Trends of the Romanian automotive industry

According to current data, the global market of automotive parts will increase from Euro 406 billion in
2010 to Euro 664 billion in 2025. Romania has more than 600 companies involved in the automotive
industry, with 203,600 employees. The cost of labour in the local manufacturing industry is Euro
4.9/hour. 158 international suppliers of auto parts own production facilities in our country, with some
of them also involved in research and development.
The current relative competitive advantages of the labour and utilities costs will gradually dwindle in
the future, so that new investments and capacity developments will be aimed at new products
competitive global technologies with high added value. The evolution of the Romanian automotive
component industry is obviously influenced by the international auto industry trends.
International trends
Globally, innovation-based manufacturers of auto parts are considered more lucrative than
companies specializing on limited number of technologies. This is because component innovation
allows the multiple use thereof for assemblies. Moreover, innovation allows the streamlining of
manufacturing and adaptation to new market requirements, as well as control over the upstream
value adding chains and hence on costs.
On the medium term, the international automotive industry which bears on the local parts
manufacturing will prioritize the following:
Focus on environment and safety;
Optimum positioning on the future integrated mobility matrix;
Overhaul of model ranges according to new demand data;
Strengthening of CDI for competitiveness on global markets;
Focusing of major investments on new products and technologies;
Sharing of risks through alliances and brand reinforcement;
Partnerships for product design and cost minimization over the supply chain, stepping up of
outsourcing;
Auto industry-wide implementation of new concepts such as numerical plant, Smart
automation, Industry 4.0;
New business solutions and new sources of profits.

Technological developments in the Romanian automotive industry

The Romanian automotive industry is more than assembling cars. Despite increases of investments
in auto parts industry, they are still far from reaching full potential. New investments have emerged
lately, such as:
The manufacturing of cutting edge energy-efficient engines at Dacia and Ford Craiova;
Manufacturing of cutting edge gearboxes for large international manufacturers: Daimler-at
Star Transmission Sebes/Cugir and the Renault Nissan alliance at Dacia;
Advanced microelectronics and mechatronics (including CD activities): Continental, Bosch,
Infineon, Delphi, Drxlmaier, Kendrion;
Complex technologies and auto parts of plastics, rubber and composite materials: many new
companies in Banat, Transylvania, Arges;
Expansion of robotics: Dacia starts a program to extend automation from 5% to 20% by
2020;
Emergence of new local companies specializing in the digitalization of the automotive
industry: Magic Engineering, Caelynx/Dassault, ADA Computers/Siemens, AS Systems, INAS,
etc.
According to the Romanian Automotive Manufacturers of Romania (ACAROM), the evolution of
Romanian automotive industry will also be directly influenced by the development lines of the two
large automotive manufacturers - Dacia and Ford, by the introduction of new concepts and manu-
facturing technologies, the ever growing interest for research and development (CDI), and the
access of auto manufacturers to funding.
Thus, the two manufacturers of Romania will consider the following:
DACIA:
Maintaining the current production pace;
Integration of new Renault complex assemblies into the Dacia manufacturing lines;
Increase of local integration;
Increase of automation for the key processes.

FORD:
Manufacturing of a second Ford model in Craiova;
Reaching the designed production pace and achieving local integration;
A research-development-innovation centre in Craiova.

It is most likely that other large automotive manufacturers will invest in Romania as well. Moreover,
new, large global suppliers will choose to manufacture their products in our country. Another trend
could be that of new manufacturing capacities for electric cars and the battery packs thereof.
As regards the digitalization of the automotive industry, this will be felt in the design of products,
optimization of technologies, logistics, lean manufacturing.
Furthermore, we will see the emergence of co-innovation on components for supply chains. New
research and development activities will appear in the automotive industry. Cooperation between the
public R&D and industry will be improved. A real support for applied R7D is expected from the
government.
As regards parts manufacturers, the local links of the supplier chain will be multiplied, and their
innovation force will increase. Easier access to loans by auto suppliers is expected.
More domestic capital will be invested in SMEs and the cooperation for innovation will increase
between SMEs and technical universities. Better access to European funds for competitiveness is
expected.

The automotive parts sector: current investment trends

New investments are mainly targeted at the Sibiu-Brasov-Cluj, Timis-Arad, Arges-Olt regions, but
new investments have recently been implemented in the east of the country.
As we already pointed out above, Dacia decided to initiate a wide-ranging program for manufactur -
ing automation until 2020.
Continental, Bosch, Delphi, Schaeffler, Yazaki, Hella transfer their own R&D activities in Romania,
while other companies invest in such capabilities. Renault Technologie Roumanie was a pioneer in
this field.
Domestic suppliers, such as GIC, Ronera, Elba, COMPA, ELJ, Componente Auto, Metaplast, Delta
Invest, etc. began investing in product innovation and technological upgrades.
Most of the investments or capacity building activities were subject to state aid. After 2009, state aid
in amount of Euro 182 million was approved for 18 large automotive projects worth Euro 350 million.
The new 2014-2020 state aid scheme has been approved by the Government.
Domestically-owned companies invested in expansion with state aid, by SOP IEC or ROP/ADRs.
Bank loan levels remain low.
The total amount of investments in the automotive parts business is higher than in other Central and
Eastern European countries (e.g.: Euro 951 million in 2012), but not enough to fully tap into the
development potential of this sector.
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