The study (which runs to 60 pages) concerns the time period 2010-2015 and is based on the information provided by market players, state bodies, authorities and the Hungarian Statistical Office in 2015. The main conclusion of the study is that there are no market issues where would make it necessary for the GVH to initiate specific competition proceedings, however, there are certain market issues regarding which suggestions were made both to state authorities and market players.

Sale of new cars

In Hungary new cars are usually sold in a mixed selective distribution system. This means that brand owners set qualitative requirements for car dealers wishing to join their distribution network and define the maximum number of dealers that may participate in the Hungarian distribution network. According to the results of the survey carried out by the GVH, brand owners do not plan any material changes in their distribution system in the near future. Further, the GVH noted that despite the introduction of the new group exemption regulation both on European and national level (allowing for termination provisions more favourable for the brand owner than under the previous regime), as a general rule, car distribution agreements in Hungary still include an ordinary termination period of two years in case of termination by the brand owner.

Car repair services

In its report the GVH states that there have been no major changes on the car repair market since the economic crisis. Market players can be divided into three main groups: (i) branded car repair shops, (ii) independent car repair chains and (iii) small private car repair shops. Most car repair shops have between 1 and 9 employees. According to the study, since 2014 the aggregate turnover of car repair shops has increased. This might be a result of the car park being older and due to the process of the market becoming more legal (with less hidden income) than before.

Due to the high price sensitivity of consumers a great number of car repairs as well as spare part sales takes place at illegal market players. The illegal purchase of repair software and equipment distorts competition, as car repair shops purchasing such equipment through legal channels are more expensive and may thus lose customers. As of 1 January 2017 car repair shops and spare part resellers in Hungary are obliged to use online cashier machine, which has contributed to the market becoming more compliant with the regulations.

Car insurance market

In its report the GVH concludes that on the car insurance market (car liability insurance (KGFB), and voluntary car insurance (Casco)) the annual turnover of insurance companies seems to have decreased by 10% per year until 2013. According to the GVH, this was a result of a general decrease of insurance premiums during the statutory campaign period. However, as of 2014, this trend seems to have changed significantly and average insurance premiums have been increasing. According to the GVH this might be at least partly due to the abolishment of the statutory campaign period. Since then, insurance companies may change their fees not only in the statutory campaign period, but several times a year. On the one hand, this enables insurance companies to react to market changes in a flexible manner, however, according to the GVH at the same time it has led to customers being less motivated to switch, in particular due to the absence of intense press and information campaigns in the statutory campaign period.

The GVH also notes that in respect of repair works carried out as a result of liability car insurance events, prices have been usually higher as compared to other repair works (mandated and paid by the car owners themselves). The GVH also notes that insurance companies usually rely on a calculation software regarding repair fees. However, the prices included in such calculation software may not reflect actual and real market prices, as these are the list prices of manufacturers and importers, which car repair shops usually get significant rebates from.

Proposals of the GVH

• Based on the above conclusions, the GVH proposes that competent Hungarian authorities should consider a potential decrease of costs regarding the registration of new cars (duty fees, registration taxes, etc.) as well as a certain differentiation of costs based on the age of cars and the pollution to the environment.
• For the same reason, the GVH considers to initiate legislative changes regarding a potential differentiation of additional costs for used cars being registered in Hungary (such differentiation focusing the age of the car).
• The GVH intends to propose to the Ministry for National Economy a re-introduction of the statutory campaign period regarding liability car insurances. According to the GVH’s expectations, a concentrated switching period may contribute to an increase of competition and to a reduction of insurance premiums. However, according to the GVH it may be useful to introduce more than one campaign period a year in order to enable insurance companies to react to any change in insurance risks within a calendar year. Further, the GVH considers that it might be useful to introduce certain guarantees in order to avoid prices below risk premium.
• The GVH expressly notes that it recommends market players to observe its case law regarding competition law assessment in the industry as well as to establish, continuously review and develop an effective competition law compliance program.