Saturday, 15 March 2025
The debt of the Polish automotive industry surged to over PLN 1.41 billion at the end of July 2024, according to the latest data from the Register of Debtors BIG InfoMonitor and the BIK credit information database. Of this, more than PLN 1.2 billion is attributed to companies involved in the wholesale, retail, and repair of passenger cars and commercial vehicles. Additionally, the rental and leasing sector saw its debt exceed PLN 217 million.
According to BIG InfoMonitor, nearly 252,000 companies in the motor vehicle trade and repair sector were analyzed, with over 14,000 of them (5.6%) facing overdue liabilities. On average, these companies owe around PLN 86,300. In the rental and leasing sector, 1,795 entities have overdue payments, and with approximately 12,000 companies in this market segment, around 15%, or one in seven, are burdened by debt.
“For car retailers, the main challenge lies in the escalating costs of vehicle procurement, driven by rising raw material and component prices, which increase the cost of bringing a vehicle to market. Repair shops are contending with soaring prices of spare parts and consumables. Meanwhile, the car rental and leasing sector is grappling with higher fleet maintenance costs. On top of this, the entire automotive industry is facing increasing pressure from new EU regulations and stricter environmental standards,” commented Sławomir Grzelczak, President of BIG InfoMonitor.
The challenges are further compounded by a significant drop in customer traffic. Citing data from the Association of Car Dealers, BIG InfoMonitor reports that in 2023, the automotive sector experienced notable declines in showroom visits (-19.5%) and customer numbers (-18.9%), despite an increase in new vehicle registrations. The fleet customer segment now accounts for nearly 70% of all sales, a clear indication of the market’s shift.
Jakub Faryś, President of the Polish Automotive Industry Association, anticipates a rise in car prices next year, which may encourage some buyers to act sooner. “It’s possible that customers aware of the upcoming price hikes will make purchases in this quarter or the next. As a result, the end of this year could be as strong, if not better, than last year. However, the forecasted price increases will likely lead to a noticeable downturn in the market next year. Dealers will need to navigate this challenge carefully, but overall, despite rising prices and growing debts, the situation for most companies in the automotive sector remains stable,” Faryś said.
BIG InfoMonitor also highlighted an increasing interest in car-sharing services, a trend driven by declining profitability in car ownership and shifting consumer lifestyles. Data from the Polish Vehicle Rental and Leasing Association (PZWLP) showed a 7.9% year-on-year increase in long-term leasing in the first half of this year, while the “Rent a Car” industry grew by 1.1% year-on-year as of June. A recent survey by Santander Consumer Multirent found that one in five Poles now uses car rental services for personal use.
Despite the growing trend toward renting, many companies in the sector continue to struggle with debt. Of nearly 12,000 companies listed in the Register of Debtors BIG InfoMonitor and the BIK database, almost 2,000 – or 15% of the total – have accumulated debts totaling PLN 217 million. The entire automotive sector is under financial strain, and debt levels are a crucial indicator of the severity of the issue.
In the third quarter of this year, over 53% of companies across Poland reported invoice payment delays of more than a month, exacerbating the problem of payment bottlenecks. This creates a vicious cycle, with outstanding receivables generating more debt, pushing the sector into deeper financial challenges.
“The automotive industry continues to enjoy strong customer demand, but rising unpaid debts pose significant risks. Striking a balance between growth and responsible debt management will be critical. To minimize risks, companies should carefully vet the financial credibility of their business partners and consider registering unreliable contractors in debt registers,” concluded Sławomir Grzelczak, President of BIG InfoMonitor.
Source: BIG InfoMonitor and ISBnews
Photo: Sławomir Grzelczak, President of BIG InfoMonitor
