Boston, MA -- (SBWIRE) -- 07/31/2013 -- Sales figures for the first four months of 2013 are bearing out BMI's increasing lack of confidence in the short-term outlook for the Hungarian new car sales market. Figures released by the European Automobile Manufacturers' Association (ACEA) in May 2013 showed that passenger car sales were down by 5.9% over the first four months of the year, at just 17,180. However, results for the month of April showed a 7.8% increase, at 4,623 units.

Looking forward, BMI's Country Risk team believes that Hungary will continue to experience recessionary conditions across 2013, forecasting GDP to contract by 0.3% this year. There are a number of factors that will constrain growth in Hungary over the next 12 months, most notably the continuing economic uncertainty in the eurozone, Hungary's largest trading partner, which remains on shaky ground after the recent Cyprus bailout as well as the inconclusive Italian election and persistent worries about the possibility of bailouts in Spain and Slovenia. In addition, the erratic policy decisions of Prime Minister Viktor Orban's government will continue to hinder fixed investment when coupled with Hungary's high corporate tax burdens and tight credit

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More depressingly for new car sales, private consumption also looks to decline further over the balance of 2013, with credit for new car loans also set to remain tight. Although interest rates have been cut - standing at just 5% as of end-April 2013 - they do not appear to be stimulating economic demand and could be storing up inflationary problems in the years ahead. The only potential boost to domestic demand could come from increased government spending leading up to the 2014 elections, which could in turn then lead to greater consumer spending on 'big-ticket' items such as cars.

However, the overall picture remains downbeat. Against this backdrop, there are now clear downside risks to BMI's current forecast of a 4.1% expansion in Hungarian new vehicle sales over 2013, especially if the domestic economic outlook continues to deteriorate.

The downbeat sales picture has also fed into a reduction in our production forecasts for 2013. BMI is now forecasting expansion of just 0.7% in autos output over 2013, to 219,419 units. European markets remain under pressure, with ACEA figures showing that Europe-wide car sales were down by 7% over the January- April 2013 period.

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