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January 23, 2022

Over 50 pc of the state aid offered by Romania went to auto industry

The economic crisis of 2009 and 2010 led to a drop of over 70 percent in the internal auto market and to a slowdown in the flow of direct investments, especially in the flow of foreign direct investments. With a contribution estimated at 8-10 percent of GDP, the Romanian auto industry remains a strategic pillar of the Romanian economy and, at the same time, one of the main economic growth engines.
Approximately 53 percent of the state aid offered by Romania from 2007 to 2013 went to the auto industry, and deservedly so since the auto industry’s exports support the national production and economy and represented 24 percent of the exports in 2013, Constantin Stroe, President of the Association of Romanian Auto Manufacturers (ACAROM), stated yesterday at the business summit organized by the French Embassy’s Economic Mission (UBIFRANCE) and the Renault-Dacia Group.
He pointed out that Romania will be offering state aid for investments in the 2014-2018 interval too, and the state supports up to 50 percent of the value of eligible expenses of new investment projects. The Romanian auto industry’s exports totalled EUR 3.2 bn when it comes to auto vehicles and EUR 8.14 bn when it comes to auto parts in 2013, growing by 26 and 23 percent respectively year-on-year.
Dacia exported 93 percent of its production of auto vehicles, while Ford exported its entire production, Stroe said, adding that the local market absorbed only 5 percent of the local production of auto vehicles last year, namely 20,518 units out of 410,959 units. Constantin Stroe deemed that auto industry exports will continue their solid growth trend in 2014. Last year the top two markets for Dacia exports were two states with tradition and prestige in the domain: France (93,803 units) and Germany (47,162 units).
Dacia car registration, up 9.5 pc in Germany
Meanwhile, the German car registration office announced that the number of new Dacia car registrations in Germany has climbed by 9.5 percent in the first half of the year to 25,706 units, which translates into a growth dynamic four times faster than the market (+2.4 percent to 1.54 million cars). Between January and June, Dacia’s market share in Germany was 1.7 percent. In June, Dacia sales increased by 8.7 percent to 5,088 units, whereas the market slid 1.9 percent to 277,614 cars.
EUR 4.7/hour, cost of labour in Romanian auto industry
ACAROM’s President also pointed out that in the Romanian auto industry the cost of labour, taking into the 5 percent cut in social insurance contributions (CAS), will stand at EUR 4.7 per hour. Constantin Store considers that in Romania the costs are much smaller than in Germany for instance, where they stand at over EUR 30 per hour, and represent a competitive advantage for the local market in its attempt to attract new investments in the auto domain. The Romanian auto industry registered a turnover of EUR 16.86 bn in 2013, namely EUR 5.26 bn from auto vehicle production and EUR 11.6 bn from auto parts production. Foreign direct investments in the auto industry generate 73 percent of the sector’s turnover, Stroe pointed out.
Renault wants to expand its network of local suppliers
In this sense, Renault Group wants to expand its network of suppliers in Romania, and the investment opportunities in the auto parts industry were presented on Thursday to the representatives of dozens of French companies. Stroe emphasized that without foreign direct investments the auto industry will not be able to continue to develop. As arguments in favour of investing in Romania’s auto industry he outlined the fact that Romania is not only a big producer of auto vehicles but also Renault’s international centre for auto parts CKD collections, the facilities offered by the central administration in the form of state aid of up to 50 percent of the eligible expenses of investment projects, facilities offered by local authorities in the form of tax exemptions, the leasing of plots of land, of areas within industrial parks, access to European structural funds, but also the human resources and the network of 14 technical universities in Romania.

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