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Hungary's New Car Market Shows Rapid Recovery As Automobile Industry Accounts For 24% Of Country's GDP

Tamás Székely 2015.11.03.

New car registrations rose 33.9% from a year earlier to 8,192 in October, the Hungarian Vehicle Importers Association (MGE) said, citing figures from Datahouse. In January-October, new car registrations rose 14.4% to 63,491. MGE projects 75,000 new car registrations for the whole year of 2015, 15% more than last year. Light commercial vehicle registrations increased 11.4% to 1,584 in October from a year earlier.

In the category of heavy commercial vehicles, MGE projects based on pro-rata figures that the annual number of registrations will exceed the 4,500 targeted earlier. Motorcycle registrations rose 9.2% to 1,883 the first ten months of the year. Jato Dynamics attributed the big increase in car registrations to a single big state order. It said Volkswagen led the market with 1,050 sales, giving it 12.8% market share. Suzuki was runner-up, selling 1,033 vehicles, and Opel was in third place with 1,005 sales.

Meanwhile a conservative economist raised concerns that Hungary is becoming unilaterally dependent on car manufacturing, and on offering subsidies and cheap manpower to foreign investors, in general, press reviewer reported. In daily Magyar Nemzet, Professor Magdolna Csáth warns that Hungary may easily find itself in trouble if demand for automobiles drops as a result of a major international financial crunch, since the latest statistics show a rapid increase in the share of car manufacturing in the national economy.

While the automobile industry accounts for 24 per cent of GDP (up from 21 per cent three years ago), the shares of electronics and food processing have slipped. The reason why car manufacturers choose Hungary is the low labour cost and the substantial public subsidies they are offered by the government.

However, Csáth remarks, one new such job costs the budget 16 million forints, while in food industry or electronics, job creation would cost less. In those areas Hungary has also more competitive know-how and research and thus would have more added value to offer. The Hungarian economist does not mind if Hungary attracts foreign investors, but warns that the government should invest much more in human capital, meaning education and research, in order to become more competitive and less dependent on one or two particular industries.

via, MTI and photo: