Dacia leads charge of emerging market cars in Europe That Europe's fastest-growing car brand is a Romanian marque says much about global carmakers" product strategies in flatlining developed markets. Dacia, owned by Renault, is defying the worst slump in European car sales for two decades, snapping up customers from better-known rivals while boasting a profit margin typically seen only at premium carmakers. Not bad for a brand whose cars were never meant for developed markets. A combination of low-cost engineering, simple, no-frills specifications designed for eastern European markets, and western European car buyers tightening their budgets, has made it the most successful brand on the continent by sales growth, and the best example of a range of cars designed for lower-cost markets that are flourishing in Europe. Stalwarts of European carmaking have long warned that freeing up trade with low-cost markets will erode their earnings and put the region's jobs at risk. But those same companies are now employing their own emerging market strategies back home to eke growth out of western European markets. In an effort to drive down development costs that can often run to $1bn per model and simplify manufacturing processes, the motor industry is shifting towards using fewer vehicle platforms, and uniting their global model offerings. In a reversal of previous strategies involving introducing successful cars from western markets into developing markets, many manufacturers are finding that cheaper, smaller or more versatile products designed for emerging market drivers work just as well in developed markets. Budget cars today account for 18 per cent of sales in Europe, according to research by AlixPartners. This is up from 13 per cent in 2002, eating into the sales of traditional mass-market volume players such as Ford, Renault and Peugeot. The selling point of Dacia models and other cars designed for and built in emerging markets is simple: value. Exterior colour options are limited to just five shades, identical door panels are used on multiple models and Dacia windscreens are built at a steeper angle to reduce production and installation costs. The company's frugal design and manufacturing approach means its basic Duster SUV costs from £9,000 in the UK, about £4,000 less than its rivals offered by mainstream volume brands. "It's the best example of a car developed for emerging markets that has been introduced in developed markets and has been a real success," said Professor Jan-Benedict Steenkamp, author of Brand Breakout, a study of emerging market brands that compete worldwide. They were far ahead of any other car manufacturer. Thanks to Dacia, known for its cheap, compact SUVs, Renault is outperforming the overall market in western europe. The French carmaker saw the Romanian brand account for 24 per cent of its group sales in the region in the first half of 2013. Without the brand's rising popularity, it would have seen its sales fall more than 10 per cent in the first half of the year. Renault does not release financial details of the Dacia brand, but Morgan Stanley Research calculates it posted a 9 per cent operating profit margin in 2012, against a negative 2 per cent margin for the core Renault brand. Renault is not alone. Ford is bringing its EcoSport, an SUV designed in Brazil and built in India, to Europe early next year. Hyundai's flagship European small car, the i10, was first made for Indian drivers, and Nissan's Pixo is a European version of India's biggest-selling small car with a different badge. "There is a global segment of people that are solely concerned with value for money," said Prof. Steenkamp. That group is global, not just in emerging markets. With the continued success of small "B-segment" cars such as the VW Polo and Ford Fiesta in Europe, carmakers have been keen to find more variants in that category, and existing emerging market models offer a cheap and easy option. Having products developed for emerging markets "gives you the opportunity to look at the portfolio and if you decide you would like to have one, you can have that discussion," said Stephen Odell, chief executive of Ford Europe. Global manufacturers that got their fingers burnt attempting to sell western-designed models in fast-growing markets such as India and China are now spending billions on research and development targeted at consumers in emerging markets. Volkswagen, Toyota, Ford, Hyundai and Suzuki all have R & D centres in India, Fiat's Brazilian subsidiary has been designing cars independent of Turin for years, and almost every global carmaker has designers and engineers working in Chinese development centres. Nissan's Chinese development centre recently unveiled its Friend-ME concept car tailored for Chinese drivers with an eye on global deployment. Meanwhile Tata Motors" groundbreaking Nano has been touted by the carmaker's senior executives as a possible product for the US and European markets in an effort to increase sales of the struggling low-cost car.