BMI's Executive Summary

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Romania is set to become a major manufacturing hub for the automotive industry in Central and Eastern Europe (CEE) following Ford's acquisition of the recently nationalised Daewoo car plant in Craiova in September 2007. However, the European Commission may challenge the take-over, threatening to overturn the transaction if it finds that the government's write-off of the plant's debts constitute state aid.

If it gets the Commission approval, the deal would end years of uncertainty surrounding the plant following the collapse of South Korea's Daewoo, which owned a 51% stake. Ford is pledging EUR675mn in investment to revive the plant, aiming for annual production of 300,000 vehicles and 300,000 engine units. The acquisition of the Craiova plant would have far-reaching implications for Romania's automotive industry. Low labour costs, high skills and EU accession have all counted in Romania's favour. Ford's plans would raise Romania's annual production capacity to 650,000 units by the end of the decade. BMI believes that if the Commission's judgement does not go Ford's way, it is unlikely the autos major will reverse its decision to acquire the plant. Craiova represents a golden opportunity for Ford to expand its operations and the level of debt, EUR7mn, equivalent to little more than 10% of the planned investment outlay, is not insurmountable if it was forced to take it on.

Dacia is also planning to raise its game. On September 26, the 500,000th Logan rolled off the assembly line at Dacia. The Dacia family, which includes three models – the Logan, Logan MCV and Logan Van – expanded in Q307 with the addition of a pick-up model, which will be marketed in Romania from 2008 and sold in other markets from 2009. In October 2007, Renault announced that Dacia would begin manufacturing the Sandero saloon model from 2008. The new model is said to be 'more sophisticated' than the Logan, and therefore will be priced above the Logan but below the Mégane. The Sandero will also be launched in Brazil and Argentina under the Renault badge by the end of 2008.

Automotive output was up 7.1% in the January-August period with 147,530 vehicles built. Car production was up 9.3% to 141,680 units, while commercial vehicle production fell 27.3% to 5,840 units and bus production doubled to 10 units. Meanwhile, automotive sales rose 25.7% y-o-y to 236,808 units in the first eight months of 2007, including 204,866 passenger cars (up by 24.9%), 30,198 commercial vehicles (up 29.4%) and 1,744 buses (up 51.1%). Sales of trucks with a GVW of over 18t surged by 140% y-o-y, while the 6-18t segment saw growth of 71%. Growth was more modest in the sales of commercial vehicles with GVW of under 3.5t (up 14%) and 3.5-6t (up 2%). BMI believes that total car production should approach capacity by 2012.

Looking ahead over the remainder of our forecast period, GDP growth should moderate below 5%, as the pace of catch-up with the rest of the EU wanes. Consequently, automotive sales growth will continue throughout the forecast period, albeit at lower levels than seen in 2007, in line with the trend within the wider economy. By 2012 sales should be around 55% more than 2007 levels with car sales up 52.4% and commercial vehicle sales up 69.2%. The key driver of growth will be the HCV segment, which is forecast to rise 156% to 39,653 units, and the bus sector, which will rise 146% to 9,287 units due to a rapid growth in passenger transportation and tourism.

Contents

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Chapter 1 – SWOT Analysis

Romania Auto Industry SWOT

Romania Economic SWOT

Chapter 2 – Europe Regional Market Overview

Production

Table: European Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: European Autos Production By Group, H1 2006

Table: Central & Eastern European Car Assembly Plants, 2006 (Countries under review)

Table: The Rise In Central & Eastern European Production And Average Wages

Sales

Table: Europe Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: EU And EFTA Autos Sales By Group, H1 2006

Table: New Vehicle Registrations By Market In Europe (EU and EFTA), 2006

Table: New Car Registrations By Market In Europe (EU and EFTA), 2005

Competitive Landscape

Table: EU-15 And EFTA, Car Registrations, 2005

Table: Top 10 Best Selling Models In Europe, Jan-May 2000

Suppliers

Table: Top Five OEM Parts Suppliers, 2005

Regulation

European Car Prices

Table: Price of Europe’s Five Top-Selling Models By Market

Chapter 3 – Business Environment Rankings

Economics – Long-term Risk

Politics – Long-term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Production And Sales

Table: Romania Autos Sector – Historical Data & Forecasts (CBUs unless otherwise stated)

Trade

Table: Romania Autos Sector – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: Romanian Car Imports

Economic Contribution

Table: Romania Autos Sector – Historical Data & Forecasts (CBUs unless otherwise stated)

Country Snapshot: Romania Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 5 – Macroeconomic Forecast Scenario

Table: Romania – Economic Activity

Chapter 6 – Special Focus: Commercial Vehicles

Regional Market Overview

Table: Regional Commercial Vehicle Market: Country Ranking, Sales

Table: Regional Commercial Vehicle Market: Country Ranking, Production

Table: Regional Commercial Vehicle Market: Company Ranking Of Significant Regional Manufacturers

Table: Recent And Planned Investments In Central & Eastern Europe

Romania Commercial Vehicle Market Overview

Table: Romanian Commercial Vehicle Producers, Domestic Sales 2005

Sales

Table: Size Of Commercial Vehicle Market

Table: Top 10 Brands On The Romanian Light Commercial Vehicles And Minibuses Market, 2005

Table: Top 10 Brands On The Romanian Heavy Commercial Vehicles And Buses Market, 2005

Table: Sales Forecasts For Romania

Production

Table: Production In Romania

Table: Production Forecasts For Romania

Chapter 7 – Competitive Landscape

Table: Romanian Automotive Sector: Jan-Jun 2006

Table: Key Players – Romania Passenger Car Market

Table: Key Players – Romania Passenger Car Market: Jan-Jun 2006

Table: Key Players – Romania Passenger Car Imports: Jan-Jun 2006

Suppliers

Chapter 8 – Company Monitor

Regional Case Study: Kia

Sales

Table: Kia Sales In Europe (EU and EFTA), By Model

Production

Table: Kia Production In Europe (EU, EFTA, Romania and Turkey), By Model

Company Profiles

Dacia

Daewoo Automobile Romania

Renault

Continental

BMI Forecast Modelling

Automobile Industry

Sources

Appendix: Regional Demographic Data

Wages (ave. labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for European Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Automotive Sources

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BMI's European Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: