At the end of last year we posted an interview you can read here about the success story of Parafix Ltd, an UK car parts manufacturer we helped enter the Romanian market and who has had a very positive experience there.

Romania`s Automotive market remains in 2016 a serious contender for those looking for business opportunities, especially for those looking at local manufacturing and exporting car parts to Romania. Here is why:

THE ROMANIAN AUTOMOTIVE MARKET – OVERVIEW

GENERAL CONSIDERATIONS

Romania has over 600 automotive manufacturers which employ 203,600 people paid on average with €4.9/hour. Its national automotive park counts 6 million auto vehicles. The auto industry contributes by 12% to Romania`s GDP. Romania exports motor vehicles (22.5% of the value of national exports in 2014) and car parts (16.7% of the national exports in 2014).

CAR PRODUCTION

Countries in Eastern Europe manufacture 2% of EU`s total car production. COFACE considers Romania, Slovakia and the Czech Republic the most successful car producers in the region as their production tripled or even increased fourfold in the last decade. Their success comes from both, a robust foreign direct investment and a robust external demand. For example, Continental Envelopes Timisoara announced in July 2015 that it would start delivering premium tires for the Jaguar automotive company. 15,000 Ultra High Performance units would be delivered to the XE Jaguar produced in the UK.

Dacia and Skoda are the strongest local brands. However, COFACE warned at the end of July this trend can`t go on forever due to the market`s possible saturation. Romania, Slovakia, Slovenia, Poland, Hungary and the Czech Republic have together 33 car factories, most of them built with foreign investments.

MAJOR CAR MANUFACTURERS

EXPORTS

Dacia, the largest car manufacturer in Romania, started 2015 with a drop on its largest markets, France and Germany, and an increase on the UK market. During the first five months of 2015, Dacia car registrations fell by 9.9% to 42,549 units in France and by 6.7% to 19,246 units in Germany but it rose by 7.7% to 198,706 vehicles on the UK market. Despite a slower beginning of the year, Dacia registered a record high sales in 2015 as 551,000 units were sold worldwide, 7.7% more than in 2014. Most sold units were motorcars followed by light commercial vehicles. Sandero, Duster and Logan were the most sought after models.

Dacia embarked on a vast programme of production automatization/robotisation until 2020.

IMPORTS

New Cars Entered the Romanian Market. BMW i8 hybrid sports car entered the Romanian market at the end of November. The model combines sports car performances with low fuel consumption as it has a 231 – horsepower petrol engine and a 131 – horsepower electric one. It can run solely on electricity over 30 km and is sold in Romania for a total price of €140,000.

BMW launched as well its BMW i3 electric model, Romania becoming at the end of the last year the 50st market were BMW I models are officially selling.

A fleet of four Renault ZOE electric cars were provided by the leasing company, ALD Automotive, a subsidiary of BRD – Group Societe Generale and ALD Automitive Group, to Orange Romania, the largest mobile carrier serving over 10 million clients in Romania.

TOTAL PRODUCTION, IMPORTS, EXPORTS, SALES (2011 – 2015)

Source: APIA (The Association of Manufacturers and Importers from Romania)

PREFERENCES FOR BRANDS IN 2015

Dacia is Romania`s success story. Its plant, Dacia Mechanical and Chassis, is the first mechanical plant of the group in terms of diversity process. It has 3,900 employees and is placed on the industrial platform in Mioveni, next to the Dacia Automotive Assembly plant and has a capacity of 450,000 units per year. Dacia announced that its Mechanical and Chassis plant produced 500,000 Energy TCe 90 engines by July 2015, 80% of production being sent to export. This engine model is manufactured as well in the Renault plant in Valladolid, Spain, and equipped on Dacia models (Logan, Logan MCV, Sandero and Sandero Stepway) and on Renault cars (Clio IV, Twingo).

A large number of the engine`s integrated parts (the crankcase distribution, the cylinder head cover, the bearing cover, the flywheel and crankshat) are produced in Romania, by Dacia plant.

Source: APIA (The Association of Manufacturers and Importers from Romania)

MODELS PREFERRED IN 2015

Source: APIA (The Association of Manufacturers and Importers from Romania)

SEGMENTATION BY TYPE OF FUEL

Source: APIA (The Association of Manufacturers and Importers from Romania)

SALES WENT UP

New & second hand cars. The Automotive Manufacturers and Importers Association (APIA) reported at the end of August a good increase in the sales of new passenger cars and commercial vehicles of 15.8% (66,000 units) in the first seven months of 2015. Second hand car sales went up as well, by 13.4% (135,208 units).

The biggest slice of the market, 75%, was represented by new car acquisitions done by companies and most cash was spent on Dacia cars (Dacia Logan – 9,341 units, Dacia Sandero – 3,617 units and Dacia Logan MCV – 1,833 units) and Skoda Octavia (2,244 units).  54% of the new cars sold in Romania were diesel models.

INVESTMENTS

According to Constantin Stroe, Managing Director of the Association of Automitive Manufacturers in Romania, the value of investments in Romania`s car parts sector is much higher than in the other countries in Central and Eastern Europe ( for example €951 million in 2012) but not high enough to capitalize the potential of development of this sector in Romania.

Example of investment in Romania: Continental. Continental invested invested € 1 billion in its activities in Romania by the end of 2014. Most of investment was dedicated to top technology, staff training, environmental protection and social responsibility. € 300 million were invested in creating jobs in Romania.

The Romanian subsidiary numbered about 15,000 employees at the end of 2014 and planned to increase its team with over 1,500 new members in 2015.

All its five divisions: Chassis & Safety, Interior, Powertrain, Tires and ContiTech, are represented in Romania as the Romania branch owns 7 production units and 3 research and development centres in Timisoara, Sibiu, Carei, Nadab, Brasov and Iasi.

Continental is as well a partner in a joint venture in Slatina and has a tire distribution centre for Eastern Europe in Sacalaz.

EXPORTING CAR PARTS TO ROMANIA IN 2016

The manufacture of car parts represented 70% of the turnover of Romania`s auto industry (€12.6 billion) in 2014. The Association of the Manufacturers of Automotive in Romania (ACAROM) estimated this turnover would grow by 7.1% in 2015 to €13.5 billion. The sales of automotive parts to the Romania market reaches €2 billion per year and the National Institute of Statistics reports that Romania imported during the first nine months of 2015 car parts and accessories worth €3.39 billion, 116.1% more than during the same period in 2014.

158 international providers of automotive parts have production points in Romania. Companies such as Continental, Bosch, Delphi, Schaeffler, Yazaki and Hella are transferring more of their activities, and investment, in Romania. Most of investment goes to Sibiu, Brasov, Cluj, Timis, Arad, Arges, Olt.

Local manufacturers, GIC, Ronera, Elba, COMPA, ELJ, Componente Auto, Metaplast & Delta Invest started investing in innovative products and technology modernisation.

Romania to print 3D car parts starting this year. At the beginning of January this year, Nicolae Balc, the Head of Car Manufacturing Engineering Department within the Technical University from Cluj Napoca, announced that the first 3D printed car parts will be produced within the next six months thanks to an EU funding of € 1 million. It is expected that the manufacturers within the automotive industry to start printing them within the next two years.

The project is developed in cooperation Loughborough University (UK), University of Applied Sciences – Aachen (Germany) and Intelligentsia Consultants Sarl in Luxemburg and follows three directions: to improve current technologies, to integrate 3 D technologies with other manufacturing technologies, to plan for competitive manufacturing of personalised products and planification, analysis and computer assisted simulation. The printed parts will be made of plastic and metal and will be destined to engines and braking systems. Models for other parts will be manufactured too.

MAJOR DISTRIBUTORS OF CAR PARTS IN ROMANIA