Characteristics of the Polish Automotive Sector
In recent times, Poland has been attracting a large volume of international direct investments in the manufacturing of automotive parts and has grown into one of Central and Eastern Europe’s largest manufacturing centers for automobiles and car parts and components.
There are numerous characteristics of the Polish automotive sector such as the Poland automotive sector is among the largest manufacturing industries in the polish territory, that credible for 11.1% of its production, and is 2nd in terms of food production.
In this article, we will be understanding the crucial characteristics of the Polish automotive sector & its importance in that field. So with any further delay, let’s jump into it.
Reason to choose Poland
To know about the characteristics of the Polish automotive sector is very crucial for every individual before they invest in the automobile sector.
In the past decade, the Polish automotive sector has seen a 100% rise in products sold.
The auto sector is among the most important pillars of the Polish economy and in the year 2019, it contributed 8% to GDP. It also contributed 21% to the value of exports.
Manufacturing of automotive parts has developed into one of the most important industries in Poland concerning production value and jobs, capital expenditures, and exports. Poland is the largest region’s automotive market in terms of service and sales.
Automotive manufacturing is the second-largest industry in Poland (11.1% share)
6 Characteristics of the Polish Automotive Sector
The high level of education and the availability of staff – In both absolute numbers as well as in regards to the quality of service, Poland boasts the biggest amount of workers who have a good technical education in the region of Europe.
1.4 million pupils, including more than 300,000 attend faculties of engineering, which offer the potential to translate into the excellent performance of the financial and quality of firms that invest in Poland.
Transport infrastructure – Poland automotive sector is rapidly expanding and remodeling its transport infrastructure, both air, rail, and sea. The planned investments for the development of expressways and motorways over the next few years will result in Poland’s ranking as 5th in Europe in terms of the length of the longest category roadway network.
Through numerous investments in the construction of terminals for ports, and particularly containers. Poland’s government permits polish ports to have regular connections with the largest vessels that come from Asia as well as the rest of Europe.
Cooperative Opportunities – There are more than 666 subcontracted companies that have an IATF 16949/2016 certification, as well as four manufacturing facilities for vehicles (VW, FCA, and PSA Group with the Opel plant) buses manufacturing facilities (Solaris, MAN, Scania, Volvo, Autosan, Amz/URSUS) along with the MAN truck factory will increase the possibility of being part of the creation of value to the industry.
Poland is a specialist in the manufacture of automobile parts from popular manufacturers mostly engines, which includes Volkswagen, Toyota, and FCA are in operation, Opel and Daimler are waiting to see the production begin.
The proximity of Central European countries with developed industries in the automotive sector is also important because it opens up many possibilities for cooperation.
E-mobility – Poland automotive sector has big goals in the field of electro-mobility and, at present, the law exists to assist the country to realize its ambitions. The growth and spread of electric mobility is the main goal of the state.
Discount programs, co-financing, and special discount programs for manufacturers (e.g. an E-bus program) in addition to assistance for the development of infrastructure to facilitate e-mobility offer an opportunity to create new business opportunities.
The estimated amount of programs that are related to this area could even surpass 4 billion EUR within the next 10 years.
Effectiveness in Finance – Poland automotive sector comes with numerous opportunities for foreign companies to get financial assistance on projects that are in Poland through both European Union Funds and domestic sources, such as direct cash assistance and tax exemptions.
Another important aspect is working organization and other operating expenses, which in Poland remain competitive standards. For instance, in the realm of social security costs, the burden placed on employers in Poland is the second-lowest level of the countries in the region.
Research & Development – Poland automotive sector has activity big Research & Development centers that can have a favorable effect on the growth of the region where they are situated. In Poland, the mature network of collaboration with universities as well as the excellent quality of education provides an excellent base for the growth of R&D facilities.
Numerous firms have partnered with local academic centers as well as other research organizations that establish strategic partnerships between business and science, for example, ZF TRW, Delphi, Wabco, Faurecia, Nexteer, Tenneco, Eaton, Valeo, Mahle, GKN Driveline.
What makes up the Polish automotive sector more crucial?
The Polish automotive sector focuses on production and is split into three primary components:
- Motor vehicle production which includes the production of passenger vehicles and buses, motor vehicles used for transporting goods, as well as other vehicles, and also manufacturing engines for motor vehicles as well as tractor engines;
- Production of trailers, vehicles, and semi-trailers
- Production of accessories and parts used in a motor vehicle.
The production for 2019 was equivalent to 642.5 millimeters of vehicles which gave Poland an impressive third place among the nations in Central as well as Eastern Europe in terms of the number of vehicles manufactured. The largest number of vehicles manufactured, around 435 million, comprised passenger vehicles.
Automotive products exported to the Export market
The highest value of the exports of automotive products in Poland for 2019 was passenger cars, which had an export amount of 6.1 billion EUR. As per the report, the biggest increase in exports when compared with the year 2017 was seen in buses.
The significant value-added domestically in the exports of Polish cars comes from Poland’s expertise in attracting investors in the automotive parts and component sector which in turn creates more value for the country than assembling vehicles.
Poland’s strength is greater than the other V4 nations, forward linkages in the value chain for automotive offer opportunities to boost the value of participation in GVCs.
The investment incentives of Poland
The Poland automotive sector is a major area for the Polish Government. The principal forms of support to polish automotive sector investors are:
- Income tax exemptions for investments made within those zones
- tax exemptions for real estate tax purposes by local governments in compliance with the regulations that apply to the area of investment; various types of assistance to the work of unemployed registered individuals which are offered from the local employment agencies
- aid provided through co-financed EU programs to support R&D initiatives (e.g. Innomoto).
- tax credit to fund R&D activities.
If you are planning to set up a Poland automatic sector in the territory of Poland, though must be aware of all the compliance & the rules & regulations imposed by the Polish government for foreign investors or businesses.
It is advisable to consider assistance from a professional Expert in this field, & what’s best than Odint Consultancy? Get in touch to know more about the key characteristics of the polish automotive sector.
Automotive materials, components and accessories, electronic coating and paint technologies, and safety systems for passengers are among the most important parts of the bigger.
Poland offers a reasonable cost highly skilled and productive workforce.
The auto industry in Poland comprises approximately 11.1% of the overall production of nation’s industrial production and is the second-largest industrial sector
Poland automotive sector is one of the most significant manufacturing regions that has broadened into Central as well as Eastern Europe’s main manufacturing hub for car parts, cars, and additional elements
Azhar Ansari is a company formation specialist with 8+ years of expertise in international business. Financial planning, risk management, and other related areas.