The United Kingdom always had been a reluctant—and sometimes recalcitrant—member of the EU. Some of Her Majesty’s subjects still refuse to fully accept the EU’s existence. This may explain why our colleagues at Autocar.uk found it worthy to note that “the unexpectedly high take-up of the German government’s scrappage scheme has led to an unexpected side effect—a boost to new car sales in Poland. The combination of the fact that the German scheme doesn’t require the new cars to be purchased within Germany, and the weakness of the Polish zloty—which has fallen by around a third against the euro in the past year—has resulted in more than 10 per cent of new cars sold in Poland being bought by Germans.” And what’s wrong with that?
The side effect is everything but unexpected, and nobody forgot to make it law that the car must be bought in Germany to qualify for the hugely successful Abwrackprämie. Such a law would be against the law. The EU is a common market, its citizens (and car dealers) have the right to buy wherever they like. Attempts of car manufacturers to stop “grey imports” trigger harsh punishment from Brussels. In 1998, Volkswagen had to pay a fine of 200M Deutschmarks (there was no Euro at the time) for messing with free European trade. With the new Block Exemption Regulation that went into effect in 2003, consumers and dealers received the right to buy their cars anywhere in the EU. The manufacturer has to honor the warranty and risks the wrath of Brussels if he balks. Most of the new cars bought in Poland by Germans are likely bought by German car dealers for resale in Germany.
Poland is part of the EU, but its currency is not the Euro. They wish it were. Last year, one Euro bought 3.19 Polish zlotys; currently, a Euro is worth 4.50 zlotys. A few weeks ago, a Euro bought nearly 5 zlotys. In Euro terms, buying in Poland is cheap, which is good for the Polish industry. Reuters says that “new car sales in Poland rose 1.2 percent in the first quarter to nearly 88,000, according to auto research agency Samar, which pinned the gains on buyers from Germany and Slovakia, which also has adopted the euro and has introduced incentives to encourage new vehicle purchases. Poles alone bought 6 percent fewer cars in the first two months of the year than in the same period of 2008.”
The combined effect of the Abwrackprämien boom and the currency rates extends far beyond some Germans buying their Golf across the Polish border—which nobody notices anymore since Poland joined the Schengen Agreement in 2007 and closed all border stations with the EU. According to Industry Week, the increase in car sales in Germany has had the knock-on effect of boosting factories producing small cars in Poland destined for sale on the German market. “Our factory in Tychy, producing the Panda model, the Fiat 500 and Fiat 600, is working at full steam,” said Fiat Auto Poland spokesman, Boguslaw Cieslar. Volkswagen factories in Poznan, Poland, are also “working flat out with order books full for the next three to four months,” said Volkswagen spokesman, Piotr Danielewicz. The Abwrackprämien boom benefits factories in all parts of Europe which work overtime to feed the German beast.
Too bad that the UK doesn’t (PTFOA, take note) have much of an auto industry left. Otherwise, they could have profited more than the Poles. The British pound (the UK isn’t part of the Eurozone either) lost a huge part of its value against the Euro. In January ’07, a Euro bought 0.65 Pounds. Today, a Euro buys 0.9 Pounds. But wait, they have the steering wheel on the wrong side, so European shoppers take their converted Euros to Harrod’s and Selfridge’s instead.
I have not quite understood why this article has taken an anti-British tone, when Autocar was only reporting on the reality of increased purchases by Germans in Poland, since the introduction of the scrappage scheme.
All the scrappage schemes introduced by various Europeans countries have had a tendancy to increase small car sales, which are mostly produced in Eastern European countries.
Whether these small cars are bought by their customers/purchasers in their home Western European countries or in Eastern European countries only really affects the local car dealer sales & profits.
” … has resulted in more than 10 per cent of new cars sold in Poland being bought by Germans.” And what’s wrong with that? ”
Some German taxpayers might object to their tax money being used to aid the Polish economy. Others might not object, but that is the essence of the question, eh? Like gcorley, I fail to see what this has to do with the UK. Also, it is hardly surprising that many citizens of EU member countries are not thrilled about giving their political decision making over to a trans-national organization over which they have no direct control (vote) or input. Those silly people of the UK have resisted the call to hand their central bank over to the Germans. Hardly a matter of being simple minded retrogrades IMO.
Those silly people of the UK have resisted the call to hand their central bank over to the Germans.
They now wish they had.
It’s rather amusing that an article claiming that Britain doesn’t have a car industry any more decides to compare it to the success of err… VW Poland and FIAT Poland. It’s also interesting to note that the UK still produces more cars than Poland per year.
Also, I rather suspect that Germany will also wish it wasn’t in the Euro when the economies in Greece, Romania, Hungary and Portugal implode and they come to Germany with caps in hands…
Toyota, Nissan and Honda manufacture automobiles in the UK with both left hand drive for export, and right hand drive for the UK and Eire. Not to mention Aston Martin, Bentley, Rolls-Royce, Land Rover, Lotus, Morgan, Jaguar and the fancier Daimler version of same… and can even boast one of these companies being British owned. Morgan.
So, you see? Britain is simply showing America the way to the future again.
Of course, A.C., Alvis, Austin, Austin-Healey, Bond, Ford, Hillman, Humber, Jensen, Lagonda, Lanchester, Marcos, Morris, Panther, Reliant, Riley, Rover, MG, Singer, Talbot, Standard, Triumph, Vauxhall, Wolseley and Vanden Plas marques are no longer manufactured anywhere in the world (or in the case of a few, such as Ford and GM’s Vauxhall, no longer manufactured in the UK).
Once again, Britain is showing America the way towards the future here, too.
It is a myth that German people hop on the train or plane to Warsaw in droves to buy a car. Only the aforementioned simple minded retrograde will believe that. These transactions are done by car dealers.There is a huge boom in so-called “EU cars” in Europe. Dealers buy them in countries where they are cheaper (prices are adapted to local market conditions) and where there is a higher VAT and possibly luxury tax (such as in Denmark) or where the currency difference is advantageous (such as in Poland.) These cars are then usually “re-imported” (Germans like their German cars, French their French…) and sold at a discount. This trade is often performed by dealers who lost their deal with the big manufacturers and who love some payback, in all senses of the word.
Economy-wise, any car sold in a country is good. (Greens will debate that.) Of course, the locally manufactured car is a little better, but the imported car is much better than no car. The German auto trade (including aftersales etc.) for instance employs more than 400K people. It pays and generates a lot of taxes – no matter whether the car comes from Wolfsburg or Timbuktu. As a rule of thumb, the price of the new car will be spent again over its lifetime for gas, insurance, parts, service etc. The German tooling industry has a big interest in factories being built, be it in Wolfsburg or Timbuktu (usually higher profits in Timbuktu.)
“Of course, A.C., Alvis, Austin, Austin-Healey, Bond, Ford, Hillman, Humber, Jensen, Lagonda, Lanchester, Marcos, Morris, Panther, Reliant, Riley, Rover, MG, Singer, Talbot, Standard, Triumph, Vauxhall, Wolseley and Vanden Plas marques are no longer manufactured anywhere in the world (or in the case of a few, such as Ford and GM’s Vauxhall, no longer manufactured in the UK).”
MG are still being manufactured in UK as are Vauxhall and Vanden Plas (not that it was ever a manufacturer in it’s own right anyway)
MG’s are being assembled from Chinese provided kits in the UK, maybe, Nicodemus. Nanking Motors literally gutted the MG-Rover plant that a couple of years ago and moved the production machinery (but not necessary all of the assembly lines) to China.
Currently the Vanden Plas is a trim-level of a Jaguar or Daimler, not a marque as it once was. It was once a proud automobile manufacturer (well, sort of) – part of BMC then BLMC then the infamous British Leyland.
Vanden Plas built limousines, chassis for hearses, and a very luxurious version of the BMC 1100/1300 front wheel drive car, then in the 1970’s, a very luxurious version of the British Leyland Allegro (all-aggro).
I have a British brochure for the latter car. Most incongruous.
I may be mistaken; I thought GM had shuttered the Vauxhall car plant in the UK. I know for sure that Ford no longer builds cars in the UK; I believe they still build automotive diesel engines for Ford-Europe in Wales.
If GM hasn’t shuttered their car production plant in the UK yet, they will. Probably within about 55 days, as a guess?
I too am a little confused as to why this article has taken an anti-british tone. Especially when you factor in the fact that part of its premise just simply isn’t true.
“But wait, they have the steering wheel on the wrong side”
Menno beat me to it, but as he pointed out, the factories in the UK don’t just make for UK consumption, they export, as well, mainly to Europe.
Also, Germans can come to the UK and order a car, with the steering wheel on the wrong side (see what I did there?) and BY LAW the dealer cannot refuse. I went on a day trip to Calais, France and I saw a Peugeot dealer, with signs in english, stating how Brits could buy a car, with the steering wheel on the correct side (I did it again!) and drive it back to the UK. So, why can’t it happen the other way?
As you’ve pointed out, Herr Schmitt, the EU has a free market and as with all free markets, it’s a two way street.
@tom
Actually, we don’t wish we handed our money over to the Germans. Our currency is so weak, it’ll make our exports cheaper and make more companies likely to invest in the UK.
Or is it, as I suspect, when the UK has a weak currency and everyone else has a strong currency, the UK is at fault, because the economy is weak, but when the UK has a strong currency and everyone else has a weak currency…..then the UK is still in the wrong, because they haven’t consider the export market?
Damned if you do…..
@Menno
The Vauxhall plant is shuttered, but only for a while. It will re-open provided everything is OK. If GM file Chapter 11, then, to be fair, all bets are off. Also, there is a factory for diesel powertrains in Dagenham, Essex.
I don’t expect that it will continue for much longer, before moving to Turkey, but I believe Ford still builds RHD Transits in Southhampton UK.
Actually, the UK is likely to benefit from the German car sales increase, even if only in a minor way. As already pointed out, you can order a RHD or LHD drive car from a dealer anywhere in Europe and they may not refuse. One hears that a very noticeable fraction of all new R8 V10 orders in the UK are for continental customers, who save themselves enough money that way, to ake the exercise worthwhile. Same as it used to be with people ordering RHD cars in Belgium and importing them over here. Still – only a small effect, by the looks of it.
On a slight tangent I called a Mercedes dealer some months ago in New York to be told they would not deal to anyone outside of the land of milk and honey which was strange especially when I had just seen a brand new un-registered ML320 for £30k(!)with his Dealer show plates on an independent UK dealer forecourt in Bradford/Leeds area, ”just off boat that one mate, 30 bags that..” said the Uk dealer. Anyhow Us dealer simply explained there’s nothing stopping someone in the US ”buying it and selling it on” then loudly said, ”you got that” in a snarling American voice and rang off (without suggesting one of these middle men he could sell to and whom i could buy) which i found remarkably foolish and un-enterprising seeing he was probably about to loose his job and probably now has given the economic climate..
I also know somone who recently bought a brand new road ready c220 in poland for 130 000 Zloties to keep in Poland but for comparison to German prices the forex to Euro is about 4.6. Dont forget that price includes vat of 22% + another main cost/tax called Akcyza now at 18% (13% pre Feb 09′) for engines greater than 2L and less than 2L 3.3%. That normally makes them pretty dear over there but assume this 2nd tax not payable for exports..