Industry Trend Analysis - No End In Sight For Auto Loan Resurgence - FEB 2018

BMI View: We expect that Poland's a uto loans growth acceleration in 2017 will continue in 2018 and this coupled with improving consumer sentiment will provide strong support to car demand in 2018.

In response to signs of growing Polish consumer confidence, specifically their appetite for auto loans, which is translating more strongly into spending on big-ticket items, such as new passenger vehicles, we have revised up our forecast for passenger car sales growth in 2018 to 9.2%, up from 5.2% previously. We now expect sales volumes to reach 518,478 units as consumers raise their spending on new vehicles, particularly through auto loans.

Consumer Appetite For Auto Loans To Drive Strong Growth
Poland - Passenger Vehicle Sales
f = BMI forecast. Source: PZPM, BMI

Due to the acceleration of auto loan take-up in 2017 and the decline in auto loan impairment for the first nine months of 2017 (9M17), we expect the growth in auto loans to be sustained in 2018 and it will continue to drive growth in passenger vehicle sales. In 9M17, auto loans averaged growth of 11% y-o-y and impaired auto loans decreased on average 21% y-o-y for the same period ( see ' Auto Loans Resurgence Sign Of Consumer Bullishness ' , March 9).

No Slowdown In Sight For Auto Loans
Poland - Auto Loans & Loan Impairment
Source: KNF, BMI

This view of increased borrowing as a reflection of rising confidence is backed up by the European Commission's consumer confidence survey. According to the survey, overall consumer confidence has continued to strengthen while the index of planned purchases of big-ticket items has also increased ( see chart below). This is in line with our long-held view since 2015 that Polish consumers, alongside consumers elsewhere in the Central and Eastern European (CEE) region, will remain in a macroeconomic 'sweet spot' of rising employment and wages, low inflation and low interest rates. Our 'sweet spot' view is highlighted by Poland's passenger vehicle sales forecast of 9.2%, outpacing that of the CEE regional average growth of 8.0% for the same period.

Consumer Confidence To Support Strong Vehicle Demand
Poland - Consumer Confidence & Intention To Buy A Car
Source: European Commission, BMI