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September 28, 2009

HUNGARY: Vehicle sales slump with economy

Car sales have falled sharply in Hungary compared with many other European countries where governments have launched car scrapping bonus schemes to help the auto industry recover.

Car sales have falled sharply in Hungary compared with many other European countries where governments have launched car scrapping bonus schemes to help the auto industry recover.

“Unfortunately here in Hungary, the government didn’t jump to the aid of car retailers,” the head of the auto retailers’ association, Attila Fojt, told news agency AFP.

Fojt forecast sales of 70,000 units for 2009 compared with 160,000 in 2008. The record was 208,000 in 2003.

As a result, around 110-120 car showrooms have been forced to close so far this year out of a total 600 nationwide, the report noted.

Citing JATO Dynamics data, AFP said only about 2,500 new vehicles were sold last month compared with over 11,000 a year ago.

The Hungarian economy is in its worst recession in 18 years and is projected to contract by 6.7% this year and then by a further 0.9% next year.

A hike in sales tax from 20% to 25 percent required as a condition of an IMF loan has soured retail sales, analysts said.

Another factor hitting the car market was the increased unwillingness of banks to lend customers money, GKI analyst Anna Munkacsy said. “This greatly discourages consumption in this sector,” she told AFP.

Gabor Gyozo, head of the Hungarian car importers’ association, agreed.

“Earlier, you could buy a car with little more than an identity card. You could take out a loan for 120 months with no immediate payment. Now, it’s the other extreme,” he said.

According to the Hungarian Leasing Association, leasing agreements accounted for 69% of all car sales in the first six months of last year. In the corresponding period this year, it was only 32%.

The value of car purchase loans has slumped correspondingly. The number of loan defaults is also increasing, the report said.

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