Hungary belongs to the leading segment per capita in automotive production and is home to the major automotive components industry as well as to some assembly plants. Automotive production represents 22 percent of Hungary’s GDP and 15 percent of Hungary’s exports. In 2017 there were approx. 900 Tier 1 and Tier 2 automotive suppliers in Hungary. Automotive production directly employs close to 170,000 people. Hungary’s favorable geographic location includes proximity to a dozen automobile manufacturing plants within the Slovak and Czech Republics, Poland and Romania.
Hungary has one of the largest growth in vehicle production within the CEE region. Hungary’s automotive production is expected to grow at an annual average rate of 9.0% over the 2018-2022 forecast period. This is mainly attributable to a substantial increase in output in 2020 when BMW’s new manufacturing facility comes online, adding 150,000 vehicles to the country’s production capacity.
Vehicles are the third most valuable export of Hungary, at a value of $16.8 billion which accounts for 14.8% of the total exports.
There are 3.4 million passenger cars registered in Hungary with an average age of 14.1 years which gives growth opportunity in the replacement of old vehicles. More than 70 percent of cars in use in Hungary are older than 10 years. Annual service or parts expenditures reach an average $750 per car owner. Car ownership still remains well below the levels of other EU countries as Hungary is considered a one-car market, with most households keeping a single car to serve the needs of the entire family (30 cars per 100 people). Small and medium-sized cars still dominate sales and eighty percent of cars sold in Hungary are either in the compact class or in the medium class.
Hungary is an EU member country and thus the market for automobile parts and equipment is largely saturated by products from countries such as Germany, Austria and France. Competitive pricing and just-in-time delivery are essential for U.S. suppliers to be successful in selling to the three OEM automobile manufacturers in Hungary and to the Tier 1 & Tier 2 suppliers.
Hungary
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There are no restrictions on the import of parts or automotive products in Hungary which can be imported without any quota, numerical or value limitations. The average import duty rate for automotive parts and components – under HS Code 87 - stands at 3 percent versus 3.5–4 percent on average for other automotive products. For a rate of duty on specific automotive parts, the individual Harmonized Tariff Schedule number must be applied upon importation. In addition, while the rate of duty may be relatively low, additional taxes such as value-added tax and other local taxes such as the car registration tax may increase import costs substantially. All cars, motorbikes and caravans are subject to a vehicle registration tax when the vehicle is imported. The exact amount depends on the make, the age and the size of
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