USA-China Tensions Transform Global Market

After the U.S. elections, relations between the...

Polish automotive market – the smallest with the biggest problems

AUTOMOTIVEPolish automotive market - the smallest with the biggest problems

Even though Poland is the fourth country in the EU in terms of the number of registered cars, the average age of these vehicles is one of the highest in Europe. Thus, repair services, parts dealers, and car sellers are kept busy. Despite this, the automotive industry’s debt increased by 15.5% within a year and currently amounts to PLN 422 million. There are currently 12.5 thousand such entities listed in the National Debt Register, the majority of which are sole proprietorships, accounting for 59% of the total amount of unpaid obligations.

According to the KRD data, the automotive sector’s debt amounts to PLN 422 million. This sum consists of 62.7 thousand liabilities unpaid by 12,561 entities. Car sellers account for as much as 41% of the total debt, and 32% belonging to entrepreneurs involved in their repair. In turn, 16% of the debt falls on sellers of parts and accessories, and only 11% on vehicle manufacturers, parts, and accessories. The average debt of one automotive company is PLN 33.6 thousand.

“Analysis of creditworthiness conducted by the KRD indicates that 86% of companies from this sector are marked by high or very high ability to settle liabilities on time. However, worryingly, over the past year, the percentage of companies with the highest scoring decreased by 11%, while the group of companies with the lowest creditworthiness increased by nearly 6%” – says Adam Łącki, CEO of the National Debt Register Office of Economic Information.

Sole proprietorships constitute 3/4 of unreliable entities in the automotive industry. They owe PLN 249.2 million. This amount is divided into 38.5 thousand unpaid liabilities. Commercial law companies, of which there are 3299 in the KRD, owe PLN 172.8 million.

Companies from the Mazovian, Silesian, and Lesser Poland voivodships have the most significant problems with paying liabilities. Their total debt amounts to PLN 104.8 million, PLN 62.4 million, and PLN 36.2 million, respectively.

“Automotive workshops often have a steady income thanks to servicing traffic damage, but this involves long payment terms. The problem arises when they have to settle liabilities for purchased parts and components earlier. When payments start to accumulate, and the workshop does not have financial liquidity, it can quickly fall into debt. The situation becomes even more complicated for those servicing companies, where customers do not always settle their obligations on time, and sometimes even refuse to pay, perhaps questioning, for example, the quality of the service provided. To avoid such situations, entrepreneurs in the automotive industry can implement receivables monitoring, which will give them full control over the timeliness of payments made by contractors” – says Jakub Kostecki, the CEO of the debt recovery company Kaczmarski Inkasso.

Small, local automotive workshops must therefore primarily face challenges related to maintaining financial liquidity.

“Prices of spare parts and consumables are going up, and at the same time, customers also expect competitive prices for services. In addition to this, the increasing EU requirements regarding environmental protection and work safety, as well as regulations regarding waste disposal, vehicle parts recycling, and emission standards impose an obligation on workshops to invest in modern technology and equipment. The costs of such investments often exceed the capabilities of small workshops, That’s why factoring or installment purchases are becoming an attractive financial option for them” – adds Emanuel Nowak, an expert from NFG factoring company.

In February 2024, the European Automobile Manufacturers Association ACEA published the report “Vehicles on European Roads”, which revealed that at the end of 2022, 26 457 659 cars were registered in Poland. Poland, therefore, took the fourth place in the European Union, yielding only to Germany, Italy, and France, and fifth in Europe when taking into account the UK.

Automotive sector also has its debtors.

The automotive industry entrepreneurs are to recover PLN 49.1 million from their contractors. Almost half, i.e., PLN 21.2 million, are owed by other commercial and car repair companies. Slightly less, PLN 13.3 million, is owed by transport and warehousing services companies. The podium is closed by industrial enterprises, which should return PLN 3.5 million to the automotive industry.

Source: https://managerplus.pl/polski-rynek-motoryzacyjny-najmniejsi-z-najwiekszymi-problemami-54011

Check out our other content
Related Articles
The Latest Articles