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The old joke about Poland’s car industry is that the country builds new cars but buys used ones. It is a snide remark that — in the past — was partially rooted in truth.
But rising consumer confidence and spending power in what has been the EU’s fastest-growing economy over the past decade has closed the gap between Poland’s car production and sales, even as exports continue to be the focus for the country’s factories.
In a fully interconnected EU car market, where manufacturing plants are spread across the continent, Poland still builds more new cars than it buys. It imports more than $5bn of new and used vehicles each year to put its citizens on the road.
But long-term trends suggest the domestic retail market could exceed the size of its production industry before the end of the decade, as Polish drivers with rising incomes shift to buying new vehicles.
“The Polish premium automotive market has been developing well over the past few years. This is a clear sign that, with the economic development of the country, more people can afford premium goods,” says Paul de Courtois, general manager of BMW in Poland.
“And at the same time customers are more demanding and seeking high-quality products. Therefore, in the predictable future, we can expect a continuation of sustainable growth.”
With 258,240 cars sold in the first nine months of the year, Poland is the EU’s eighth-largest retail car market. Since 2007, when it was the region’s 13th largest, the country has become the EU’s fastest-growing vehicle market having expanded 19 per cent in the intervening years. It is also one of very few big markets to be larger than it was before the financial crisis.
That growth should continue, as long as the economy holds steady. “The outlook for the automotive industry is promising,” says Piotr Michalczyk, partner and leader of automotive services at the Warsaw branch of PwC, the professional services firm. “The positive dynamic in this sector can be attributed to economic growth. Due to this fact we can expect increasing demand for upper-class cars.”
However, sales remain below that of 2000, when Poles bought 600,000 new cars a year. This was in the period before the country entered the EU trade zone that allowed used cars to be freely imported.
The market also lags behind the potential suggested by its population and economy, the union’s sixth largest. In Spain, for example, where the population is 20 per cent larger, more than twice as many new cars were sold last year.
One area of the market that has helped boost new car demand is the corporate leasing and long-term rental segment, driven mainly by the expanding financial services industry in Poland.
The long-term car rental market rose by an annualised 12.4 per cent in the second quarter of 2015, as company car demand grew.
According to the Polish Vehicle Rental and Leasing Association, companies bought more than 57,000 new cars in the three months to the end of June, roughly half the total number of new car sales.
That trend has been helped by a professionalisation of the service offered by carmakers in Poland. As head of BMW, Mr de Courtois oversees not only the sales and marketing arm of the German carmaker’s operations in Poland, but also its financing arm and Alphabet, its global leasing operation.
But while premium cars are gaining in popularity, Volkswagen’s low-cost brand Skoda is still Poland’s most popular new car marque. It is fashionable among buyers who, in the past, would have typically bought second-hand cars made by mid-range producers such as VW, Toyota or Ford in order to afford the luxury of a new model.
And vehicle pricing shows a conscious effort by carmakers to track the spending power of Poland’s rising middle class. Since 2010, the average showroom prices of cars have not followed the country’s headline inflation rates, but almost exactly mirrored corporate wage growth, according to the Samar DNB Vehicle Price Index, a local monitoring service.
This suggests the manufacturers are marketing cars at prices they know Polish people can afford.
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