2010-03-19 21:23:01 -
Poland Autos Report Q2 2010 - a new market research report on companiesandmarkets.com
Car production and sales in Poland could decline in 2010 as consumers in the countrys key export markets retrench and as the domestic economy struggles to recover. The head of the Polish Automotive Industry Association has said that the countrys vehicles sales could tumble this year by 30,000-60,000 units, compared with 2009, the Polish News Agency (PAP) reported. Production also could slump as domestic demand for cars in Germany, which accounts for 33% of total exports from Poland, is forecast to fall by 1mn units in 2010, according to a report in Rzeczpospolita.
Vehicle production in Poland is export driven, with manufacturers exporting 90% of their output. In 2009, auto exports got a boost from the weakening of the zloty
against the euro, as well as from auto scrappage schemes across the EU. However, clunkers plans across Europe have largely run their course, and we do not expect production levels to return to pre-crisis levels until 2013. Although by the end of the forecast period, output is expected to exceed 1.2mn units.
In the near term, output may be poised for a fall. German automaker Volkswagen (VW)s Poznan factory has planned to lower production from 149,000 to 145,000 units in 2010. More worrisome is that Fiat may move production of the Panda to Italy starting in 2011, even though industry analysts say it would be more inexpensive for the automaker to keep making the model in Poland. To compensate for lost production volume from the transfer of the next-generation Panda, Fiat plans to build its next Ypsilon model in Tychy, but we believe that will not be enough to offset the declines associated with the loss of the Panda.
Nonetheless, we are still upbeat about the long-term growth potential in the market. When the economic recovery in Europe strengthens, and exports regain momentum, this should translate into a rise in production in Poland. New car sales in Poland have held up amid the economic downturn. But without the support of a tax break that was suspended in 2010, sales could come under pressure. Furthermore, even though Poland was the only country in the EU to avert recession in 2009, the country faces mounting budget problems. As reported by the Associated Press, the Polish government spent its way out of the downturn and now leaders must face a rapidly growing budget deficit that has already widened to 7.2% of Polands gross domestic product.
There are some parts of the market, such as the premium car segment, that have been largely unaffected by the global economic downturn and which we think will continue to do well over the long term. We see luxury car sales growing, but expect the lower-medium car segment to keep dominating sales. A recent report by Samar indicates that the lower-medium car segment accounted for 99,600 units from a total of 291,818 vehicles sold in January-November 2009.
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