Fleet Management in Poland
Polish fleet management is a challenging sector for operators and associated suppliers, who must contend with the complexity of legal, political and environmental considerations. There are many opportunities to embrace, but perhaps even more challenges facing the Polish market, as it embarks on the e-mobility journey a little slower than their European counterparts. From EV uptake to tax and emission regulations, to the impact of WLTP and the confounding after-effects of the COVID pandemic, we examine the current EV market and what the fleet future has in store for the region.
EV market focus
When the coronavirus pandemic emerged, the only certainty for the automotive sector was uncertainty. Fleet operators and the wider vehicle production, sales and leasing market had to react fast to survive.
Flexibility, resilience and adaptability were key to survival across all sectors and countries, and the Polish fleet sector was no exception.
In Poland, the electromobility movement has been slower to make inroads than other European countries. The Act on electromobility and alternative fuels came into force in 2017/8 and financial subsidies facilitating electric car purchases have only recently been implemented, which meant that until now, the vast majority of EVs were the privilege of wealthy or environmentally conscious Poles.
However, emerging legislation, combined with renewable energy programmes and increasing availability of e-vehicle solutions in Poland, suggests that the sales figures of EVs will increase rapidly to align with European peers. The Polish government has set its sights on a target to have over 600,000 electric and hybrid cars on the road by 2030 (a goal that has been lowered from the original plan of having one million electric vehicles by 2025).
Go for green
Encouragingly, prior to the pandemic, Poland had started to embrace the electrification movement. The number of electric cars in Poland exceeded 20,000 in 2020, with nearly half of registered last year – purely electric models making up 48.3 percent and plug-in hybrids, 51.7 percent.
EVs were starting to become bigger business and big news on boardroom agendas, with over twice as many e-cars registered by companies (14,084 units) while private ownership accounted for the remaining 6,097 cars, according to the Samar Automotive Market Research Institute.
But to achieve the ambitious e-goals, the government must ensure that the necessary charging infrastructure is available, prioritise renewable and emission-free energy sources, and offer appealing financial incentives targeting fleets and individuals alike.
Is Poland ready to embrace this sustainable transport era?
The stop-start of e-mobility
The deployment of the Electromobility Development Plan and the Act on Electromobility and Alternative Fuels is pivotal in the successful EV adoption throughout Poland.
However, the main barrier to electric vehicle sales and leasing in Poland is the lack of fiscal and tax incentives offered by the Polish government and the absence of clarity over incentive schemes. Business owners and fleet managers are still awaiting clarification of the tangible and monetary benefits of switching to EV.
The government’s subsidy scheme launched last year was initially designed as one of the most generous in Europe. Every purchase of a new electric car costing less than €30,000 would receive a subsidy of up to €8,500. However, the reality was substantially reduced subsidies, disgruntled drivers and flummoxed fleet managers.
Until final approval and full rollout, current incentives include the tax benefit of excise exemption for EVs and more favourable depreciation write-offs for electric vehicles compared to regular cars. Additional benefits include free parking in some city centres and dedicated parking spaces during charging in metered parking zones and EVs are permitted to drive in bus lanes until 1 January 2026.
However, so much more needs to be done for Poland to play catch up with the rest of Europe.
In order to encourage growth in the number of charging stations, the government directed that building permits were not required for charging stations and charging points. The Act exempts providers from the obligation to obtain a licence to trade in electricity in the case of offering EV charging services.
As part of its push to electrify transport, the government also created a new state-owned EV company tasked with the design, manufacture, and sale of the first Polish electric vehicle. ElectroMobility Poland was formed in 2016 as a joint venture between four state-owned power companies and aims to make EV ownership cheaper, more practical and therefore more appealing to the masses. Launch dates have been compromised due to mass market competition although EMP still hopes to have Polish EVs rolling off the production line within five years.
Although initial EV uptake figures are not overly impressive, Poland certainly has the appetite to grow this lucrative and essential eco vehicle sector. But as other European countries can testify, it takes time, perseverance, governmental commitment and public support for greener driving to make EVs the norm, not the anomaly.
The impact of WLTP
Measuring real life fuel consumption and CO2 emissions has widely affected the global automotive sector and Poland is no exception. Sales of older vehicles went into decline and new vehicle price increases were the most noticeable effect of WLTP. Even with the favourable excise duty rates for hybrid vehicles, sales of low emission vehicles are still modest compared to the rest of Europe.
Trends in the Polish leasing market
Long term leasing has gained traction in recent years for many businesses with small to medium sized fleets. However, COVID has resulted in extended production times for new vehicles leaving a shortfall to fulfil new leasing contracts. Contract extensions and short to mid-term leasing became an interim solution to the problem but leasing companies are struggling to meet demand for certain makes and models.
New or used. Is there a deal to be done?
Vehicle residual values fell by around 20 per cent in response to the constraints and uncertainty associated with COVID. However, as lockdown eases, used vehicle residual values are slowly getting back to ‘normal’ thanks to price increases in the new vehicle market and extended production periods, which negatively impacted new vehicle supply and the availability of attractive manufacturer deals.
According to the Central Register of Vehicles and Drivers, 158,025 passenger cars have been registered in Poland in 2021 to date (28.6 per cent more than in the same period last year). Last year’s lockdown and the closure of showrooms had a huge impact on the new car market, so these figures are certainly encouraging that confidence is returning.
Car sharing and road safety is on track
The Polish car sharing market has been experiencing rapid growth since 2017, when car sharing operators scaled their operations to capture the most car sharing-friendly cities where the number of young people and vehicle density were the highest.
The first government initiative supporting car sharing was also introduced in Wroclaw, providing service users with dedicated parking slots and parking fee waivers.
Car sharing and green mobility initiatives, including company scooters and public transport incentives, have long-term appeal to both businesses and the Polish government. By encouraging the adoption of hybrid and electric vehicles into car share schemes and in new fleets, businesses can align their green corporate credentials with Poland’s 2017 Electromobility Act.
Road safety is also making inroads in Poland’s green plan – mainly through increased investment in walking and cycle schemes rather than driving and road infrastructure investment. Drivers are no longer allowed to drive 10km/hour faster at night in built up areas and a change in right of way legislation was introduced in favour of pedestrians and cyclists. Good for the green movement, but not so great for fleet managers who would welcome improved road conditions to help make their fleets more efficient – and safer.
The road ahead
Many businesses are still being cautious with their fleet investments as they wait to see what Autumn brings in terms of further COVID restrictions and business interruption. How long will it take to recoup the pandemic losses? Will the new normal of working from home continue? What impact will this have on company car provision? The answers remain to be seen.
In the meantime, long lead times, slow imports, higher prices, lower discounts and increasing pressure to switch to low-emission transportation is the playing field for fleet managers looking to get a good EV deal and make their fleet more cost-efficient and eco-sustainable.
Coupled with the lack of company government subsidies to electrify fleets, uncertainty over interpreting the tax benefits of company and green vehicles (which appear to vary from city to city and company to company), a limited charging infrastructure, along with the pressure to ramp up fleet technology investment to improve driver safety and efficiency, green fleet management in Poland has never been more challenging.
But for those who persist in the e-mobility crusade, it is only a matter of time before Poland puts itself firmly on the green EV fleet map.