Auto price surge leads inflationary pressure
Bringing an added dimension to this country's inflation phenomenon, prices continue to rise as new customers from Germany flood into the market looking for good deals.
Polish auto prices remain up to 20 percent cheaper than in Germany, hence western regions of Poland in particular are being inundated with shoppers from all over Western Europe, and dealers regularly report that more than half of their customers are foreigners.
As automakers seek to address this eastward leakage of customers, some have chosen to raise prices. The net effect will be that, not only may the deal frenzy soon be over for richer Western car buyers, but for many Poles with less disposable income the option of buying a new car will soon become history.
For example, according to a report in Rzeczpospolita, German automaker Volkswagen has announced that it will force price cohesion by raising the cost of its cars in Poland to German levels within six months. For the time being, market leader Fiat has no plans to increase prices, while Toyota has told the press that though their prices have seen a 10 percent rise in recent months, their prices are 20 percent lower than in Western Europe.
Auto price rises are among the highest of all sectors, which are exhibiting a vulnerability to inflation. On Wednesday, the ten-member Monetary Policy Council (RPP) announced that inflation is likely to rise in the short term, although decided to keep interest rates on hold.
The RPP stated that the immediate effects of EU membership could be used to explain inflationary pressure, but has decided to hold interest rates at their current position. However, there are more long-term factors causing inflation that the RPP identify, namely "a strong recovery whose pace exceeds prior expectations."
A price report from the Central Statistical Office (GUS) last week pushed April price inflation to 7.5 percent, according to the news agency Interfax. "Industrial output was up a stronger-than-expected 21.9 percent in April over the year prior. Before week's end, markets received word of car and truck sales driving Polish retail sales 30.6 percent higher in April against April 2003 and 18.8 percent up from March," said the agency.
In April, auto sales were the highest performing retail sector, according to GUS. They grew 21.6 percent month-on-month and 56 percent year-on-year. "In annual terms, retail sales of food, non-alcoholic beverages and tobacco rose by 24.9 percent, furniture and white goods grew by 23.5 percent, while sales in non-specialized stores were up by 19.2 percent," says Interfax. "Drugs and cosmetics sales rose by 9.3 percent after a 2.4 percent increase in March and a 6.6 percent February year-on-year decline. Monthly sales of drugs and cosmetics fell by 1.1 percent."
As European automakers battle to adapt to a changing price environment, so production cost opportunities are being presented by EU enlargement. General Motors has already suggested that it may move part of its Opel Zafira plant to Poland in order to reduce costs. "Workers' privileges in Germany are unacceptable, and sooner or later manu-facturing of cars will have to be fully moved to a cheaper place," says acting president of GM Europe Bob Lutz.
Polish auto prices remain up to 20 percent cheaper than in Germany, hence western regions of Poland in particular are being inundated with shoppers from all over Western Europe, and dealers regularly report that more than half of their customers are foreigners.
As automakers seek to address this eastward leakage of customers, some have chosen to raise prices. The net effect will be that, not only may the deal frenzy soon be over for richer Western car buyers, but for many Poles with less disposable income the option of buying a new car will soon become history.
For example, according to a report in Rzeczpospolita, German automaker Volkswagen has announced that it will force price cohesion by raising the cost of its cars in Poland to German levels within six months. For the time being, market leader Fiat has no plans to increase prices, while Toyota has told the press that though their prices have seen a 10 percent rise in recent months, their prices are 20 percent lower than in Western Europe.
Auto price rises are among the highest of all sectors, which are exhibiting a vulnerability to inflation. On Wednesday, the ten-member Monetary Policy Council (RPP) announced that inflation is likely to rise in the short term, although decided to keep interest rates on hold.
The RPP stated that the immediate effects of EU membership could be used to explain inflationary pressure, but has decided to hold interest rates at their current position. However, there are more long-term factors causing inflation that the RPP identify, namely "a strong recovery whose pace exceeds prior expectations."
A price report from the Central Statistical Office (GUS) last week pushed April price inflation to 7.5 percent, according to the news agency Interfax. "Industrial output was up a stronger-than-expected 21.9 percent in April over the year prior. Before week's end, markets received word of car and truck sales driving Polish retail sales 30.6 percent higher in April against April 2003 and 18.8 percent up from March," said the agency.
In April, auto sales were the highest performing retail sector, according to GUS. They grew 21.6 percent month-on-month and 56 percent year-on-year. "In annual terms, retail sales of food, non-alcoholic beverages and tobacco rose by 24.9 percent, furniture and white goods grew by 23.5 percent, while sales in non-specialized stores were up by 19.2 percent," says Interfax. "Drugs and cosmetics sales rose by 9.3 percent after a 2.4 percent increase in March and a 6.6 percent February year-on-year decline. Monthly sales of drugs and cosmetics fell by 1.1 percent."
As European automakers battle to adapt to a changing price environment, so production cost opportunities are being presented by EU enlargement. General Motors has already suggested that it may move part of its Opel Zafira plant to Poland in order to reduce costs. "Workers' privileges in Germany are unacceptable, and sooner or later manu-facturing of cars will have to be fully moved to a cheaper place," says acting president of GM Europe Bob Lutz.
