Everybody wants a Dacia Logan! Do I want one? Do you want one? Probably not. But apparently there are an awful lot of people in the world who do. The Dacia Logan is a product of the acquisition of Dacia by Renault. Dacia was a car manufacturer behind the iron curtain in what is now Romania. But why does everyone want one, but not us? Aha! It is a "budget car" that is designed for markets in countries with emerging economies.

Don't expect to see the Logan in the U.S. anytime soon -- if ever. We're just too rich to want a car that has the price of about $6500 in Europe. It may be telling that it is marketed in Europe: Austria, Belgium, Croatia, France, Italy, Luxembourg, Netherlands, Poland, Slovenia, Spain, Switzerland, and Turkey only. That said, Renault designed the Logan to be a modern car, but one that could be built very cheaply.

The car can be powered by a 1.4- or 1.6-liter four-cylinder engine with a five-speed manual transmission. Two different 1.5-liter diesel engines are offered in Europe.

They expected it to sell well in Eastern Europe where incomes are much lower than in the wealthy west. Surprise! There was demand in the west and it sells about 25% of the production. 250,000 of them were sold in 2006. With increased capacity, 400,000 should be sold this year. The original Logan was a sedan. That was supplemented in by a station wagon. A van is planned in the near future. Production is expected to be 900,000 in 2009. Renault is looking for other places to start manufacturing.

Demand doesn't end there, however. The reaction in some markets is really absurd. In the first month of being sold in India, there were 25,000 inquires. And even more spectacular, in the first month of sale in Iran, there were 85,000 deposits taken.

The manufacture of the Logan in India is being done in a joint venture with Indian auto manufacturer, Mahindra & Mahindra. It is being priced to compete directly with imported Hyundais and locally-made Tatas. The market in India is dominated by hatchbacks, but the emerging middle class wants sedans -- exactly what the Logan is. The capacity of the plant where the Logan is made is 40,000 per year. The plan is to expand the plant soon.

The surprise really was Western Europe. It was expected that consumers there would look at a used "better" car as more desirable than a "cheap" Dacia. The advantage to the European consumer was a car that was less expensive than the cheapest Fiat or Citroën. It even has a three-star European NCAP crash test rating.

The European sales people love to talk about "surprise and delight" when it comes to the Dacia. As I said before, it may be a cheap car, but it also is a modern car. It may not have rain-sensing wipers, but it does have a really low price. It is the equivalent of a cell phone that just places and receives calls. I'll be there really is a market for those here. It is a small car by our standards, the size of a European Ford Escort. That is one size smaller than our Ford Focus.

The attraction in developing countries like India and Iran is that the cars available to them in the past were expensive European ones or domestically produced models that were first produced in Europe years ago. Then the tooling was moved to Eastern Europe where the car was made for more years. Then the tooling was sent to Iran or India. The cars made, while "new", were an ancient design. The Dacia isn't like that.

The success of the Logan has awakened other sleeping manufacturers.

Volkswagen is doing intensive work to develop the last generation Golf (Golf IV) into a Logan competitor. It will need a sedan body (the Jetta?). The price point for this one is rather higher than the Logan at $8500.

Of course Toyota is looking into this market as well. They claim to be working on "low cost technology" for their Logan rival. A really cheap car made by Toyota could really change the landscape of car making.

Another player is native Indian manufacturer, Tata, who wants to build a car costing less than $5000 for India's rural poor. They claim to have it ready for production in three years. I would expect that this car wouldn't be what I would call a "modern" car. To meet that price point, it would very likely not have expensive technology like air bags or multipoint fuel injection.

What about China? They have made low-tech cars for quite some time and they were not exported. They also make some copies of Japanese cars, but with significantly lower assembly quality. Note that when I say "copies" of Japanese cars, I mean that the cars the Chinese make are real copies. They look like Xerox copies of the original Japanese cars.

The Chinese, however, are now getting serious about making competitive cars on the world market for export. They seem much more interested in making cars that will sell in Europe and the United States, rather than cars going to developing countries. The low profit, though high volume, of the basic cars aren't as attractive as the higher profit cars they can make to sell in developed countries.

One negative for a car like the Logan in the United States is its association with the Yugo. That also was a cheap car made in Eastern Europe (then, Yugoslavia). Unlike the Logan, however, the Yugo was cheap in every sense of the word. Nobody liked the Yugo. It started rusting in the dealer's showroom, and falling apart as you drove it home. The convertible was cute, though.