Opinion

The current-generation Dacia Sandero was launched in December 2020 as Britain’s cheapest car – priced from a whisker under £8000. Today, less than three years later, the most affordable version of the Renault Group brand’s hatchback costs £13,795. 

That cars are getting ever more expensive is no secret: inflationary pressures, the increasing cost of legislative compliance, logistical headaches and supply constrictions are together conspiring to hike up the list price of cars from all brands and in all segments. But the impact on Dacia is arguably most tangible given its historic billing as the purveyor of the cheapest cars on the market. 

Although its cars remain among the most competitively priced in their respective fields, bargain-basement pricing structures are no longer Dacia’s modus operandi, and the days of the sub-£10k Sandero are long since past. Not only that, but the brand will now expand its range upwards to compete in the fearsome European C-segment, armed with the Skoda Kodiaq-rivalling Bigster and two more future models besides. These cars could feasibly take Dacia well into the £30,000s in range-topping forms – a realm that would have previously been unthinkable for the Romanian brand to occupy. 

But, as Dacia’s sales and marketing boss Xavier Martinet explained, striving to be the market’s cheapest car brand is a precarious position to occupy. “At the end of the day, you can be interesting at £9000 with a basic customer proposition, you cannot do it at £13,000, £14,000, £15,000. At that price level, for a basic car, a low-cost car customer would go to the used car market,” he said.

Plus, the need to remain profitable means the relentless pursuit of volume at all costs is no longer a viable business model. “With the evolution of pollution and ADAS expectations as well, and with the GSR2 (safety regulations) coming, we cannot build a £9000 car any more and make money out of it,” added Martinet.

And the second another marque sees fit to undercut your cheapest car by knocking a few quid off their equivalent model, that’s your unique selling point out the window.

Which is why Dacia’s pricing uplift is as much driven by free will as it is obligation. “We’re forced by regulation, but at the same time I want to say it’s also a choice,” said Martinet. “Because if your only purchasing reason is price, there’s always the risk that somebody will be cheaper than you, and so you’re quite vulnerable. Giving more value to the brand, to the vehicles, is a way to make us less vulnerable to the attack of anyone – any existing competitor or any newcomer.”

Martinet says Dacia must “enrich the car content” to remain competitive and profitable, while maintaining the astounding volumes it has achieved in Europe. The Sandero now ranks as the region’s best privately selling car and the Duster is not far behind. 

That ‘enrichment’ comes courtesy of add-ons like chunky 4x4-style cladding, extra kit, slick new colour options and fun accessories like the Jogger’s campervan-aping Sleep Pack and a lairy sticker package for the Duster. Dacia may have vocally shunned the costly electronics and gizmos required for a five-star Euro NCAP safety verdict, but equipment that can be demonstrated to actively enhance the ownership experience – and put its cars more obviously on a par with rivals – is fair game. It’s telling, perhaps, that more than 70% of Dacia models are now specified with the top trim package. “When people say ‘I’m buying a Dacia – I’m buying a cheap car’, it’s wrong because they’re not buying the cheap one,” said Martinet.

The real test will come when the brand finally starts to transition to a pure-electric line-up, a move it will make with the next-generation Sandero in four years’ time. Pricey battery hardware means this electric supermini – related to Renault’s hotly anticipated reborn 5 – will no doubt bring another hefty price increase, even if it uses second-hand underpinnings and technology from its parent company. 

But what’s interesting is that Dacia won’t let this inherent cost uplift stand in the way of its steadfast commitment to good-value motoring. “We will go for a shorter range and longer charge times,” pledged CEO Denis Le Vot, swimming gamely against the tide of volume manufacturers pushing for their EVs to offer 600 miles between charges and warp-speed top-up times. “We want a cheaper price for the customer.”

No doubt Dacia’s tried-and-tested formula of minimising weight, equipment and options – together with the suggested integration, even, of cheap sodium battery chemistry – means it can make good on this pledge. But in the context of a market environment beset by soaring prices across the board, “cheaper” is an increasingly relative concept.

Persuading people to switch to electric cars requires addressing several barriers – both real and imagined. Price remains a major factor: for many people, electric cars are just too expensive. That will change as the technology improves, with firms such as Hyundai, Kia, Renault and Volkswagen all pledging small, affordable EVs in the years to come.

But those cars aren’t here yet and the various target prices that executives have offered are just that: targets. So the news that the Dacia Spring Electric – billed as Europe’s cheapest EV – is finally coming to the UK is hugely welcome. It’s a tangible demonstration that battery-electric machines really are getting cheaper.

The key question will be how cheap. Based on pricing elsewhere, we’d expect the Spring Electric to be priced at somewhere just over £15,000. That’s a far cry from the heady days of the £5995 Sandero, but then again even Dacia’s cheapest petrol model now costs more than £12,000. Still, it does highlight the challenge for the Spring Electric: even if it is the cheapest EV on sale, it will still be undercut by some petrol-powered machines – which, contrary to some scaremongering recent headlines, will remain legal to drive in the UK once the sale of new ICE cars are eventually banned.

Clearly, buying a Spring Electric will require some compromise: it has a motor that produces just 44bhp, and a 28.6kWh battery that gives a comparatively meagre official range of 143 miles. So while it might help vault the price barrier, some buyers might be put off by concerns about range – whether real or imagined.

The reality is those limited-range compromises are often far less significant than imagined: witness the many happy owners of early Renault Zoe and Nissan Leafs, or buyers of the Honda E or Mini Electric. And it's worth noting that the Spring Electric's range is significantly more than many of the EVs it is set to substantially undercut.

For many people, the Spring Electric’s range will be ample for their weekly usage, especially once you make a bit of mindset adjustment. And with that power instantly available, it is unlikely to feel as gutless as 44bhp might suggest. In fact, I suspect it could well be a lot of fun in the right circumstances.

Most importantly, Dacia has 10 years of form in the UK for selling buyers on the benefits of low-cost, no-frills motoring. Which is what the Spring Electric will hopefully represent. It’s proof that cheaper EVs really are coming, and another big step in chipping away those perceived barriers to EV ownership.

Procurement and supplier management. Not really topics to set most people’s hearts racing, but subjects that are now becoming key skills requirements for leaders in the automotive industry.

The capability of digital technology to connect the customer directly with the brand has transformed and disrupted long-established business relationships in new car sales, remarketing and through the extended supply chain. This connectivity relies on suppliers enabling the connection and often delivering all or part of the service. 

However, many businesses across multiple sectors are making the mistake of choosing suppliers based primarily on cost rather than the defined needs and expectations of consumers. I say that not just as a businesswoman working with clients and job candidates in all areas of the automotive supply chain but as a customer who, like everyone else, experiences the impact of poor procurement and supplier management decisions. 

Who hasn’t felt frustrated and exasperated, for example, by the experience of making a customer service enquiry and being unable to speak to a human being?

The perfect storm of high inflation and a chronic skills shortage across the industry means more and more organisations are looking to outsource elements of their business to save as much money as they can in the supply chain, with the consequent risk of outsourcing their brand and reputation.

Success requires leaders with proven skill in identifying and managing suppliers to deliver the level of service, the quality, the long-standing expertise and the value-add to the organisation, remembering the needs of the customer at the end of the chain. 

If Covid-19 taught us one thing, it is that good supplier relationships matter because when a crisis hits, they will be tested. The automotive industry was found wanting and was unable to obtain microchips to restart production.

But have we learned lessons, or are we just back to ‘business as usual’, where the bigger dogs in the supply chain bark at the smaller ones to drive down costs? 

My business conversations tell me that, with some notable exceptions, it remains all about the money and that will come back to bite businesses as the supply of new vehicles continues its steady growth back to pre-pandemic levels and pressure on margins grows. 

The evolution of direct-to-consumer and online sales through the new retail agency model underlines the importance of having the right procurement strategy, with clear expectations and standards, and then managing suppliers to deliver. For example, it means manufacturers now need to work with new suppliers to deliver services in key areas such as technology, consumer marketing and finance that they have never previously managed. 

Organisations (and not just manufacturers) need leaders with the skills and experience to manage this new dynamic. The competition is fierce and the cost of acquiring talented individuals is growing. 

The selection, integration and management of suppliers needed to deliver the level of service that customers have come to expect from the established franchised dealership model is fundamental to business success.

Start from the market, because forgetting the customer is a dangerous game.

Lynda Ennis is the founder of global automotive and mobility executive search company Ennis & Co

Some eight years after the Dieselgate scandal started to rock the automotive world and beyond, the first Volkswagen Group executive has been convicted following an admission of guilt – of sorts.

Rupert Stadler was Audi boss for 11 years from 2007, the last three of which were served with a brass neck, the scandal having hit and the reconciliation process had begun. 

When facing a prison sentence last month, he took a plea deal to escape with a suspended sentence and a fine (albeit a seven-figure one of €1.1 million), admitting that he failed to stop the sale of cars fitted with the cheat device and not doing more to act rather than any direct involvement.

Two co-defendants, ex-powertrain engineer Giovanni Pamio and ex-Porsche boss Wolfgang Hatz, took similar deals, although German prosecutors seem determined to keep the case against Hatz going and are reviewing the sentence he was given. 

The fall of Stadler is now complete. He oversaw the growth and expansion of Audi to what it is today – he took sales from just under one million units per year to just under two million by the time he left – and he always seemed a more studious and less showy executive than many of his bravado-rich contemporaries from the VW Group at the time. Yet still he knew – of course he knew. 

The first time I interviewed him was at the Detroit motor show about a decade ago. Motor shows aren’t always the best place to get the warmer side of execs, given they’re sat in the same room all day with journalists coming in one by one; back to back. Yet Stadler gave a friendly and insightful interview and what I thought would be a few cagey news lines turned into a big profile feature piece. 

The last time I spoke to him turned out to be just a few days before his arrest, at the unveiling of the Audi Q8 in Shenzhen. This was a doorstepping job, and the approachable and open Stadler of before looked a bit like a rabbit in the headlights.

This was his last public appearance as Audi boss; with his arrest forthcoming it’s obvious why he was distracted, and not overly keen to furnish my questions over whether or not there’d be a next generation R8. Other things on the mind and all that. 

Stadler surely won’t be the last VW executive to end up with a criminal conviction at the end of this. Intriguingly, Stadler’s plea deal included a condition that he can be called upon to give evidence against other future defendants in the dieselgate case. His simple reply of “yes” as to confirming if he could have done more to act is hardly warts and all. 

Given the bosses of two VW Group brands of the time have now finally admitted a part in the scandal, it’s a fairly safe assumption that this indeed goes far and wide across the group and the leadership of several brands. Shock of the year.

But if we’re ever to get to the bottom of this scandal and the inner workings of it, people are going to need to talk. Perhaps the Stadler of Detroit – and not Shenzhen – could be the witness to do so when others have their day in court.

Lovely as it is, Hatfield might not seem somewhere with a big enough pull to require a visit from Lamborghini’s top executive team. Yet the Hertfordshire town is now home to Lamborghini’s 11th and largest UK dealership, and the new HR Owen franchise opened its doors at an event attended by more than 200 UK customers.

The frontman for Lamborghini is Stephan Winkelmann, now on his second stint at the top of the company. While the designs of Lamborghinis are wild, Winkelmann himself is more refined in how he dresses, with the sharpest collar in the industry and a tie knot never out of place. But when he speaks, the formality slips: his eyes smile and give extra meaning and theatre to his words.

We talk Hatfield first. A vast new dealership – part of a complex of new luxury dealerships from HR Owen on the site – might seem at odds with the trend to a move online and smaller, urban dealerships. (For the record, Winkelmann says: “We are not adopting the agency model.”) But in the luxury world, such touch points remain hugely important and their role goes beyond that of selling cars. 

“Dealers are the ambassadors of the brand." Winkelmann says. "Selling cars is still the main activity but more and more it’s to entertain, and to make [buyers] feel part of the club. These make the difference. There is huge competition with luxury brands not just on cars. There’s a huge trend of offering things money can’t buy. We need to create a fuss.”

Still, the firm is continuing to invest in its digital platforms, building software to help dealers help customers to configure and explain their cars, due to their complexity. But “it has to be humanised and hands on”, says Winkelmann, with Lamborghini itself “never interfering in the sales process”.

Lamborghini’s wait time for a new car is two years, which Winkelmann thinks is too long. He would prefer it to be no more than 18 months. “Residuals are sky high,” he adds, “so if you sell used, you still get the price of the new car.”

Winkelmann speaks warmly of Lamborghini’s role in the Volkswagen Group under Audi ownership, calling recent reports that Lamborghini doesn’t need Audi support any more, because it is so profitable in its own right, “bulls***”. 

Indeed, in the electrification era that relationship is more important than ever. Winkelmann notes three things it simply couldn’t do without: the platforms for its – wait for it – “daily drivers” (the Urus and upcoming 2028 electric GT), software and batteries. 

While the cars are expensive, the brand is one for everyone. Lamborghini invests heavily in its museum, which had 120,000 people visit last year, largely a mix of tourists and school children. It’s at the limit of capacity but Winkelmann says the market for Asian visitors remains untapped and provides future growth potential, as most visitors now come from Europe and America. 

He is seeking more licensing deals – the Lego factor – as they are almost pure profit, above 90%. “Licensing helps to strengthen the brand. Lego makes the brand friendly, touchable and accessible,” says Winkelmann.

These extra curricular activities might only be around 1-2% of Lamborghini revenues but it’s around 5% of the brand’s profits, and is “very good business compared to the headcount”. 

Its presence is also vast on social media, something Winkelmann is keen to keep investing in as the long view is taken that the teenagers of today are the car buyers of tomorrow. 

“We’re aware we’re serving privileged people, and there are a limited number of them. So there are a lot of people that can be left behind. Social media gives us a huge fan base, and motorsport is also part of this,” he says.

On social media, Lamborghini focuses more on the brand than the cars or propulsion methods, a further long game because it doesn’t want people to fall in love with the engine that powers the car. “We have customers coming up that don’t look at how we achieve the performance.”

After an audience with Winkelmann, you emerge with respect for a company that’s as well oiled and professional a machine as they come, however outrageous the cars might be.