Monday, February 23, 2009

Reuters: Romania's Dacia benefits from German car aid

BUCHAREST, Feb 20 - Romanian carmaker Dacia, owned by France's Renault, plans to boost production in the coming weeks, as German subsidies for car buyers help boost flagging demand and prevent more work stoppages.

Dacia, which exports the 6,000-euro ($7,545) Logan model, saw its average daily production fall by 20 percent this year and had to suspend work intermittently in recent months as the global crisis spread to eastern Europe.

However, the German government's plan to revive its ailing car industry with a multi-billion-euro aid package has given a boost to demand for Dacia cars, company officials said.

Under the plan, German owners of cars older than 9 years will be able to get 2,500 euros for a new vehicle.

"This measure ... has led to a substantial increase in demand for vehicles with accessible prices, like Dacia," said Silviu Sepciu, Dacia's spokesman.

"According to our estimations, by the end of February, Dacia will get an order for about 30,000 from Germany, that's more cars than we sold there in all of last year."

Average daily production should rise to 1,200 cars from 1,085, though still below last year's peak of 1,360 vehicles.

Countries like Germany, Spain and Italy have pushed schemes to help their ailing car industries as recession in the euro zone hurt demand.

The downturn in the West has bitten Eastern Europe's car exports, forcing plants like Romania's Dacia to temporary shut down production or Hungary's Suzuki to lay off over a thousand of its workers.

"This removes, at least for now, the prospects of a new halt in output," Sepciu said. ($1=.7952 Euro) (Reporting by Ioana Patran; Editing by Simon Jessop)

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