Automotive manufacturing Poland: Spare parts – the strong point of Polish automotive industry

Lost battles with neighbours for investment in new automobile factories have not displaced Poland from its position as regional leader in the automotive industry. The country still remains a European powerhouse in the manufacture of automotive parts.

The last two decades have been a time of substantial foreign investment in the Polish automotive industry. Manufacturers of both replacement parts and vehicles have taken a liking to Poland. As a result, the country has become one of the largest European manufacturing centres in the branch and an industry leader in East-Central Europe, while the automotive sector has acquired the status of a key element of the national economy, occupying top positions in terms of total value of production, export volume, investments, and employment. And, perhaps most importantly, the industry is constantly developing. According to the latest figures published by Eurostats in 2013, revenues from the automotive branch in Poland totalled 57 billion euro, of which 28 billion comprised the earnings of manufacturers themselves.

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Manufacturing

The automotive market can be divided into two main parts, automobile manufacturers and the so-called independent segment, primarily charged with creating modules, replacement parts, and accessories intended both for installation in new vehicles and for aftermarket sales.

Between 2010 and 2013, the production value of automotive parts and accessories in Poland grew by 37.7%, which when contrasted with a simultaneous stagnation or even fall in automobile production figures resulted in an increase in the segment’s market share in combined revenues from sales of materials and goods related to the manufacture of automotive parts, vehicles, semi-trailers and trailers (from around 40% to more than 55%). A noticeable growth in the dynamics of the sector, however, took place only after 2012, mainly due to a rising trend in key export markets. The total value of products sold in 2014 reached 6.1 billion euro and rose in real terms by 5.1% (y-o-y).

Export

Automotive parts and components manufactured in Poland are highly respected in Europe, driving growth in the value of exports and foreign investment. Between the years 2000 and 2007, exports in the independent automotive market increased by 27%, and in the following seven years by a further 31%. Despite this increase, the industry’s share in total exports remained at a stable 10-11%. In the same period, total exports of the entire automotive branch fluctuated between 22.9 billion euro in 2008 to 5.3 billion euro in 2014, and its share in total exports dropped from 19.7% to 15.5%.

In 2014 the key product group in exports of this segment of the market was engines; sales to foreign markets brought Polish manufacturers 2.5 billion euro in revenues. During the same period, exports of vehicle body parts amounted to 1.8 billion euro, tyres also 1.8 billion euro, electrical parts 1.7 billion euro, and engine components 1.2 billion euro. The most significant increase in exports in 2014 was noted by manufacturers of glass products for the automotive industry (+25.8%).

The vast majority of Polish automotive parts exports are destined for markets in the European Union. In 2008 this amounted to 85% of exports, whereas in the current decade the proportion has exceeded 90%. Germany remains the major market; in 2014 approximately 45% of Polish exports were sent there, with a combined value of 5.96 billion euro. Large European countries are heavily represented among the remaining countries, including Great Britain, France, Italy, and Spain. The fastest growth was noted in exports to the Czech Republic (+34.4%).

Investment outlays

The steady growth which has maintained itself for the last decade has been possible thanks to substantial investments made earlier. Between 2004 and 2015, foreign investors “pumped” more than 13 billion euro into the Polish automotive market as part of more than 535 investment projects. The high regard that foreign concerns have for the Polish automotive market is also demonstrated by the creation of large R&D facilities in the country. Companies from the independent sector are also beginning to collaborate more and more often with institutions of higher education, fuelling a need for young, talented, and ambitious employees.

As the Polish Information and Foreign Investment Agency stresses, the driving factors of the competitive edge of Poland in the European automotive parts market are the qualified labour force, the high potential for growth in new car sales, and investment incentives offered by Polish authorities, including income tax waivers for 14 Special Economic Zones, direct financial support in return for the creation of new jobs, and real estate tax waivers.

MM

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