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Market Report, "Hungary Autos Report Q4 2013", Published

New Transportation market report from Business Monitor International: "Hungary Autos Report Q4 2013"


Boston, MA -- (SBWIRE) -- 09/30/2013 -- Disappointing H113 new vehicle sales continue to bear 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 July 2013 showed that passenger car sales were down by 2.2% over the first four months of the year, at just 27,160.

Commercial vehicle sales performed even worse, down by 7.9% y-o-y, at just 6,923 units. Dragging the wider sector down was the very poor performance by light commercial vehicles, whose sales were down by 13.6%, at 4,653 units.

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Adding passenger car and commercial vehicle sales together, we have a total new vehicle sales market of 34,083 units, down from 35,303 units for H112.

BMI's Country Risk team now believes that the worst may now be over for the Hungarian economy, given better-than-expected Q113 real GDP figures, an uptick in industrial production in April and the country's exit from the EU's Excessive Deficit Procedure in June 2013 all being welcome developments. That said, we do not expect a strong resurgence in economic activity over the near term, as the government's erratic policy making and high corporate tax rates deter domestic and foreign investment.

As such, although we have revised up our end-2013 real GDP forecast marginally, from -0.3% to -0.1%, on the back of improving consumer sentiment and rising retail sales, this is still a negative number for the full year. We are more optimistic on the outlook for 2014, believing that a recovery in export and household consumption will drive real GDP growth to 1.1%.

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 4% as of end-July 2013 - they have not, as yet, provided a lasting stimulus to consumer 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 April 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 remain 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 worsens. Beyond 2013, however, we believe there is a chance for a more sustained increase in new car sales.

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