 units, a capacity maintained from 2009 onwards [53](#page=53) [56](#page=56). * **Capacity Utilization:** Capacity utilization has also seen a significant improvement, rising from 50.17% in 2005 to 78.19% in the same year and further to 88.40% by 2024, representing a 19.31% increase [53](#page=53) [56](#page=56). * **Total Production:** Total production in Romania alone reached 76,000 units in 1995. When including Morocco, total production reached 621,813 units in 2024 [56](#page=56). ### 4.3 Dacia's competitive advantage: The low-cost, smart-buy proposition Dacia's core competitive advantage lies in its positioning as a "low-cost, smart-buy" option. This is achieved through a holistic approach to cost management and product simplification [57](#page=57). * **Design and Platform Strategy:** * **Existing Platforms:** Dacia extensively utilizes existing Renault platforms, such as the B0 platform, which is shared with other Renault models. This allows for the amortization of research and development costs and streamlines production [55](#page=55). * **Design to Cost:** A fundamental principle is "design to cost," focusing on simplified designs and production processes to minimize expenses [55](#page=55). * **Simplified Components:** This includes using simpler parts like a basic flat windscreen, symmetrical mirrors, and single-piece bumpers and dashboards. The adoption of a single-part design approach for elements like pipework and circuitry further contributes to simplification [55](#page=55). * **Fewer Parts:** Dacia models often feature 50% fewer parts compared to other top-range Renault models, leading to reduced weight and manufacturing complexity [55](#page=55). * **Product Characteristics:** * **Small Engines:** Dacia primarily uses smaller, efficient engines, such as the 1.4 and 1.6 MPI, and 1.5dCI engines [55](#page=55). * **Minimalist Interior and Features:** To control costs, Dacia interiors are minimalist, often omitting standard features found in higher-end vehicles. This includes features like ABS, ESP, or power steering not being standard. Similarly, minimal soundproofing leads to a noisier ride with noticeable engine, road, and wind noise. Limited electronic devices, such as no standard stereo or power windows, are also part of this cost-saving strategy [55](#page=55). * **Simplified Features:** Only basic equipment is provided as standard, with options like air-conditioning available as affordable extras [55](#page=55). * **Operational Efficiency and Cost Management:** * **Shared Components:** The use of shared components from proven designs leverages existing R&D investments [55](#page=55). * **Quality-Price Ratio:** The primary "order winner" has evolved from simply the lowest price to the highest quality-price ratio, indicating a focus on delivering perceived value [53](#page=53). * **Supply Chain and Logistics:** Dacia has implemented a Just-In-Time (JIT) production system across its plants and suppliers, optimizing inventory and reducing holding costs. This includes efficient inbound logistics and reduced Work-In-Progress (WIP) inventory [54](#page=54) [56](#page=56). * **Supplier Relations:** The tendering process has moved from limited to open, and supplier/part references from multiple to dedicated OEM suppliers. Contracts have shifted from short-term to medium-term [53](#page=53). * **Defect Rate and Inspection:** Defect rates have been significantly reduced, moving from average to low, and inspection frequencies have decreased from occasional to rare sampling as quality improved [53](#page=53). * **Production Process:** Machines have been updated from obsolete to new, tools from outdated to modern, and the level of automation has increased from limited manual to basic manual with improved process workflows and shorter cycle times. Production leveling (heijunka) has transitioned from off-balance to stable [53](#page=53). * **Quality Standards:** Quality standards have become more stringent, with tolerances shifting from slack to tight, and scrap rates reduced from below 3% to below 1% [53](#page=53). * **Warranty and Service:** Warranty periods have been extended from 1-1.5 years (or 95,000 km) to 2-3 years (or 100,000 km). While warranty claims were frequent, they are now average. Dealership service costs have moved from expensive repairs (unreliable) to above-average service costs (reliable) [54](#page=54). * **Past vs. Present:** Dacia's transformation is starkly evident when comparing its past (around 1995-2000) with its present (around 2024). * **Price Range:** The price range has dramatically increased from 3,500-4,500 euros in the past to 16,000-32,000 euros in 2024, reflecting an evolution in product offering and market appeal while still maintaining its value proposition [52](#page=52). * **Quality Perception:** Quality has shifted from "low-cost, outdated" to "best value, modern" [52](#page=52). * **Financial Status:** Dacia's financial status has moved from distress to stable growth [52](#page=52). > **Tip:** Understanding the "design to cost" philosophy is crucial for grasping Dacia's competitive edge. It's not just about being cheap, but about intelligently eliminating non-essential features and complexities to deliver essential functionality at a significantly lower price point. ### 4.4 Market position in specific regions Dacia holds a dominant market position in certain regions, notably Romania and Morocco, demonstrating its success in both its domestic and emerging markets. * **Romania:** Dacia is a leader in the Romanian market with a 32.4% share in 2018 [39](#page=39). * **Morocco:** Similarly, Dacia leads the Moroccan market with a 29.5% share in 2018 [39](#page=39). ### 4.5 Factors contributing to success Several key factors have underpinned Dacia's success: * **Strategic Management Framework:** The adoption of a strategic management decision-making framework, which considers market dynamics, infrastructure, and growth opportunities, has been instrumental [39](#page=39). * **Renault's Vision:** The "Renault vision," encompassing "design to cost," strategic management, and positioning Dacia as a "cash cow," has provided a clear direction and support system [56](#page=56). * **Infrastructure Development:** Investments in production capacity, re-technologizing industrial facilities, re-designing workflows, improving quality compliance, renewing IT systems, and training personnel have all contributed to operational excellence [55](#page=55). * **Logistics Management:** Implementing robust logistics management, including a Just-In-Time (JIT) production system, optimizing international orders, and managing delivery lead times, has been critical for efficiency [54](#page=54). > **Example:** The shift from a "push (JIC)" production system to a "push-pull transition (JIT)" signifies a move towards a more responsive and efficient manufacturing process, reducing waste and improving inventory management, which directly supports the low-cost advantage [54](#page=54). --- ## Common mistakes to avoid - Review all topics thoroughly before exams - Pay attention to formulas and key definitions - Practice with examples provided in each section - Don't memorize without understanding the underlying concepts

| Term | Definition | |------|------------| | Globalization | The process of interaction and integration among people, companies, and governments worldwide, driven by international trade and investment and supported by information technology. | | Automotive Industry | The sector of the economy concerned with the design, manufacture, marketing, and sale of motor vehicles. | | Case Study | An in-depth investigation of a single individual, group, or event, often used in academic research to provide a detailed understanding of a particular phenomenon. | | Logistics | The detailed coordination of a complex operation involving many people, facilities, or supplies. In business, it typically refers to the management of the flow of things between the point of origin and the point of consumption. | | Supply Chain Management | The management of the flow of goods and services, involving the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption. | | Production Capacity | The maximum output that can be achieved by a manufacturing facility, process, or business over a specific period. | | Greenfield Investment | An investment in a new facility, built from the ground up, on land that has not been previously used for industrial purposes. | | Greenfield Investment | An investment in a new facility, built from the ground up, on land that has not been previously used for industrial purposes. | | Corporate Costs | The expenses incurred by a company in its operations, including salaries, taxes, marketing, and administrative expenses. | | Just-in-Time (JIT) | A production strategy aiming to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. | | CKD Kits | Stands for Completely Knocked Down kits, which are products, typically vehicles, that are shipped in a disassembled state for final assembly at the destination country. | | Competitive Advantage | A condition or circumstance that puts a company in a favorable or superior business position. | | Design to Cost | A product development strategy where the target cost is established first, and then the product is designed to meet that cost target, rather than designing the product and then determining its cost. | | Strategic Management | The ongoing process of establishing an organization's strategies, and the longer-term, broader sets of actions required to achieve these strategies, plus the corresponding establishment of the organizational structures and resources that will be needed to implement those strategies. | | Export Rate | The proportion of a company's total production or sales that are sold to customers in foreign countries. | | Market Share | The percentage of total sales in an industry generated by a particular company's products or services. | | Workforce | All the people working or available to work in a country or area. | | Infrastructure | The basic physical and organizational structures and facilities (e.g., buildings, roads, power supplies) needed for the operation of a society or enterprise. | | VAT | Value Added Tax, a consumption tax placed on a product or service whenever value is added at each stage of the supply chain, from production to the point of sale. | | Customs Duty | A tax imposed on imported goods and services, typically collected by a country's customs authorities. |