PARIS - Renault Group's planned acquisition of a 51 percent stake in Romania's state-owned automaker, S.C. Automobile Dacia S.A. Colibasi, moves the French company a step closer toward its goal of producing a vehicle costing less than $6,000 for emerging markets.
But first it will have to secure the long-term future of the troubled Romanian automaker.
Renault's acquisition bid, which is subject to government approval, is accompanied by an industrial and commercial program focusing on plant investments, modernization and cost reductions.
Renault is believed to be prepared to spend some 1 billion French francs, or about $175.5 million, on Dacia.
The plan envisions a gradual transformation of Dacia's industrial facilities, supplier network, distribution system and existing products.
It will unfold in three stages. The first, between 1999 and 2000, will be to renovate and upgrade existing products and processes aimed at attaining quality standards.
Between 2001 and 2003, the plan is to launch a new vehicle to replace the current Dacia 1310. Based on current thinking, the new vehicle would be derived from the Renault 19 sedan, which went out of production in France in 1995.
The third stage, starting in 2004, is intended to make Dacia a second marque for the Renault Group with the launch of an all-new, modern vehicle selling for less than $6,000 in emerging markets like India.
Renault also plans to cut costs and improve facilities at the Colibasi plant near Pitesti, 140 kilometers northwest of Bucharest.
Renault has been active in Romania since 1966, and was instrumental in creating an automobile industry there. Dacia assembled several Renault models under license until 1978.
Most of the vehicles built by Dacia since then have been Renault-derived, notably the R-12.
Dacia employs around 29,000 and produces over 100,000 passenger cars and light-commercial vehicles a year, 10 percent of which are exported mainly to neighboring markets as well as Egypt, Argentina and China.
Other manufacturers with Romanian assembly operations are Rodae - in which Daewoo has a controlling interest - and Aro, which builds small sport-utilities.
Renault is targeting output of 200,000 vehicles a year in Romania by 2010, approximately 80,000 of which would be exported to emerging countries.