Automobile industry Poland: Records in the shadow of falling car production

Despite the fact that passenger car production decreased last year by as much as 13 %, Polish automotive industry remains, overall, one of the most important sectors for Polish economy’s development. Last year ended with record results in various categories. However, weakening dynamics may indicate future slow-down.

Last year was the second year in a row with falling production of passenger cars in Poland. The 13 % decrease means that a little over 450 thousand cars left the factories. On the one hand, this is influenced by the decisions made by automotive concerns to decrease production in the existing Polish factories, on the other – by the lack of new investments. International manufactures, deciding about the location of production of new models in Central and Eastern Europe, choose the Czech Republic, Slovakia and more and more frequently also Hungary and Romania. Last year, Poland was overtaken by Romania in terms of passenger car production for the first time in history. New investments in Hungary mean that also this country will soon produce more new passenger cars.

This trend which is hardly positive is still largely saved by commercial vehicles, the total production of which increased last year by 208 thousand (+19 %). This is largely thanks to the growing production in Volkswagen’s factories, thanks to which the Polish unit of this German concern achieved the best production result in its history. Only Spain, France, Germany and Italy produce more vehicles in this segment in Europe.

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Key parts and accessories

Poland’s strong position on the automotive market of Central and Eastern Europe is, however, mainly due to a good condition of the automotive parts, components and accessories sector. The value of sold production of the total Polish automotive industry reached PLN 153.4 billion last year which is 3% better compared to the year before even though it needs to be emphasized that this is the weakest growth dynamics over the last 7 years. Producers of automotive components had the biggest impact on this good result and generated almost PLN 89 billion in revenue in 2018. This result means growth of 4.8 % in relation to the record year of 2017. At the same time, the value of car manufacturers’ sold production fell by 2% - to PLN 55.1 billion, whilst the biggest growth – by 11.3 % - was recorded in 2018 by the producers of trailers and semi-trailers.

The situation in the automotive parts and components sector has remained stable for quite some time. Its position is due to, amongst other things, large investments and close relations with car factories located in the countries of our region of Europe. Despite quite a good situation in this sector of the automotive industry, in recent years Poland lost its leadership position to the Czech Republic in terms of widely defined components for the automotive industry.

Growing employment

Good condition of Polish automotive industry means that the number of people employed in the industry has been growing steadily for years. According to GUS (Main Statistical Office), in Poland there were approx. 203 thousand people employed in the car, trailer and semi-trailer sector in 2018. This is, however, only a part of the employment. Within medium and large enterprises employment increased by 3.8 % to the level of 195.5 thousand employees. Within the producers of parts and accessories, on the other hand, the 4.5 % growth of employment allowed for reaching a record level of employment of 154 thousand people. It is more challenging to calculate the number of employees employed by enterprises from sectors other than PKD 29 (e.g. production of tyres, windows, processing of plastics). According to careful estimates, these companies may employ as many as 90-100 thousand people contributing to the automotive industry. A separate group is over 1.28 million of services employees which work in trade and vehicle repair.

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Record export

2018 also ended with record numbers in terms of the value of the automotive industry’s value of export. The overall level of PLN 25.95 billion is almost 3 % higher compared to the year before. The greatest contribution to this result is attributed to parts and accessories, the export value of which reached EUR 12.2 billion (+7.6 %), whilst the biggest growth (+19.5 %), to the level of EUR 3.2 billion, was recorded by trucks. This result is satisfactory, especially in light of the slow-down on international markets. However, much lower growth dynamics compared to the year before should be emphasized. Between 2015 and 2017, the average annual growth of export was approx. 10 %.

The biggest recipient of Polish automotive companies is Germany with its share of over 31 % of export value. Last year, the Czech Republic moved up to the second position (8.5 %) whilst Hungary ranked third (7.7 %).

Opportunities and threats

The Polish automotive industry has quite a good year ahead; however the future may not necessarily be as good which is indicated by decreasing dynamics over the last 12 months. The falling demand in the United States and China for cars manufactured in the EU may have a significant impact upon the manufacturers of parts.

Investments into new production factories (such as Mercedes engine factory in Jawor which is to be started at the end of this year, as well as Faurecia in Legnica, Valeo in Chrzanów or Kirchhoff in Mielec) will contribute to the growth of employment within the sector by 3 thou-sand people this year, as well as to the growth of production and export in the automotive sector of parts, components and accessories.

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