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Consumer Automotive Financial Services in Hungary

  • September 2013
  • -
  • Finaccord
  • -
  • 67 pages

Consumer Automotive Financial Services in Hungary investigates the market for automotive financial services linked to sales of new and used passenger cars to individual buyers in Hungary. In addition to analysing the market for finance and leasing services, the study also covers creditor insurance, motor insurance, road assistance, extended warranties, prepaid service contracts, GAP insurance and vehicle contents insurance.

Using survey results for average take-up rates for finance and leasing propositions at the point of sale, data for the size and growth of the automotive finance and leasing market for consumers in Hungary is provided in terms of gross advances and assets leased for 2008 to 2012 with splits between finance for new and used cars and between finance organised through dealerships at the point of sale and directly with banks or other lending institutions.

Moreover, also by means of data for average take-up rates, the markets for creditor insurance, road assistance, extended warranties, prepaid service contracts and GAP insurance are sized in terms of gross written premiums and other revenues sold through the automotive trade (i.e. via dealers and manufacturers) in 2012. These markets, estimated to be worth HUF 10.97 billion in total in 2012, are broken down between new and used cars, and between new contracts sold during 2012 and in-force business sold in previous years but still being renewed in 2012

The report draws on a survey of 40 leading car dealerships as well as an analysis of the approach to consumer automotive financial services of 33 car manufacturer brands in Hungary. The PartnerBASE™ dataset that accompanies the report details each of the marketing initiatives for consumer automotive financial services traced by Finaccord for both dealers and manufacturers; a market data annexe is also available in a convenient spreadsheet format so that there is no need to re-enter key data points from the report.

In addition to captive finance companies owned by manufacturer brands, organisations covered by the report include Budapest Bank, CarGarantie, CIB, Europ Assistance, Generali, Lombard, Magyar Autóklub, Merkantil Bank, QBE and Real Garant. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in Hungary.

Table Of Contents

Consumer Automotive Financial Services in Hungary
TABLE OF CONTENTS

0.0 EXECUTIVE SUMMARY 1

1.0 INTRODUCTION 3

What is this report about? 3
The focus of the report is on financial services related to the sale of passenger cars to individuals 3
Rationale 3
The provision of financial services is essential to support both car sales and profitability 3
This report offers a detailed updated analysis of the subject in Hungary based on primary research 3
Methodology 3
Survey of dealers and manufacturers 3
Market data 4
Computation of market data is based on a complex set of assumptions and variables… 4
…in order to provide market segmentations in unrivalled detail 5
External sources 6
Definitions 6
Finance and leasing products 6
Insurance, warranty and assistance products 7
Operating models 8
Tied and non-tied providers 8
Abbreviations 8
Exchange rate 8
PartnerBASE and market data annexe 9
Finaccord 9

2.0 MARKET ANALYSIS 11

Introduction 11
Passenger vehicle data 12
New car sales have collapsed with the greatest decline visible among individual buyers 12
although the volume of sales of used cars remained above the 400,000 threshold in 2012 12
Suzuki has experienced a precipitous decline in its market share in recent years 13
Consumer automotive finance and leasing market 14
Market size and growth 14
Mounting bad debts cause a severe contraction in both point-of-sale finance and direct lending 14
with the result that the value of new contracts in 2012 was 64% less than it had been in 2008 15
Types of finance and leasing product 17
Two main product types account for the vast majority of private car finance in Hungary 17
Consumer automotive insurance, warranty and assistance markets 18
Market sizes 18
In total, the automotive trade is likely to have sold contracts worth close to HUF 11 billion in 2012 18
Survey of automotive dealers and manufacturer brands - overview 21
Introduction 21
Provision of consumer automotive financial services 22
Dealer provision rates for creditor and GAP insurance appear to have increased in recent years 22
Number and nature of dealer schemes 24
There has been a small rise in the average number of providers used by dealers for finance and leasing 24
and a larger one for motor insurance 24
Types of creditor insurance policy sold by dealers 27
A majority of dealers report availability of comprehensive creditor insurance policies 27
Types of motor insurance policy sold by dealers 28
Comprehensive motor insurance policies are on offer from all Hungarian dealerships 28
Sources of road assistance distributed by dealers 29
Road assistance can be acquired in a variety of ways often including as a stand-alone policy 29
Consumer uptake of automotive financial services through dealers 30
Take-up rates at the point of sale have tended to increase among buyers of new cars 30
with the reverse applying in the case of used car buyers 30
Survey of automotive dealers and manufacturer brands - partnerships 32
Introduction 32
Finance and leasing 33
Five providers account for over 95% of the point-of-sale car finance market in Hungary 33
Four captive finance providers are directly involved in the finance and leasing sector 35
with four non-captive entities acting as tied finance providers to manufacturer brands 35
On a combined basis, the market leader maintains a narrow lead over its two closest rivals 37
Creditor insurance 38
Three direct providers are in evidence albeit one of these is classifiable as a captive broker 38
Motor insurance 40
Both underwriters and brokers are visible in the market for motor insurance sold via the automotive trade 40
with Generali the most prominent provider among both dealers and manufacturer brands 42
Extended warranties 44
Three non-tied providers are active in Hungary's market for extended warranties 44
two of which are also used as external providers by manufacturer brands 46
A combined analysis assigns an implied 24.2% market share to the leading competitor 48
Road assistance 49
Europ Assistance and Magyar Autóklub are the most prominent providers of road assistance 49
as both tied and non-tied providers 51
GAP insurance 53
Following its acquisition of Carlife in 2009, QBE remains the leading non-tied provider 53
and is also prominent as an external underwriter used by manufacturer brands 55
Prepaid service contracts 57
Over a quarter of dealers offer prepaid service contracts 57
and over a third of manufacturer brands investigated 58
Vehicle contents insurance 60
Vehicle contents insurance is offered as a stand-alone policy by a small minority of dealers 60
which reflects the fact that few manufacturer brands have made an arrangement for it 61



LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1

Key market data for consumer automotive financial services in Hungary, 2012 2

1.0 INTRODUCTION 3

2.0 MARKET ANALYSIS 11

Passenger car parc and new / used passenger car sales in Hungary, 2008 to 2012 12
Passenger car parc and new / used passenger car sales in Hungary, 2008 to 2012 (data) 13
New car registrations in Hungary, segmented by manufacturer group, 2012 13
New and used passenger car finance market in Hungary, segmented by distribution channel: volumes, 2008 to 2012 14
New and used passenger car finance market in Hungary, segmented by distribution channel: values, 2008 to 2012 15
New and used passenger car finance market in Hungary, segmented by distribution channel: values and volumes, 2008 to 2012 (data) 16
% split between the different types of finance and leasing contract organised at the point of sale in Hungary, 2013 17
Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in Hungary, 2013 19
Total revenues from consumer automotive insurance, warranty assistance and service contracts in Hungary, 2012 (data) 20
Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in Hungary, 2013 23
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Hungary, 2013 25
Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in Hungary, 2013 (data) 26
% split between the different types of creditor insurance policy sold at the point of sale in Hungary, 2013 27
% split between the different types of motor insurance policy sold at the point of sale in Hungary, 2013 28
% availability of road assistance through factory warranties, extended warranties, motor insurance, prepaid service contracts and as a stand-alone product in Hungary, 2013 29
% of new and used car purchasers acquiring each type of automotive financial service at the point of sale in Hungary, 2013 31
Provision of finance and leasing by dealers in Hungary, 2013: provision rate, product sources and provider share of non-tied partnerships 34
Provision of finance and leasing by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 36
Implied market shares of new business for finance and leasing in Hungary, 2013 37
Provision of creditor insurance by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 39
Provision of motor insurance by dealers in Hungary, 2013: provision rate, product sources and provider share of non-tied partnerships 41
Provision of motor insurance by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 43
Provision of extended warranties by dealers in Hungary, 2013: provision rate, product sources and provider share of non-tied partnerships 45
Provision of extended warranties by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 47
Implied market shares of new business for extended warranties in Hungary, 2013 48
Provision of road assistance by dealers in Hungary, 2013: provision rate, product sources and provider share of non-tied partnerships 50
Provision of road assistance by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 52
Provision of GAP insurance by dealers in Hungary, 2013: provision rate, product sources and provider share of non-tied partnerships 54
Provision of GAP insurance by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 56
Provision of prepaid service contracts by dealers in Hungary, 2013: provision rate and product sources 57
Provision of prepaid service contracts by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 59
Provision of vehicle contents insurance by dealers in Hungary, 2013: provision rate and product sources 60
Provision of vehicle contents insurance by manufacturer brands in Hungary, 2013: provision rate, operating models and weighted provider share of partnerships 62

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