Asset-based financing in Hungary slumped by 10% during Q1 2020, according to the Hungarian Leasing Association (HLA).
The Hungarian leasing market closed the first quarter with a total of 146bn forints, (£37m), which is 10% lower than a year earlier in response to the fallout from the coronavirus pandemic hitting Europe late in the quarter.
The blow to the Hungarian leasing sector curbed growth in some sectors, including a 4% increase in car financing and a 1% increase in the fleet market. However, other segments, such as trucks and agricultural machinery, experienced a double-digit decline, the association reported.
The business outlook continues to be uncertain, with the HLA predicting that the amount funded for 2020 could be as much as 75% of last year’s total.
The Hungarian leasing market, which has been growing rapidly for years, began to feel the effects of the epidemic in March after a positive start for the year, the HLA said.
Zoltán Tóth, secretary-general of the HLA, said the decline “represents a 10% decrease year-on-year, but corresponds to the 2018 level, and represents a higher amount than in previous years.”
He added: “Vehicle sales and investment are key to the leasing market, and they were the first [to feel the] drastic impact of the epidemic, which also contributed to the weaker performance of the first quarter.”
Outlays for cars and light commercial vehicles rose 4% to almost 63bn Hungarian Forint (HUF) in the first quarter, whereas outlays for heavy commercial vehicles dropped 36% to less than HUF25bn.
Financing of farm machinery came to almost HUF13bn, down 24% from last year, partly due to outstanding growth in 2018 and 2019.
Financing of construction machinery fell 9% to HUF5.6 bn, also from a high base.
The segment of other production equipment shows a 14% decline compared to growth last year.
Early this year, members of the association expected total outlays to come to around HUF740bn to 750bn this year, level with 2019. Due to the impact of the pandemic, they now project outlays to fall 25% to 30% from the previous year to HUF520bn to 550bn in 2020.
Tóth said: “At the beginning of this year, the member companies of the Hungarian Leasing Association planned that 2020 would end with a funded amount of around HUF740-750bn this year, but the general economic crisis caused by the coronavirus epidemic made this goal unachievable.
“For the whole year 2020, 70-75% of last year’s 740bn business outlay is a reality, ie this year could see 520bn to 550bn,” he said.
Of the various sub-markets, commercial vehicles and other machinery may be the most problematic segments this year.
According to the member companies of the HLA, the negative effects of the epidemic have been mitigated by the various central bank and state economic stimulus and financing programmes, such as the Hungarian National Bank NHP Hajrá! scheme, under which HUF1.5 trillion of resources have been made available to enterprises.
The HLA was founded in 1991 and is made up of 36 members that finance the assets of about 500,000 individuals and 200,000 companies.