Combining Polands pitted roads with Italys reckless drivers sounds like a recipe for disaster. But since Fiat, Italys leading car company, took over FSM, Polands second-biggest carmaker, the journey has picked up speed without, so far, encountering too many bumps.
Poland, with South America, is one of the fastest growing parts of Fiats empire. Demand for cars has soared with the economic liberalisation that followed the collapse of communism. Growth, boosted recently by improved access to consumer credit, has fuelled a bonanza. Car sales in Poland surged from 250,000 units in 1994 to 373,000 last year.
Massimo Gentilini, the new boss of Fiat Auto Poland, forecasts this will rise to between 430,000 and 450,000 this year. Weve got a real and proper explosion, he says.
The sharp rise in demand helps to explain the speed of Fiats success in Poland, in spite of heavy investment in FSM to update its plants for the production of new models.
The Polish operation turned its first profit last year, with earnings of zloty 311 million ($97 million), after a zloty 427m loss in 1993 - the first full year of operation. Fiats results have been based on market dominance. Two of every five cars sold in Poland last year were from Fiat Auto Poland. That was well ahead of FSO, bought last year by Daewoo of South Korea, and Opel, the German subsidiary of General Motors, which came a distant third.
Fiat success in Poland has not been merely domestic. The country is the sole world source for its Cinquecento minicar. Fiats total production in Poland - dominated by the Cinquecento - climbed from 278,000 in 1995 to 307,000 last year. More than half the Polish-built cars were exported, lifting turnover from zloty 3.6 billion in 1995 to zloty 4 billion.
Although Fiats involvement in the Polish motor industry started in 1921 as a shareholder in the countrys first motor manufacturer, it was only in 1992 that it gained direct involvement by buying 90 per cent of FSM.
Since then, Fiat has invested $1 billion on modernising the company to build new cars and engines.
Its range now includes the Cinquecento, the veteran 126 - an even smaller car sold only in Poland - and the Uno.
The company also builds other Fiats from kits exported from Italy. Output last year included 205,000 Cinquecentos, 60,000 126s and 36,000 Unos. Gentilini says a further $800 million is now being spent to raise capacity and launch two new models.
The first, unofficially called the Seicento, will succeed the Cinquecento next year.
The second, the Siena, is the four-door version of Fiats A178 world car, which went into production in Brazil in 1996. The Polish-built Siena, to be launched in June, will be followed by a station wagon version towards year-end. But while the two new cars should consolidate Fiats local dominance, their arrival coincides with new challenges. The surging domestic market has sharpened the competition.
Within the coming months, Daewoo will introduce the first of three new Korean-designed models to replace FSOs dated range.
In September 1998, production will start at GMs new, 75,000 unit a year Polish plant. Output of Skoda models is also scheduled to rise at Volkswagens plant in Poznan. And in late 1995 Ford started assembling cars at Plonsk.
Competition from imports is also growing. Although foreign-made cars suffer a 25 per cent tariff disadvantage over locally-built vehicles, the handicap will disappear by 2002 as Poland prepares to join the European Union, making the market much tougher.
Conditions will also grow more difficult abroad. Until now, drivers of minicars have been in effect limited to the Cinquecento or Renaults Twingo.
Although differing in price andspecification, the two are often seen as direct rivals.
However, the choice is widening. Last October, Ford launched the Ka. That has been followed this year by the Arosa, from VWs Seat subsidiary. VW will follow with at least one, and possibly two, VW-badged versions of the vehicle.
Meanwhile, Opel is believed to be working on a slimmed-down Corsa. And next year will see the debut of the Smart, a tiny two-seater built by Mercedes-Benz and SMH, the Swiss watches group.
Gentilini points out that not all the new vehicles are direct competitors to the Cinquecento, and the greater choice may stimulate the minicar market. But he recognises the challenges ahead both domestically and in Europe.
In Poland, Fiats strategy is based on maintaining its leadership in small cars - always a company forte - and expanding into larger vehicles.
While some of the bigger cars, like the mid-sized Marea, are already being assembled from kits, the real impact will come from the Siena, according to Mr Gentilini. Were convinced its the right product, he says.
As for greater competition in the European minicar sector, his answer is simple. I dont doubt there will be greater competition. The question is, will there be problems for us? I dont think so. His confidence is based on an insiders knowledge of the Cinquecentos successor. While the current car has won plaudits from the motoring press, Gentilini is confident about the new version: Its successor will be even better, he says.
