June car sales near pre-COVID-19 levels

Car sales in June have risen to 90 percent of the level last seen in Poland in January and 80 percent of June 2019 levels, but the worldwide drop in demand may impact on the automotive sector in Poland.

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“It's a good result, because in April sales were only 35 percent of January levels and in May they were only 50 percent,” analyst Ignacy Morawski of Spotdata wrote in his blog on Monday, commenting on the sales figures in June, which were almost back to normal at 41,000 according to SAMAR analysts.

Car sales and consumption are closely linked, so if companies and individuals are buying cars it is a positive sign for the economy, Morawski asserts. It is almost too good to be true, however, as he points out that the COVID-19 virus may hit new highs in numbers of cases again in the autumn, leading to a further drop in consumer confidence.

What these sales mean for GDP

Economists forecast a fall in GDP for the Polish economy in the second quarter of this year of between 5.6 percent (Fitch Ratings) and 8.0 percent in the case of Bank Paribas’ Michał Dybulski. Because of the relationship between consumption and GDP, the higher than expected sales of cars may be a sign that even the more optimistic forecast needs upgrading.

World Demand

Even if consumers return to the forecourts, the automotive industry, which is a major exporter, is still vulnerable to the drop in demand in other countries. The German Motoring Association (VDA) predicts that worldwide auto sales may reach nearly 14 mln units this year after sales of just short of 78 mln last year.

Polish parts suppliers, some of whom actually temporarily closed production down when the supply chain from China collapsed earlier this year will undoubtedly feel the pinch of lower demand until the end of the year. The Germans expect a drop in demand of 23 percent over the course of this year.