Boston, MA -- (SBWIRE) -- 11/08/2012 -- There has been a sharp rise in the number of new cars sold in Hungary over H112, with new passenger car sales up by 19.9% over the first six months of 2012, to 27,781 units. This strong performance has come as a slight surprise to BMI, which had forecast that, with Hungary likely to edge back into recession in 2012, a slight fall in new car sales over the current year was the most likely outcome. However, it is clear that other factors - such as the January 2012 cut in new vehicle registration fees - have more than outweighed economic concerns year-to-date. As such, BMI is changing its view on the Hungarian new vehicle market this quarter.

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Light commercial vehicles (LCVs) saw 11.8% growth in sales over H112, to 5,373 CBUs, with heavy commercial vehicle (HCV) sales up by 10.1%, at 2,115 CBUs. Bus sales suffered a substantial fall, down by 66.3% y-o-y, to 28 units. However, buses represent just 0.08% of the total vehicle market. Including motorcycle sales of 1,077 over the Jan-Jun 2012 period, total new vehicle sales in Hungary stood at 36,374 units for H112, an increase of 16.7%.

BMI has now revised up its forecasts for new vehicle sales, to 8% growth for 2012. Although we believe that macroeconomic conditions will remain severely negative over the balance of the year (with our Macroeconomic team recently revising down its GDP growth figure for 2012 down to -1.2%, and BMI also targeting a 2.3% annual real terms decline in private demand, on the back of tighter credit conditions, rising unemployment, weakened confidence and constrictive fiscal policy), the very strong start to the year has clearly necessitated an upward revision to our previous forecasts for 2012.

Moving forward, BMI's core view that Hungary will be successful in obtaining a new external financing arrangement with the IMF and EU later in 2012 should give the central bank room to manoeuvre on interest rates. Indeed, our Macroeconomic team believes that a rate cut of some 0.5% might be possible following a successful deal with the IMF/EU. This would see rates come down to 6.5% and would also likely see the cost of car loans come down as we move into 2013, further boosting the short-term outlook for domestic demand.

As of end-H112, the Opel Astra has now clearly supplanted the Skoda Octavia as the most popular car model sold in Hungary, selling 1,713 units for a market share of 6.2%. The Octavia was in second place on 1,591 units sold (market share 5.7%), followed by the resurgent Suzuki Swift in third place (1,140 units, 4.1%). Suzuki has clearly been investing heavily to win back lost market share, with the company reportedly looking to triple its 2011 sales figures in 2012.

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