News: German automaker Daimler intends to make a huge investment in producing transmission components at its existing joint venture (JV) site in Romania, reports Handelsblatt. Daimler's supervisory board is scheduled to lay the groundwork for the investment on April 24. The report added that Daimler plans to expand its JV site in Cugir as its transmissions production facility in Untertuerkheim, Germany, is reaching full capacity. However, the reports could not be confirmed by the automaker.
BMI View: It is BMI 's long held view that, as manufacturers increasingly seek to shift their focus away from Western Europe, markets in Central and Eastern Europe (CEE) will receive investment. This is predicated on generally lower production costs in the CEE region, and ongoing improvements in operating environments. Autos production volumes in Romania are currently below several of its regional competitors, such as Poland and Hungary. We believe that substantial increases in operating costs, such as the higher wages demanded by workers at Dacia, will not help Romania improve its regional position.