Poland: Samar releases passenger car registration figures through February

NEW CARS

Dwindling demand in January in February stems from several factors. First of all harsh winter has effectively refrained customers from visiting car showrooms. Secondly, the number of foreigners buying cars in Poland, e.g. from Germany, has been significantly reduced due to end of scrappage schemes in neighboring countries and gradual strengthening of Polish zloty. With the current level of EUR/PLN below the 4.0 level, new cars sold in Poland no longer represent a competitive offer for Germans or Slovaks. The third cause behind weak sales has been limited availability of 2009 production year cars. In the second half of 2009 dealers’ and importers’ stocks have been wiped out by foreigners and thus many domestic customers were forced to order cars for production, rather than buy them instantly. Car sales to companies have also been hit, which is reflected by registrations of passenger cars with LCV homologation. In February 4,977 units have been registered, which is a similar level to the one recorded in January (4,814 units). This is a much lower result than in December, when more than 10,000 units of passenger cars with LCV homologation have been registered. Still, such vehicles have a cumulative market share of 22.44% in 2010, when it comes to all registrations.


The Ministry of Finance is still awaiting formal approval from the EU on changes in VAT regulations to limit the tax deductible on passenger cars with LCV homologation. According to Magdalena Kobos, the Ministry spokesperson, a formal decision is expected by the end of March or early April. If the EU grants approval for changes in the VAT regulations, then we can expect a pull effect in the second quarter with monthly sales similar to December level. In the case of lease agreements full VAT deduction will be still available, even if tax regulations are changed during the contract. Nevertheless, in the second half of the year sales of passenger cars with LCV homologation will be put to an end.


Another negative factor that can reduce sales of new cars is the T-Recommendation, issued on February 23rd by the Financial Supervision Commission (KNF). The recommendation states that the sum of the monthly installments of all loans paid by the customer should  not exceed 50% of his or her net income. Exception is made only for individuals with high income well above average earnings. In their case, the maximum ratio of monthly payments may reach 65% of their net income. Banks have 10 months to comply with the latest regulation and according to Expander Advisors as a result, the number of car loans granted to individual customers could drop this year by as much as 20%.

A comparison of declared sales and actual registered cars still shows a significant difference. In February the difference accounted for 2,666 units or 12.2%.  Such disproportion can’t be explained by foreign customers, as such purchases have been very limited in recent weeks due to lack of scrappage scheme in Germany and gradual strengthening of Polish zloty. The difference is largely the effect of dealers’ purchases made well in advance. However, if negative sentiment prevails on the market, unsold stocks will be a huge problem as the cost of storage could be eating into profits.

USED CARS IMPORT

In February 47 384 units of used cars have been registered, which represent an increase of 20,25% compared to previous month and 8,62% YOY. In recent weeks import has been fostered by EUR/PLN exchange rate well below the 4.0 mark.  However, cumulative results are still lower by nearly 7% compared to last year.