German clients have been driving home cars from Poland stock.xchng / Mike Johnson

Poland's auto industry is being boosted by a German government incentive to buy new, environmentally friendly cars and a weak złoty.

A report released this week by consultancy Deloitte said that around ten percent of cars bought in Poland were purchased by Germans.

It follows a recent move in Germany to offer a €2,500 (zł.10,895) rebate for people to hand in their used cars and purchase a new, more efficient vehicle, without restricting buyers to the domestic market. The program has proven so successful that it could cost Berlin up to three times its €1.5 (zł.6.54) billion budgeted price tag, The Financial Times reported. So far around 1.2 million Germans have applied for the rebate, according to Reuters.

According to the Polish Automotive Industry Association (PZPM), in March this year passenger car sales were up 2.5 percent y/y, and three percent m/m. Passenger car sales for Q1 2009 were up 1.3 percent on the previous year.

The positive effects of the German incentive are also being felt in the Czech Republic and Slovakia, Professor Tadeusz W. Kowalski, from Poznań University of Economics, told WBJ.pl.

He said the three countries were benefiting on their proximity to Germany and the fact that they produce small, efficient cars. “The new actual demand of German households seems to concentrate on such cars because the difference between their prices and the rebate is the smallest and thus the cars became available for poorer households,” Prof. Kowalski said. “This structure of demand also signals pretty gloomy expectations of the German consumers – they are not eager to use more of their savings for durable goods.”