In recent years, Poland has become one of the main producers of cars, parts and automotive components in Europe. In 2020, it was ranked 5th in terms of the number of passenger cars in the European Union. A large internal market, production potential and integrity with the global supply chain make the automotive industry on the Vistula a very developed place. However, she is awaiting changes related to the EU plan to ban the sale of new combustion cars from 2035. According to EMIS experts from the ISI Emerging Markets Group, Poland’s position in the region may be determined by skilful adaptation of production plants to the needs of the production of electric vehicle components.

June 7, 2022 – According to the EMIS report “Poland Automotive Sector Report 2022-2023”, by September 2021, Poland had sold 4.2 billion passenger cars, 3.2 billion vans, one billion buses and over 20 billion parts and components. In 2020, the gross value added of the Polish automotive sector along with the industries cooperating with it amounted to 3.4% of the country’s GDP, which means that it was the second largest production branch. According to the Central Statistical Office, the automotive industry then accounted for 10% of Poland’s industrial processing and 12% of its exports.

The size of the country, developed port terminals and access to qualified employees are Poland’s particular assets in the region of Central Europe. The country on the Vistula River has one of the largest numbers of people of working age in the EU with technical education. About 1.4 million students study at state universities, of which over 300,000 study engineering. Poland also has a large domestic market, with the largest number of registered cars in the region. This is because many people live outside big cities where their own means of transport is often necessary. Investments in recent years have resulted in Poland having an extensive road network and a solid network of motorways and expressways, which places it fifth in Europe in terms of the length of the highest category road network.

The development of the automotive industry on the Vistula River

There are numerous production plants of such brands as Inter Cars, Toyota Motor Poland and Mercedes-Benz on the Vistula River. Volkswagen Poznań has produced 40,881 cars since January 2022. In 2016, Mercedes-Benz decided to choose Jawor in the Lower Silesia Province as the location of a production plant worth EUR 500 million. In Lower Silesia, in Kobierzyce, there is the largest factory of lithium-ion batteries in Europe, which are necessary for the production of electric vehicles. Self-service production lines using artificial intelligence are developed there. In addition, the Swedish manufacturer of e-vehicle batteries, Northvolt, announced in February 2021 the construction of a factory in Gdańsk. The end of the first stage of the investment, worth a total of $ 200 million, is scheduled for the turn of 2022 and 2023.

Investors from the automotive industry in Poland can benefit from preferential tax regulations and subsidies, which are various forms of state aid. The supporting measures include income tax exemptions for investments and real estate tax in Special Economic Zones, as well as aid offered under programs co-financed by the European Union to support research and development.

According to EMIS experts from the ISI Emerging Markets Group, investments in the production of components and components for electric cars are a necessary condition for Poland to maintain its leading position in Central and Eastern Europe and become attractive to countries in the western part of the Old Continent. There is no doubt that in the coming years, e-mobility will be the most important trend in the automotive industry. The European Commission aims to have around 30 million low-emission cars on the road by 2030. In addition to reducing the negative impact on the natural environment, it will also contribute to reducing energy dependence on Russia, which is of particular importance in the face of the war in Ukraine.

Challenges on the way to success

Despite its stable position and good prospects, the Polish automotive industry will face numerous challenges in the coming years. The main ones are related to the EU program for the transition from combustion engines to zero emission vehicles by 2035. The planned transformation will require massive investments in infrastructure, technology development and employee training. In order to meet these expectations, it will be necessary to restructure production lines in Polish production plants, which currently focus mainly on small passenger cars with traditional engines.

In the first nine months of 2020 alone, motor vehicle production in emerging European markets fell by 23%. In 2021, Europe was the world’s weakest market in the automotive sector. In the second half of last year, the number of registrations of new vehicles decreased. The beginning of 2022 showed that this number was lower than in the corresponding months of the last three years. This is due to, inter alia, with supply chain disruptions and problems with the availability of materials needed for the production of cars.

Poland will have to face the prospect of losing its competitive advantage in several segments of the automotive industry, which is related to the rising labor costs in the country. EMIS analysts from the ISI Emerging Markets Group point to the years 2013-2018, when the average gross wage in the automotive industry in Poland increased by 28% – this was the result of active government measures aimed at increasing the standard of living of the population. In the long run, the challenge is also the low birth rate, which results in a shortage of workers on the market. As a result, Poland increasingly relies on a labor force outside the EU (especially from Ukraine) to meet labor shortages.

Source: Poland Automotive Sector Report 2022-2023