Polish Automotive market 2008

1. Country Profile
POLAND
2008

2. Summary
 Real GDP growth is forecast at 6.5% in 2007 (up from 6.2% in 2006), but is then expected to
slow to 5.2% in 2008 and to an average of around 4.3% per year in 2009-12. Export
performance will continue to be good, but the recovery in investment will push up imports,
widening the current-account deficit to nearly 5% of GDP in 2009-10. Even in 2012, the deficit
is expected to be 4.7% of GDP.
 The new government is likely to be much more positive than its predecessor about Poland's
entry to European economic and monetary union (EMU). It may try to quicken the timetable
for euro adoption and the zloty could enter the EU's exchange-rate mechanism (ERM2) in
2008 or 2009, raising the possibility of euro adoption in 2011.
 Total Polish Population: 38,518,241
 39% of the overall Polish population or 12.9 million (but 11 million according to CIA) Polish
accessed the Internet in 2006; 14.8 million are forecasted in 2007, or a 14% increased from
2006.
 The Polish online user is younger, more affluent and better educated than the general
population: age range 16-34, medium high education, living in highly density populated area.
Students represent the most representative social class:
1. Internet users age-group 16-24: 4.4 million
2. Internet users’ age-group 25-34: 3.3 million
 Only 41% of the Polish households have Internet access. Interesting to note, of those having
an internet access, 70% have a broadband connection (In fact, many polish portal show
interactive online ad).
 In 2008, the Minister of Transportation may introduce a new user charging system to: 1)
reduce congestion; 2) generate revenue; 3) Increase investment on transport infrastructure;
4) apply the “user pay” principle; 5) Provide a value for money to paying users.
 The outlook for economic growth in Poland is very favourable for the next two years, and this
in turn should sustain growth in the country's new car market. BMI has raised its 2007 sales
forecast for passenger cars to 264,911 units. Poland has fallen to fourth place on BMI's
Business Environment Ranking, although this is more owing to an improvement in the scores
of other countries in Central and Eastern Europe (CEE), than to a deterioration in BMI's
outlook for the country.
 Toyota continues to lead the new car market, seeing its market share grow from 12.7%, to
13.3%, as the carmaker ranked as the most popular new-car brand with sales of 5,955 units.
The Japanese carmaker was followed by Skoda (5,588 units, up 24.3%), Opel (4,377 units, up
4.5%), Fiat (4,200 units) and Ford (3,157 units).

3. PEST ANALYSIS
Politics
 The unexpectedly decisive victory of the conservative-liberal Civic Platform (PO) in the October
parliamentary election will allow the PO to form a government with the small Polish Peasants'
Party (PSL). The government will command a safe parliamentary majority but will not be able
to overturn presidential vetoes without the support of the centre-left Left and Democrats
(LiD). This will limit its ability to make radical changes in economic policy. Tensions between
the PO and the more statist PSL are likely to rise over the forecast period and the government
may not survive to the end of the parliamentary term in 2011.
 The new government will continue to defend Poland's national interests but will try to rebuild
relations with Germany, which deteriorated sharply under the previous administration. It may
also adopt a less confrontational approach to relations with Russia.
Economics
 Real GDP growth is forecast at 6.5% in 2007 (up from 6.2% in 2006), but is then expected to
slow to 5.2% in 2008 and to an average of around 4.3% per year in 2009-12. Export
performance will continue to be good, but the recovery in investment will push up imports,
widening the current-account deficit to nearly 5% of GDP in 2009-10. Even in 2012, the deficit
is expected to be 4.7% of GDP.
 Inflation is still low, although price pressures are rising. Emigration and continued employment
growth will lead to acceleration in wage growth. Consumer price inflation will rise to 3% in
2008 but, assuming that the National Bank of Poland (NBP, the central bank) continues to
raise interest rates, it should return to close to the NBP's target of 2.5% by 2010-11.
 Despite continued economic expansion, the previous government's cuts in social security
contributions and increases in social spending are likely to keep the budget deficit relatively
high in 2008. Progress in bringing down the deficit is likely to be slow as the PO promised to
raise public–sector salaries and to cut personal taxation by introducing a "flat tax" in the
recent election campaign.
 The new government is likely to be much more positive than its predecessor about Poland's
entry to European economic and monetary union (EMU). It may try to quicken the timetable
for euro adoption and the zloty could enter the EU's exchange-rate mechanism (ERM2) in
2008 or 2009, raising the possibility of euro adoption in 2011.
 The outlook for economic growth in Poland is very favourable for the next two years, and this
in turn should sustain growth in the country's new car market. BMI has raised its 2007 sales
forecast for passenger cars to 264,911 units. Poland has fallen to fourth place on BMI's
Business Environment Ranking, although this is more owing to an improvement in the scores
of other countries in Central and Eastern Europe (CEE), than to a deterioration in BMI's
outlook for the country.

4. Social
 Total Polish Population: 38,518,241 (July 2007 est.)– Cia Worldbook)
 Polish population at 2006: 38 million of which 52% females’ and 48% males. The ratio of
males/females is relevant at older ages, whilst for younger generations the actual number of
the females and males is quite narrowed.
 Age Structure:
1. 0-14 years: 15.5% (male 3,070,388/female 2,906,121)
2. 15-64 years: 71.1% (male 13,639,012/female 13,761,154)
3. 65 years and over: 13.3% (male 1,964,429/female 3,177,137) (2007 est.)
 Ethnics: Polish 96.7%, German 0.4%, Belarusian 0.1%, Ukrainian 0.1%, other and
unspecified 2.7% (2002 census).
 Religions: 71 Roman Catholic 89.8% (about 75% practicing), Eastern Orthodox 1.3%,
Protestant 0.3%, other 0.3%, unspecified 8.3% (2002).
Tax on Car
(Before June 2006) The rate of car registration tax on first registration of a car in Poland relates
exclusively to the age of the vehicle. This rate is 3.1% or 13.6%, depending on the engine capacity of
the vehicle, for a car less than two years old. After two years, the rate starts to rise appreciably and
can be as high as 65% on cars that are at least seven years old.
Consequently, the cars most heavily taxed are second-hand cars from other Member States. The way
they are taxed compares unfavourably not only with motor vehicles manufactured in Poland, but also
with motor vehicles of non-Polish origin that were bought on the Polish market and registered in
Poland when new.
In its case law, the Court of Justice has consistently found that each Member State is free to establish
a registration tax, but that Article 90 requires the method of depreciation chosen by a Member State
to assess the taxable value of a foreign second-hand car to reflect the real loss of value, to the effect
that the tax applied to a car from other Member States does not exceed the residual tax incorporated
in the value of similar vehicles already registered in the country.
Road Taxes are included in the cost of fuel.
(Expected) Poland’s Finance Ministry has presented the revised car tax draft legislation dated June 5,
2006, which is likely to replace the controversial excise duty later this year. The scheme is based on
engine size and pollution, to favour newer and less polluting cars.
In order to calculate the amount of tax due, the following formula applies:
A = B² x C x D

5. A - the amount of tax due as expressed in Polish zlotys
B - engine displacement in litres, one digit after the comma, rounding it down if the car fails to meet
the Euro-5 emissions norm or rounding it up if it meets or exceeds the Euro-5 standard
C - the Euro emissions norm for a given car
D - PLN 500
Depending on the Euro emissions norm a given car satisfies, the formula uses different variables,
which is:
• 12 if there is no Euro emissions norm given or if it is not compliant with any Euro
rule
• 8 if it is Euro 1-compliant
• 4 if it is Euro 2-compliant
• 2 if it is Euro 3-compliant
• 1.0 if it is Euro 4-compliant
• 0.9 if it is at least Euro 5-compliant
What follows is a table compiled by Samar that shows how much tax local motorists are required to
pay under today’s excise duty as compared to the April 4 2006 Finance Ministry proposal, and the
June 5 2006 revised proposal. The tax rates are given for the best-selling models in the individual
segments along with their showroom prices.

6. Technology
ONLINE MARKET ENVIRONMENT
Polish Internet Data – Access, penetration and Usage
(All data from Eurostat and the Polish National Office of Stats)
Demographics
 There were 11,400,000 Internet users in Poland (representing 29.9% of the population) in June
2007, according to Internet World Stats. This was up by 307.1% compared to 2000. (Internet
World Stats, June 2007).
 39% of the overall Polish population or 12.9 million (but 11 million according to CIA) Polish
accessed the Internet in 2006; 14.8 million are forecasted in 2007, or a 14% increased from
2006.
 The Polish online user is younger, more affluent and better educated than the general
population: age range 16-34, medium high education, living in highly density populated area.
Students represent the most representative social class:
 Internet users age-group 16-24: 4.4 million
 Internet users’ age-group 25-34: 3.3 million.
 Almost 38% of Poles over 15 years of age have Internet access, reflecting growth of more than
1/3 in comparison with 2005, according to a SMG/KRC survey, quoted by Rzeczpospolita. The
rise was the most rapid anywhere in the world.
The increase was prompted by growing competition in the Internet services provision market. The
operators offered faster connections, and this resulted in more than 1 million new broadband users.
The Office of Electronic Communications (UKE) estimates that there were over 2.8 million broadband
subscribers at the end of 2006. Gemius, a company which monitors Polish Internet use, insists that
the increase was also a result of the growing popularity of e-commerce. (PMR Ltd, March 2007)
37.8% of Poles over 15 years old use the Internet, according to a Nettrack survey carried out by the
SMG/KRC polling agency in the third quarter of 2006. This represents more than 11.4 million
individuals. The survey also shows that:
Almost 60% access the Internet every day or almost every day, and 21% a few times every week.
42% of Internet users in Poland have higher education qualifications, and 28% have a university
degree. (IT & Telecoms Headlines No. 45 (128), November 2006)
High frequency of Individuals in the age ranged: 16-24 (77%) and 25-34 (56%) in
accessing the INTERNET at least weekly.

7. Access
 Only 41% of the Polish households have Internet access. Interesting to note, of those having
an internet access, 70% have a broadband connection (In fact, many polish portal show
interactive online ad).
 The basic form of connecting to the Internet, which is via a modem, is not always possible in
some smaller places, where there is still a lack of telecommunications infrastructure.
 Polish users mostly connected at home using PC, and only a mere 2% of those having a
Internet connection use a palmtop.
 In 2006, 45% of Polish households had a computer, and 36% were connected to the Internet,
according to the Central Statistical Office (GUS). Broadband was used by 22% of households.
The GUS has announced that 44% of the population between 16 and 74 years of age are familiar with
the Internet search engines, 23% use Internet discussion forums, and 12% use VoIP. Almost 8 million
Poles had their own e-mail addresses in 2006. (PMR Ltd, March 2007)
 The most common locations of Internet access in Poland are home (75.6%), work (29.8%)
and university or school (12.8%), according to a Nettrack survey carried out by the SMG/KRC
polling agency in the third quarter of 2006. The survey also shows that almost ¾ of Internet
users have home Internet access and that a vast majority of them (89%) have a kind of
permanent connection. (IT & Telecoms Headlines No. 45 (128), November 2006)
Gender
Contrary to many other EU countries, there is not a significant difference in Internet access when
analysing the gender composition of Polish Internet users:
1. Age Range: 16-24: Male 77%; Female 77%
2. Age Range 25-54: Male 41%; Female 37%.
E-COMMERCE
Polish Internet users have been buying goods online more frequently than in 2005 and spent more on
this form of shopping in 2006, according to a Gemius report on the Polish Internet in 2006.
The findings show that the proportion of Internet users who bought something online climbed from
41% in 2005 to 55%. Auctions (77%) were more popular than e-shops (57%) among those shopping
online. Users shopping via auctions emphasise that they are able to find better bargains by such
means and that the offer is much more extensive than that of the online stores.
The proportion of Internet users shopping online via only e-stores or auctions has declined, in contrast
to that of people who buy things via both, which has increased.

8. Gemius reports that in August 2006 Allegro.pl, the most prominent Polish online auctioning service,
was visited by 54.5% of all Internet users. On average, each of the visitors spent 2 hours 46 minutes
browsing through the items on offer at that time, the equivalent of 6% of total time online that month.
The most popular online stores were those selling books with 1 in 4 Internet users having visited
these. 64% of online shoppers have bought books, CDs or DVDs online. (PMR Ltd, March 2007)
45% of Polish Internet users have purchased a product on the Internet, according to a research
conducted by InSites in May 2006. InSites Consulting conducted a large-scale European Internet study
in order to map the Internet profile and behaviour of the European Internet users. A large sample of
over 80,000 respondents leads to representative samples for 13 key countries. (InSites’ Escape
Reports, August 2006)
eMarketer indicates that Central and Eastern Europe is currently the fastest-growing region for
advertising in Europe. Even though its ad spend equalled just 27% of the ad market in Western
Europe in 2006, Zenith Optimedia predicts the region will grow to a total of $13.8 billion by 2009,
overtaking Western Europe, which will account for $12.9 billion. Online advertising is keeping pace in
Eastern Europe as well. Internet advertising in the region will grow 28.6% in 2007, to $292 million,
based on PricewaterhouseCoopers / Wilkofsky Gruen Associates data, and hit $482 million in 2010.
That year, Poland will account for 44.8% of Internet spending in the region, or $216 million, followed
by Russia with a 32.4% share, or $156 million. (eMarketer, January 2007).
11% of the overall Polish population bought goods and services online in 2007 prior to interview. This
percentage reaches 20% for the population in the age-group 16-24 ( or 1.2 million e-shoppers) and
22% for the population age 25-34 (or 1.3 million e-shoppers).
E-commerce: top products: 1) music/films and magazine; 2) cloths and sport accessories; 3) toys,
furniture.
Mobile phones and wireless access
As many as 7 million mobile handsets will be sold in Poland in 2006, compared to 5.9 million in 2005,
according to Samsung Electronics Polska. The company has recently upgraded its sales forecast from
1 million to 1.2 million handsets in 2006, after very healthy sales in the first quarter of the year,
during which it sold 300,000 units. This matches last year’s sales in their entirety.
Poles bought 5.9 million mobile phones in 2005, fewer than the predicted 6.2-6.5 million. Samsung
therefore had a share of around 5% of the Polish market, whereas globally it is the third largest
mobile handset supplier, with over 12%. The frontrunner is Nokia, which holds 32% of the world
market, and second place is taken by Motorola with an 18% share. (PMR Publications, April 2006)
There were 29.2 million mobile phone users in Poland at the end of December 2005, reflecting 26.3%
year-on-year growth, according to the Central Statistical Office (GUS).

9. The number of subscribers and users of mobile phones grew in 2005 by 6.1 million, i.e. 6.6% more
than in the previous year, while the number signed up with fixed-line operators has declined.
According to the GUS, in Poland there are 76.4 mobile users for every 100 inhabitants. The figure
exceeded the 60.5 of 2004. In 2005 there were 32.2 fixed-line subscribers for every 100 inhabitants.
(PMR Publications, February 2006)
Trends in the Polish Automotive Industry
Poland has a long and proud tradition of manufacturing cars, stretching back to the days when Fiat
opened its first factory there in the 1930s. Low labour costs, a large domestic market and the ready
availability of qualified personnel, combined with the country’s leading role in components
manufacturing, make Poland one of the most attractive countries in Europe in the eyes of the global
automotive sector.
The Polish car industry, one of the country’s first sectors to be privatised in the early 1990s, is playing
an increasingly important role in the national economy: its share in GDP creation was around 4 per
cent in 2006, and it represented a full 10.2 per cent of total industrial production. The country
produced nearly 700,000 cars in 2006, with production expected to rise by about 10 per cent in 2007.
With a population of approximately 38.1 million inhabitants, total GDP surpassing €250bn, and a
growth rate of just below 6 per cent (2006 figures), Poland is both one of the largest and one of the
most economically dynamic new members of the European Union. In 2006 it produced over 714,600
cars, trucks, and buses giving it a 1.2 per cent share in the worldwide production of passenger cars
and a 4 per cent share in the European auto industry.
The Polish automotive industry consists of approximately 2,250 registered companies, the majority of
which (80 per cent) produce spare parts and accessories. Together, these companies employ over
100,000 people (2005 figures).
New car registrations in 2007 rose by 22.9 per cent for a total value of 293,319 units.
Consumers in Poland bought over half a million new cars in 1998, which made the country Europe's
seventh biggest car seller, the Polish News Agency (PAP) reported. PAP said 515,256 new cars were
registered last year, with Italy's Fiat and South Korea's Daewoo selling over 56 per cent of the
vehicles.
Fiat had an 18.98 per cent share in the domestic market (149,341 cars sold) and Daewoo a 27.23 per
cent share (140,296 cars sold). GM- Opel sold 42,393 cars (8.23 per cent share), Skoda 30,949 cars
(6.01 per cent share), Renault 26,611 cars (5.16 per cent share) and Ford 25,213 cars (4.89 per
cent).
Daewoo's minicar Tico was the bestselling passenger car. Lublin's Daewoo was also the biggest
delivery van selling company (12,913 cars sold - 25.9 per cent share in the market).

10. The European Commission proposed legislation on the implementation of its target to reduce the
average CO2 emissions of new cars to 120 grams per kilometre by 2012. The proposal will seek to
reduce the average emissions of CO2 from new passenger cars in the EU from around 160 grams per
kilometre to 130 grams per kilometre in 2012 as part of the EU's integrated approach to achieve
overall 120 grams per kilometre.
That will translate into a 19% reduction of CO2 emissions, and will "place the EU among the world
leaders of fuel efficient cars".
The proposal aims to safeguard the European automotive industry’s competitiveness through
provisions which will stimulate the development and deployment of cutting edge automotive
technologies. Under the legislation, several manufacturers will be able to group together to form a
pool which can act jointly in meeting the specific emissions targets. Manufacturers in this pool will be
required to abide by the rules of competition law.
Independent manufacturers who sell fewer than 10,000 vehicles per year and who cannot or do not
wish to join a pool can apply to the Commission for an individual target. Special purpose vehicles such
as those designed to accommodate wheelchair access are excluded from the scope of the legislation.
The review of the EU's CO2 and cars strategy also envisaged a number of complementary measures
which would contribute to a further emissions cut of 10g/km or equivalent, thus reducing the overall
average emissions of the new car fleet sufficiently to meet the EU objective of 120g/km. These
complementary measures include efficiency improvements for car components with the highest impact
on fuel consumption, such as tyres and air conditioning systems.
A premium of EUR 20 per g/km has been proposed in the first year (2012), gradually rising to EUR 35
in the second year (2013), EUR 60 in the third year (2014) and EUR 95 as of 2015. Most
manufacturers are expected by the EC to meet the target set by the legislation, so significant
penalties should be avoided.
The proposal will now be communicated to the Council and to the European Parliament as part of the
co-decision legislative procedure.
POLISH CAR PRODUCTION
According to data from Poland's Automotive Market Research Institute, SAMAR, Polish car production
was up 15% year-on-year (y-o-y) to 608,000 units in 2006, the best result for five years.
According to figures from Polska Izba Motoryzacji (the Polish Chamber of Automotive Industry, or
PIM), the value of Polish automotive exports, including parts, rose by 22.3% y-o-y to EUR14.1bn in
2006. The balance in international trade on the Polish car market resulted in a surplus of EUR6.17bn.
A massive 145% increase in exports to Ukraine drove growth during the period, with the majority of
exports coming from the FSO plant. The plant supplies vehicles and assembly kits to FSO's Ukrainian

11. parent company AvtoZAZ. BMI's 2007 forecast for total vehicle production stands at 923,251 units.
With around 95% of output expected to be exported, our forecast for exports this year is around
877,100 units. In terms of car sales, the Polish market continues to enjoy strong growth. Results for
the first two months of the year confirm the competitive nature of the Polish car market in line with
the country's score on BMI's Business Environment Ranking.
Toyota continues to lead the new car market, seeing its market share grow from 12.7%, to 13.3%,
as the carmaker ranked as the most popular new-car brand with sales of 5,955 units. The Japanese
carmaker was followed by Skoda (5,588 units, up 24.3%), Opel (4,377 units, up 4.5%), Fiat (4,200
units) and Ford (3,157 units).
Among the carmakers making the most significant gains during the first two months of the year were
Seat and Suzuki. Seat saw its new car sales surge by 70%, to 951 units, while Suzuki enjoyed a
massive 138% increase in new car sales, to 753 units. With respect to premium brands, BMW saw its
sales climb 60%, to 379 units, while sales for Porsche rose by 111%, to 38 units.
Other industry developments include speculation that Toyota may begin to manufacture cheap sedan
models in Poland. Should Toyota go ahead, the resulting plant with a capacity of 250,000 units would
boost automotive production in Poland to above one million cars per annum. Toyota is bidding to
consolidate its position on the Polish car market and has unveiled the 'Golden Era for Toyota's
Customers' campaign, which includes a new customer loyalty programme and the launch of limited
editions of the Auris and Aygo vehicles.
As the top-selling brand here, Toyota had 27,112 since the beginning of the year (+23,6%), including
2,621 units in September (+25.5%). Its market share is 12.5%. Toyota led the way ahead of:
2. Skoda (23,843/+14.8%; 2,250/-7.9%)
3. Fiat (21,093/+15.4%; 2,268/+12.6%)
4. Opel (19,470/+9.1%; 2,056/+30.5%)
5. Ford (16,050/+20.8%; 1,746/22.4%)
6. Peugeot (14,816/+35.6%; 1,450/+24.7%)
7. Volkswagen (14,328/+44.3%; 1,506/+10.7%)
8. Renault (11,875/+0.3%; 1,251/+11.4%)
9. Citroen (10,206/+16.8%; 1,045/+15.9%)
10. Honda (9,781/+39.8%; 1,018/+27.7%)

12. Among brands classified in the other half of the Top-20 list, positions of Korean brands are worth to
mentioned: Kia (ranked 11th) - 6,147 sold cars/+111.2% and Hyundai (ranked 16th) - 2,860 sold
cars/+57.6%. Japanese producer - Suzuki (ranked 14th) sold 5,213 units/+95.5%, nearly twice as
many as in the year-ago period. Record result belongs to American Dodge (ranked 28th) with 457
units sold/+202.7%).

13. Polish Search Engines
http://www.hoga.pl/ (a searchable directory with Polish websites. The search engine on the site is
powered by both Google and Netsprint).
http://www.interia.pl/ is a web portal, a meta search engine and a directory with Polish websites.
Their meta search results come from AltaVista, Google and Netsprint.pl.
http://www.netsprint.pl/serwis/ is a robot operated search engines. The first visit makes you wonder if
it isn't a direct copy of Google interface; Simple and efficient!
http://katalog.onet.pl/ is the most popular web portal in Poland. It offers a searchable directory with
Polish websites. For the international search results they use AltaVista and Infoseek.
http://english.poland.com/ is a spider operated search engine. But is also offers a directory. It is only
allowed to add Polish (.pl) websites to the indexes.
http://www.razdwatrzy.com/katalog/ is a Polish directory with a meta search engine included. The
meta search results come from Google, Fast, Teoma and others.
http://katalog.wow.pl/ is a web portal, located in Warsaw, with a searchable directory with Polish
websites.
http://katalog.wp.pl/?ticaid=1527a is a very popular web portal in Poland (No 2!). It offers a
searchable directory with Polish websites. For the international search results they use Fast and
Google.
Top 3: Alexa
Others

14. Social Networking – Diggs - Blogs
Please, note that many are clones!
http://www.wykop.pl/ gets the most traffic and it's probably the most popular web 2.0 site in Poland.
Other Diggs clones are:
http://www.linkologia.pl/;
http://etapia.pl/
http://linkr.pl/
http://www.coke.pl/Sklep/ is a 43things.com clone prepared for Coca-Cola, which launched recently.
It's a fully-featured social network integrated into Coca-Cola's Polish website.
http://www.filmweb.pl/ a popular community website for movie fans with 2.0 features (like blogs,
user-contributed content features and so on).
http://fotosik.pl/: photo sharing place (there's also slajd.net coming)
http://biznes.net/ , http://www.goldenline.pl/ , http://ogniwo.net/ - business networking sites like
linkedin.com
http://grono.net/ , http://www.spinacz.pl/ - teenager social networking sites (grono.net claims to
have 800,000 users!)

15. http://www.blox.pl/html , http://bloog.pl/?ticaid=6527b , http://blog.pl/ - polish blogging sites (the
most important are those connected with top polish portals).
http://www.wiadomosci24.pl/ http://www.ithink.pl/ - citizen journalism sites
http://fotosik.pl/ , http://patrz.pl/ - photo/video hosting/sharing site (also streemo.pl is coming soon
- it is currently in alpha).
pytamy.pl - an askeet.com implementation (an answers site)
wrocek.pl, miejsce.info - Google maps mashups
podaj.net - book exchange website
10przykazan.com, blogfrog.pl - blog aggregators (there are such functionalities in trendomierz.pl too)
http://www.bebo.gazeta.pl/ Bebo in Polish!