The Polish car industry

The car industry has become one of the most dynamic branches of Polish economy. The number of employees in this sector is rising and the prospects for the coming years are very promising.

In order to fully grasp the benefits of the actual situation we have to go back in time to 2008, when the whole world faced a severe financial crisis. There were some people thinking that our Polish car industry would be left untouched. They were wrong. The global market started to affect our economy as well. Car sales in Europe dropped dramatically which, in turn, had a negative impact on Polish car parts suppliers depending on the EU markets’ demand. Production downtime took place in Volkswagen, Fiat and Opel (Vauxhall) factories.

In Gliwice, where Opel has its own factory, preparations were just being made to start assembling Astra IV when the production process had to be changed and adjusted to the new situation, which didn’t bode well. The management decided to give up part-time workers and stopped outsourcing services. The factory started to operate in a 2-shift mode, instead of 3. The biggest subcontractors like FŁT in Kraśnik, Remy Automotive in Świdnica, IAC in Teresin or MAN in Starachowice, declared severe job cuts. Delphi, Wielton, Wabco and TWR had similar plans. In the worst-case scenario, there were fears that tens of thousands of employees could be made redundant.

The situation now is substantially better. The Polish car industry has been systematically growing since 2014. The production has gone up by 43% and the car parts suppliers have increased their sales by 50%. The export of car industry goods stands at 12% in the overall exports of our country. That is quite an achievement for us. Since the 90’s a lot has changed, new players like Toyota or Mercedes have entered our market. We have witnessed Fiat-Chrysler or Renault-Nissan-Mitsubishi mergers, Opel (Vauxhall) has been taken over by the French PSA. Volkswagen and Ford are thinking about a possible alliance as well.

Naturally, factories produce cars to make a profit and the demand is steadily rising in the whole EU. However, it is more and more expensive. Nowadays customers have a greater choice of cars, more deals on new models and their sizes, and prices, are going up from generation to generation. But customers today have become more demanding towards car dealers who have to invest more and more to build new and bigger show rooms to satisfy all clients’ needs. It seems that Polish car dealers are doing quite well.

They are ready to pay a lot of money for commercials shown over and over again on TV or in a variety of other media. At the first glance, those flashy adds suggest that the cars cost “next to nothing” just to attract customers’ attention but they hardly ever tell the truth. And we can have problems with availability if we decide on a promotional offer. It also matters if we are going to place an individual order or the car dealer just needs to have it delivered from the stock centre. In the first case, we have a right to be fussy, nonetheless, we shouldn’t count on a great discount offer. But if we place a special order or agree to take a model that has already been assembled, we are in a position to haggle over prices and negotiate a much better deal. Of course, then, you buy what they currently have in stock so you can’t ask for any extra options on the vehicle. There is also a third choice. From time to time a car dealer owns a model that for some reasons hasn’t been sold yet. Such situations are not very common but in those circumstances a car salesman will be very eager to sit down around a table and eventually reduce the price quite dramatically.

Individual clients most of the time tend to buy small cars, whereas corporate consumers choose bigger ones because they need at least an average-sized vehicle to run their businesses. Especially in the latter case, the tendency is not changing very much. Moreover, this trend should continue as car dealers are preparing special promotional offers for a new Opel (Vauxhall) Insignia or a face-lifted Ford Mondeo. More and more clients are interested in cars that cost over 300 000 PLN. The sales of luxury cars and hybrid vehicles are steadily growing.

Another way of using a car is to pay monthly charges for it. This new form of financing is addressed mostly to individual clients. A driver pays a fee every month and he doesn’t have to buy a vehicle in order to use it. However, no one knows if this trend will be still present and popular in the future. The TCO, the Total Cost of Ownership of a car in Poland is at a quite low level. Actually, Polish people are spending on their vehicles the least amount of money in the EU. However, we need to bear in mind that an average Polish citizen sees and values a 100 euros differently than, let’s say, a German or a Frenchman.

The purchasing power of Polish people is still not very big, that is why they tend to buy second-hand cars. This also goes for luxury cars as well as more affordable vehicles like Volkswagen, Opel (Vauxhall) or Ford. The most popular are German makes and Poles perceive them as rock solid and reliable. But it shouldn’t be surprising; Polish market is being literally flooded with German-made cars.

What the industry now needs is support from the government and fewer restrictions. No doubt about it. There are some signs of slight improvement; Polish drivers are encouraged to choose cars with electric motor or plug-in hybrids as these vehicles will be exempted from excise duties. A promising beginning…

Author/ photographer: Jakub Sandecki

Translation: Magician

Correction: TheFlorator