Automotive News Europe
Low-cost labor a key factor in decision
Bruce Gain
The Dacia Sandero and Sandero Stepway (shown) will be produced on a new 400 million euro production line at parent Renault’s factory in Tangier, Morocco.
Renault is expanding Dacia production at its plant in Tangier, Morocco, to help meet strong demand in Europe for the Sandero. The subcompact is Dacia’s top-selling model in Europe, where eight-month sales for the car are up 59 percent to 79,586, according to JATO Dynamics.
Construction of a second line in Tangier, Morocco, will increase Dacia capacity there to 340,000 from 200,000 vehicles a year by 2014, the company said. More than 90 percent of the production will be exported with most of the output coming to Europe, a Renault spokeswoman said today.
Renault will produce the Dacia Sandero and Sandero Stepway on the new line, which will cost the automaker 400 million euros to add. The original line, which produces the Dacia Lodgy and Dokker, began operation in January and produced its 100,000th vehicle in June.
Renault says an additional 1,400 people have been recruited, increasing the total work force at the zero-emissions plant to 5,000. The factory currently operates on a two-shift basis.
Dacia plans to continue production of the Sandero at it largest plant, which is in Pitesti, Romania, where maximum capacity is 400,000 vehicles a year.
Bottleneck prevention
Michel Costes, an analyst for Inovev, toldAutomotive News Europe that the Tangier expansion was primarily intended to prevent a production bottleneck in Pitesti. Growth in demand for low-cost Dacia models means “there simply is not enough capacity at the Pitesti site to produce the Sandero as well as the Logan,” Costes said.
Dacia debuted a face-lifted version of the first-generation Sandero last year as well as the second-generation of the Logan.
Renault chose the Tangier site because it offers the advantages of low-cost labor and a close proximity to Renault’s key markets in Europe, Costes added. “Labor costs are 50 percent lower in Tangier than they are at the main Dacia plant in Romania,” he said.
Pitesti problem
Last March production was disrupted in Pitesti by a strike over pay, with staff seeking significant increases to bring them closer to the rates paid to Renault workers in Turkey and France. At that time Dacia’s vice president, Constantin Stroe, told Reuters: “If necessary, we will move part of our production to another facility in Morocco as we can’t face growing costs in Romania. The demands from the employees are unrealistic.”
According to Costes, switching some Sandero production from Pitesti to Tangier would also help maintain future production at the Moroccan plant when demand for the Dacia Lodgy wanes, as it is expected to do in line with the downturn in the minivan market in western Europe.
Renault also builds the Renault Kangoo, Sandero, and Logan for the Moroccan market from kits at a separate plant in Casablanca.
