Automotive Poland: Good investment climate for the automotive industry

Foreign automotive concerns may rely on the friendly business environment in Poland whilst the country itself has a few attributes which make it one of the best locations in the region.

Every few months on average, information circulates in the media about another big investment of the automotive industry in Poland. Some of them get executed whilst others move ultimately to the markets of competitors – usually Czech, Slovak and Romanian. It was the case with the Jaguar plant for which the former minister of economy Janusz Piechociński fought. That ostentatiously announced investment turned out to be a fiasco. Poland lost to Slovakia and lost the opportunity for approx. PLN 6 billion being invested within its borders. This, however, does not mean that the local automotive industry is in bad shape.

Increased sales

The latest data published by KPMG and PZPM indicate that in the first quarter of this year over 210k of new cars were registered in Poland which equates to the growth of 18% year over year. This result was largely influenced by investments carried out by companies, but a small revival is also noticeable amongst individual clients (II quarter of this year resulted in the growth in this segment on the level of 5.7% year on year). Interestingly, Poles are increasingly choosing more expensive cars of premium makes.

In the first half of 2016 registration of premium makes grew by no less than 31.8% year on year whilst the sales of popular makes grew by 17%. In the same segment, the domination of institutional buyers was clearly visible: there were 33.8% more of them compared to the year before, comments Jakub Faryś, the president of the Polish Automotive Industry Association (PZPM).

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Production also up

At the same time, the growing sales of new cars drives the sales of parts and accessories as well as encourages foreign investors to place their production in Poland. As it emerges from the report of KPMG and PZPM, in the first quarter of 2016, the total number of vehicles produced here was 378.4k, i.e. 4.7% more year on year. In addition, the export of automotive products increased. In the first quarter of this year, it reached EUR 7.6 billion which equates to growth of 3.8% year on year. It was mainly driven by the sales of components, parts and automotive accessories as well as engines.

However, Poland has lost the position of the leader in Central-Eastern Europe in terms of vehicle production output. Czechs, Slovaks and Romanians draw foreign investors much more efficiently - even that last country manufactures almost as many cars as Poland. Nevertheless, Poland maintained the first position in production of parts, components and automotive accessories. It is also the biggest producer of delivery trucks in the region.

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