Xavier Martinet (Dacia): “The price of cars will increase even more”
After serious price increases last year, regulations should, according to Dacia’s Xavier Martinet, raise car prices faster than inflation.
Dacia had another successful year in the European market. Over 11 months, the brand grew by 14% while registrations in Europe contracted by 6.1%. In these times of economic turmoil, customers seem to want the market’s entry-level proposition.
No discount, but a desire to control costs as much as possible production and distribution. “It is almost pathological with us. We discuss every decision, every part. By saving a few euros here and a few euros there, it ultimately makes a serious amount”, estimates Xavier Martinet, marketing director sales & operations of Dacia.
In its early days, the Dacia brand was primarily seen as low value and a major competitor in used cars, but Dacia has since made a name for itself.
© Dacia
No longer cars cheaper than competitors, the Renault group’s entry level has moved upmarket. He became “third largest consumer brand in Europe“.
Where not so long ago was the price of a Dacia is about 25% less than the first competitor, we’d rather be at 15% now, Martinet believes whose brand should have the best design and the best value for the asking price. “If the only argument is the price, there will always be someone who will do better”, said Martinet. For him, “the real low value” is not a new car “but a 15-year-old used car”.
Inflation
The brand is clearly not immune to inflation. The Spring, the “cheapest” electric car on the market, has seen its price increase by 25% in a year. The Jogger, a 5 or 7-seater vehicle, started at 14,790 euros when it was launched in Belgium in November 2021, it is now available from 17,490 euros.
This upward trend affects everything in the market, but fasten your seat belts, because it should continue beyond 2023, according to the director of Dacia.
He explained that the new Euro 7 standard will further increase the price of cars. In addition to the CO2 and particulate standards, there are also a full series of mandatory onboard equipment, in particular driver assistance systems.
Mandatory systems
Black box, speed limiter, lane keeping assist, fatigue alert system, etc. Obligations on new cars for sale are combined with inflation, so the car item will definitely become more expensive.
Martinet does not think that the Dacia model has been weakened. To avoid any discounting, “we must produce fewer cars than customers want. We’ve been doing this for 18 years,” he said.
“Premium brands are doing well, but so are entry-level brands. Between the two, the community is asking”
Dacia manufactures in Morocco and Romania. The boss also believes thanks to good residual values in the increase, part of the price increase was offset for its customers. The true value of a car, in fact, depends as much on the initial value as on the resale value of the vehicle.
Faced with this general price increase, is the entry-level better than the mid-range? At Dacia, we are sure of this. “Premium brands are doing well, but so are entry-level brands. Between the two, the community is asking questions,” Martinet said.
“The premium will continue to grow”
The DS brand is now 4 and a half years old, and is in 41 countries. The brand Premium by Stellantis from the Citroën universe is however still looking for popularity, as CEO of the brand, Béatrice Foucher, who was at the Brussels show, explains to us. A battle of popularity that will last another 10 years, according to him.
The latter thinks, like many, that the Premium car market will become more important in the coming years with the “enrichment of countries” around the world and the “evolution of the Gini coefficient” tending to have more disparity in wages. It favors a Premium market, but also an entry-level market. “The lower middle class has reduced the share allocated to the car and will face electrification”, Foucher studies.
“There will be more rich people and the golden days of premium brands will continue. An expensive or rare car can be a form of investment,” said Foucher, who was happy to see the residual values of its 4 models go up, important when working with rental companies. “You build brand value by building a good second-hand market,” he says. DS’s margins are “at a Premium level”, assures the CEO.
DS is now the eighth European Premium brand in Europe. “We beat Lexus and Jaguar, and Land Rover is still ahead of us,” the CEO said. In Belgium, DS’s ambition is to reach the top 5 of the Premium market.
