The recent growth of the car market
The Romanian car market has been on an upward trend for years now. In 2014 the car industry’s turnover stood at 18 billion euros, it exceeded 20 billion in 2015 and reached 22 billion in 2016, experts say. Also, the automotive industry accounts for a quarter of Romania’s total exports, with companies in the field getting 13 billion euros from exports alone. Head of the Romanian Carmakers’ Association, Gabriel Sicoe, tells us more about it:
“At present, Romania’s car industry is a high series industry that has several important advantages. It offers a significant number of jobs, it generates the modernization of several other fields of activity, of other industries, and is the most globalized industrial sector. In Romania there are currently around 470 companies in the car making industry that hire over 206 thousand people. In 2016 the turnover in the car industry exceeded 22 billion euros, which is 13% of the GDP, while exports accounted for over 13 billion euros, that is 24% of Romania’s total exports. Dacia Renault and Ford are the biggest carmakers in Romania. The car parts industry is also highly developed, representing 72% of the automotive industry’s total turnover.”
Last year Romania produced some 335,861 cars, while only 94,919 were registered, a lot less, and the cars manufactured/registered ratio continues to be negative. With the scrappage of the car pollution tax starting February, the import of second hand vehicles has doubled, with a heavy impact on Romania’s budget, Gabriel Sicoe also told us:
“Romania ranks 10th in a classification of top European car manufacturers. We fare quite well, considering we are outclassed by countries with a strong carmaking tradition, such as Germany, Spain, Great Britain, France and Italy. The problem isn’t how we fare in terms of manufacturing, but in terms of vehicle registration, as we are 16th placed at EU level. Although the car demand went up in 2016 to almost double the EU average, vehicle registration remains low, due to high competition coming from second-hand car markets abroad. So the car market continues to account for a third of its worth back in 2007, prior to the economic crisis, facing strong competition from second-hand vehicles imported from other countries. Currently 1 in 6 Romanians buys a second-hand vehicle abroad. The problem is that 72% of these cars are now older than 10 years, which means our car fleet continues to grow old. At present, Romania’s car fleet totals some 5,1 million vehicles, with an average car age of 14 years, which means most of them are superseded."
For this year, the Rabla Classic and Rabla Plus car scrapping programmes are a lot more generous: the subsidy for 100% electric cars is 10,000 euros. For the Rabla Classic programme, which is now into its 13th year, the scrapping bonus level of 6,500 lei, which has not been changed for 2 years, will stay the same, but an additional 1,700 lei will be granted this year for plug-in hybrids and 1,000 lei for heavily polluting vehicles, that is, those with emissions of up to 98g\CO2\km.
But experts say the car scrapping programme is not enough. The massive imports of second-hand cars means, in their opinion, that Romania becomes less attractive for prospective investments in the automotive industry. For example, Dacia exports 93% of its output, and sells only 7% of its cars domestically, while Ford only sells in Romania 1% of what it manufactures in Craiova. Foreign investors are interested in Romania only to the extent to which our country remains competitive or becomes more competitive. The car market could be rebalanced by supporting purchases of new cars and by implementing measures to discourage the import of second-hand vehicles, says the head of the Romanian Car Makers Association, Gabriel Sicoe:
“First of all, we should encourage the sales of new cars. This means programmes like the car scrapping incentives that we already have, but in addition we could put together a loan system for those who want to buy a new car but do not have enough money. There has been such an attempt with the so-called ‘First Car’ Programme, but it offered only 5-year maturity loans, which was not interesting enough for prospective clients. We suggest we should extend loan maturity from 5 to 7 years. Then, there is the issue of taxation for second-hand car imports. And we should also consider applying the VAT rate on the total value of a car, not just the profit margin of importers. Third, we need a set of technical regulations for second-hand car imports. The technical inspection should be conducted on each successive sale, because generally the cars imported in Romania are old, heavily polluting, and with safety problems. Another measure could be an annual technical inspection every time a car older than 8 years, let’s say, is sold. This should prevent traffic safety problems. And perhaps we should look for solutions for the mileage issue. There are still examples of people misled into thinking that the second-hand car they want to buy has run fewer kilometres and therefore that they are getting a bargain. We suggest the invoice should specify the number of kilometres for the vehicle being sold.”
The only models made in Romania included in the top 100 best-selling cars in the EU are Dacia Sandero, ranking 20 in the first quarter of this year, with nearly 48,000 cars sold, and the Duster on 36th place, with roughly 36,000 units sold, up 3%, the daily Ziarul Financiar reports.
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