New car launch unlikely to dent market

When Fiat and Daewoo opened their plants in Poland in the 1990s, their cars quickly became best sellers. But a new Toyota and PSA Peugeot Citroën economy car will not repeat their success when it enters the market in 2005, competing carmakers and analysts said. The new vehicle, part of a joint venture between the French and Japanese automakers, will be manufactured across the border in the Czech town of Kolin and the new car's engines and gearboxes will be made in Toyota's expanded Wałbrzych-based Polish plant, following a €300 million ($261 million) investment announced last week. "My ideal projections for the new car's sales via Toyota's distribution network in Poland are some 10,000 units annually," said Makoto Seki, president of Toyota Motor Poland. If PSA sells the same number of new models, Polish drivers will buy a mere 20,000 of the jointly produced vehicles in three years, when the new car is launched. Fiat's low-entry model Seicento is the best-selling car in the now severely depressed Polish market with 40,515 new units sold in 2001 and 2,996 in January 2002, according to the market research firm Samar. The Warsaw-based Daewoo-FSO last year sold 19,225 Matizes, Seicento's main rival in the economy car class.

Based on current projections, PSA and Toyota will not be in a position to compete for the top market spot. Adding doubt to sales projections, Toyota's forecasts are based on optimistic macroeconomic assumptions. "The Polish economy will recover (from the current slowdown), so when Poland joins the European Union, we hope the car market will again reach some 700,000 vehicles annually in four to five years," Seki said. The new car will aim to win some customers from the lowest category, where Seicento and Matiz are placed, but also some buyers from the next class, according to Seki. "Our customer profile is a bit different, their income level will be a bit higher than in the case of Matiz," Seki said, noting that the new car will be more expensive than Matiz and Seicento. "If we introduced a cheap car, it would affect Toyota's brand image," he said. Jose Ramon Soriano, Fiat Auto Poland's commercial director, said Fiat is capable of warding off the new competitor. "We had 15% of the Polish market even when Matiz sold at full speed," Soriano said.

Polish Fiat, Czech Toyota-PSA In 2004, before the rollout of Toyota's and PSA's new car, Fiat will introduce a Polish-made model to replace the Seicento, Soriano said. "Our plans today envisage the production of the new model in Poland," he said. Toyota Motor Corp. said last week it would spend 300 million to increase capacity at its Wałbrzych-based plant by an additional 300,000 gearboxes and 250,000 engines annually to supply the Kolin site. But manufacturing gearboxes and engines in Poland will not be enough for Polish drivers to consider the car homemade, according to Wojciech Drzewiecki, Samar's president. "It will still be an imported car, despite the lack of tariff barriers by then and the main plant's proximity to the border," Drzewiecki said. "I don't think the investment will have much impact on the Polish market."