After reading the UK Institute of Advanced Motorists (IAM) guide to driving in Poland on p31, you might be thinking that the roads are poor, the country is a risky place to drive and that your car would be vulnerable to theft.

Some of these points are made by others too. Paul Gogolinski, CEO of Total Fleet Solutions Poland spoke at a conference of the International Auto Finance Network in London last year and noted that more development of the road network is needed and road safety is a particular issue.

He also suggested that demand for ex-lease vehicles has opened up a need for remarketing channels for leasing companies. At the same time he noted that ‘clocking’ – winding back mileage readings to enhance resale values and also advertising damaged vehicles as undamaged have been problems among non-franchised dealers.

None of these problems are unique to Poland of course, but in automotive terms, the country is less developed than others in the European Union, which Poland joined in 2004.

Slow progress of new car market

According to data from ACEA, the 2015 car market in Poland rose 8.3% to 354,975. This made it the eighth largest new car market in the EU last year. According to the UK Financial Times Poland has been the fastest growing market for cars in the EU since 2007 and is one of the few EU car markets that is larger than before the financial crisis. Even so, the FT points out that new car sales reached 600,000 in 2000 and that opening up the country to the EU used market has been a factor in the decline of new car sales. Marek Małachowski is general manager of ALD Automotive Poland and adds, “In total there were only 9.2 new cars registered per 1,000 inhabitants, which is three times less than the European average, 66% of which are acquired by companies. It’s an open secret that an important number of cars first registered in Poland are re-exported to other countries.”

Data from the Polish Leasing Association (PLA) shows that at the end of Q3 2015, the vehicle sector made up the largest part of the Polish leasing market. Cars and light CVs accounted for 36.7% of the Polish leasing market and heavy transport for a further 26.5%, while the total Polish leasing sector grew 15.7% year-on-year at the end of Q3 2015. Up to the end of Q3 2015 the PLA reckons that new leasing volumes were worth €8.11bn (35.9bn zloty (PLN)).

Thriving manufacturing industry

Back in 2004, Poland was one of the major car producing nations in the EU, but has since been overtaken by the Czech Republic and Slovakia. Fiat, Opel and VW produce cars in the country, while Volvo Bus and MAN both have bus plants there. MAN also builds heavy trucks in Poland. The new Volkswagen Crafter will be built in the country with production scheduled to start later this year. The plant has a capacity of 100,000 vehicles a year. Opel began production of the fifth generation Astra in Poland in 2015 and has also installed a new diesel engine production line at its Tychy plant.

In addition, Poland is host to a thriving manufacturing sector for automotive parts, with many of the leading global suppliers represented in the country.

Car fleet management

The Polish Vehicle Rental and Leasing Association (PVRLA) includes prominent members from the vehicle leasing and rental sectors. It released its most recent business information at the end of Q3 2015. Then the organisation reported that car fleet management had grown by 14% YoY and that 21.2% of new cars purchased by companies at Polish dealerships were covered by car fleet management (CFM) services. PVRLA data also suggested that the number of cars used under long-term rental contract in Poland during Q1, Q2 and Q3 2015 was 71% higher than in the same period in 2014. Putting that into figures, the market for that period grew by 7,420 cars in 2014 compared with 12,697 in 2015.

The PVRLA says it represents around 80% of companies in the Polish vehicle rental and leasing market and says that at the end of September 2015, 17,054 more cars were in use under long-term contracts than at the end of September 2014, bringing the total number of cars under long-term contracts to 138,573. Alphabet reports that this figure grew to almost 150,000 cars by the end of 2015. There is still plenty of room for growth, reckons Alphabet, “The estimated market capacity is 500,000 cars and it depends mostly on market information and savings on leasing for companies.” Alphabet quotes growth in the CFM sector at 16.6% during 2015, the highest for seven years.

PVRLA provides an analysis of Q3 2015, using figures from Polish motor trade organisation IBRM Samar. Over 55,500 new cars were sold to companies in Poland in Q3 2015. PVRLA reckons that 11,800 of these were rented under car fleet management arrangements, the equivalent of 21.2% of total company sales. PVRLA also notes that during Q3, companies bought around 70% of the new cars sold in Poland.

PVRLA says that full service leasing (FSL) is the most popular car fleet management service in Poland. Of the 138,573 cars operated by CFM companies belonging to PVRLA members at the end of September 2015, 103,137 or 74.4% of them were under full service leasing. Alphabet Poland reports FSL sector growth of 10.2% in 2015, equating to almost 10,000 more cars. “Long-term lease has become the preferred form of financing company cars for up to one-third of companies which lease vehicles”, says Alphabet. The company attributes much of the growth to new business in the small and medium enterprise (SME) sector. “The number of micro, small and medium-sized companies in Poland opting for long-term rental cars is expected to increase further, affecting the continued high growth of the industry.”

At the end of Q3 2015, the largest PVRLA members offering FSL were; LeasePlan Fleet Management Polska (22,103 cars), Arval Polska (16,019 cars), Alphabet Polska Fleet Management (12,706 cars), Carefleet (10,661 cars) and ALD Automotive Polska (9,999 cars).

Fleet car preferences

Fleet Management, where the organisation outsources the management of its fleet to an external service provider is the second most popular service. This accounted for 19,233 of the cars included in the total PVRLA fleet at the end of Q3 2015. This represented 13.9% of the cars.

The third largest sector was for contracts covered by leasing and service arrangements. This is not so comprehensive as full service leasing, but similarly involves external fleet financing, but a smaller range of administrative and car maintenance services. 16,203 of the cars or 11.7% of the total fell into this category.

The PVRLA reported that the most popular cars under CFM contracts in Poland in late 2015 were the Skoda Octavia, Ford Focus, Skoda Fabia, Toyota Yaris and Opel Astra. “The typical fleet car in Poland is still a

C-segment station wagon powered by a diesel engine,” reports ALD’s Marek Małachowski (pictured). “However, hatchback and sedan are also popular. Premium brands and SUV are rather limited as they are driven only by executives.” Alphabet reports a very similar situation, “The most popular types of cars are combi and saloon. Surveys show that the most wanted types of cars are generally SUVs and crossovers.

“The reason they don’t dominate in the fleet sector is their (typically) higher price and corporate car policies, which often prohibit those types of cars or restrict them for management only.”

Environmental policies and taxation

Around 71.3% of vehicles are diesel powered and some 28.5% fuelled with petrol. The market for hybrid and electric cars is still small, at around 0.2% of the market, but is growing steadily reports the PVRLA. Marek Małachowski of ALD says there is, “A total absence of any pro-environmental policies of the authorities: there are neither taxes nor tax incentives based on emissions. As consequence the cars powered by alternative energies are almost absent in sales figures, diesel is still the king.”

Drivers of company cars are only taxed on private use and new regulations were introduced in 2015, as Alphabet explains, “For the private use of company cars with an engine capacity of less than 1600 cm3 the tax is set at 250 PLN (approx. €60) per month, for cars with power units above this capacity it is set at 400 PLN (approx. €100) per month. The change here as compared to the previous system is that with the new system calculating value of this fringe benefit is straightforward. A lump-sum rule is applied, instead of market valuation.”

ALD’s Małachowski focuses on the taxation of vehicles, “It is probably surprising for most readers, but in Poland there are no specific taxes for fleet/business vehicles. On the contrary, for those vehicles the VAT on purchase, maintenance and fuel is deductible fully (for LCV) or partially – 50% for passenger cars. There is a tax benefit for fleet vehicles vs. private vehicles.”

The PVRLA established a separate Rent a Car Companies Group in May 2015 and members now include Avis, Budget, Express, Hertz, Panek, Sixt and 99rent. In total, these companies had some 11,243 cars on their fleets at the end of Q3 2015. PVRLA has 21 member companies in total.