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Poland Autos Report Q1 2012
Business Monitor International, Dec 2011, Pages: 55
Business Monitor International's Poland Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Poland's automotive industry.
New car sales in Poland continued their recent decline throughout the first ten months of 2011, down about 7% y-o-y from 2010, according to the European Automobile Manufacturers Association (EAMA). This is despite Poland’s economy not suffering the fate of other European nations, such as Greece, where the autos industry has totally collapsed since the beginning of the economic crisis. In fact, retail sales grew around 11.4% y-o-y in September. This apparent disparity is partially explained by a culture of importing cars, which may have been a factor in the recent acquisition by VW of the sales network of some 195 stores of Jan Kulczyk.
Autos sales within the eurozone have, on average, declined by 1.2% within the same period, according to the Warsaw Business Journal - demonstrating weaknesses in the export model followed by Poland in times when their customer base is suffering serious economic decline and uncertainty.
In this light, our current prediction for 2012, of 7.2% y-o-y overall growth in vehicle production to 852,853 vehicles produced, is at the mercy of economic developments throughout the rest of Europe. This remains an area where there is no real certainty - with serious concern over the future of the euro, it seems unlikely that there will be the economic uptick that was assumed earlier in 2011. However, the underlying trend of Polish production is of strong growth, and we view the growth rate of completed vehicles to be just over 5% during the course of the 2013-2016 period. Clearly, while we see growth, we do not see it reaching the historic highs of almost 20% seen in the early to mid 2000s within our forecast period.
This issue, of lack of foreign demand curtailing domestic growth, can be seen where several stoppages of plants have been forced due to shrinking markets in Western Europe, where up to 95% of some plants export their finished products. Overall, only 70,500 passenger cars and delivery vans left Polish factories in September, which represents not only the seventh month of overall decline in domestic car production.
Nowhere is this clearer than at the Opel plant in Gliwice, where there was an expectation of higher demand over H2 at the beginning of the summer period - they will now produce 8,000 fewer vehicles than predicted in June. Domestic recovery is also likely to be weak over the next two years, as the Polish Ministry of Finance has indicated plans to converge VAT with the EU limit of 25% by 2013. That would require a 1% VAT hike every year until 2013, thereby limiting scope for a quick recovery in demand.
There are some areas of potentially very strong growth domestically, in particular when it comes to new vehicles with better fuel consumption. Buyers in Poland prefer more affordable and practical hybrid cars over expensive fully electric vehicles (EVs), reports Rzeczpospolita. Hybrid car sales nearly doubled to 741 units in the first nine months of 2011, according to data released by the automotive market research body Samar Institute. Japanese automaker Toyota Motor's Prius hybrid mid-sized hatchback is practically the only hybrid vehicle being sold in the country.
As what can be seen as a demonstration of the potential of the domestic underlying production structure, Italy’s Fiat has also been using the ‘Polish model’ as a way to reshape much of its Italian domestic production, Businessweek reported in October 2011. The wages of its foreign workers, in particular Poles, are as much as 70% lower than the heavily unionised Italian workforce. Also, even adjusting for effects such as different production and model types, the average Polish worker produces 100 cars a year, whilst the average Italian produces around 30. This can only be a good sign for Poland, which stands to make substantial gains if the Italian labour issue cannot be resolved by Fiat, which has previously threatened to pull out of Italy if it does not reach suitable understandings with its unions.
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