Some 53,000 cars were sold last year, but dealers say the real figure is 7,000-8,000 lower, as many are taken out of the country.

In comparison, in the Czech Republic – a similar sized market to Hungary – 171,000 new cars were sold in 2012.

Faced with falling demand and rising costs, car dealers have been forced to cut expenses. At least 73% of them reduced advertising costs, 63% cut labour costs and 10% closed units last year, the PwC survey found.

Higher taxes will further hurt the sector, warned Gabor Gablini of car dealers association Gemosz.

The number of car dealerships has dropped to 460 from 1,100 in recent years, and rising tax burdens could force 10% of the remaining dealers to wind up operations this year, he projected.

The percentage of dealers who indicated that they will leave the market doubled to 25% in 2012 from 2011.

Source: Hungary Around the Clock

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