Largest Hungarian car manufacturers give outlook for the coming months

Róbert Krisztián, Deputy CEO, Magyar Suzuki Zrt. and President of MAGE (Association of the Hungarian Automotive Industry), said that last year was a turning point for the car market. From spring onwards, we managed to overcome the supply problems, in particular the supply of chips has stabilised, and manufacturers are able to use the capacities to the maximum again.

The industry has had a difficult but good year, with 10% more cars produced compared to 2022.

The sector is performing well also in Hungary, with 505,000 cars (and more than 2 million engines) produced in the country, 52,000 more than in 2022. Suzuki manufactured more than 160,000 cars, an increase of approximately 24% compared to the previous year. Growth is expected to slow down this year: this could lead to a small decrease in production (due to capacity already filled up earlier).

Róbert Krisztián noted that by 2025, one in four to five cars sold will have to be electric, but this proportion will continue to increase. Manufacturers could face huge penalties if they fail to meet the EU's electric car targets. This also means that manufacturers are working hard to develop electric cars, but there are many challenges ahead.

He sees the market reaching price parity between electric cars and cars with internal combustion engines between 2030 and 2035.

Zoltán Les, Member of the Board of Directors at Audi Hungaria Zrt., said that the company produced 177,000 cars and achieved sales of €9.1 billion in Hungary, but that they had a difficult year and that 2024 will not be any easier.

He stressed that although the number of electric cars sold is increasing year on year, the quality and speed of the transition is highly questionable. The CEO said that the market could be affected by the immature nature of the emerging Chinese car industry, but that the political situation between the US and China could also put raw material supply chains at risk.

The price war is a huge challenge: raw material and energy prices have to be compensated or incorporated into car prices, he added.

Olívia Mesics, Managing Director, Plant Manager of Opel Szentgotthárd Ltd., Stellantis, said that they have been able to increase production continuously, and last year they were close to the maximum production capacity. At the same time, they were also working on the introduction of a new, state-of-the-art engine. The Stellantis group has nearly 100 sites, so internal competition is strong: last year the decision was taken to embark on the path of electrification.

The company's ability to respond quickly to market developments is key: they will start producing electric drive trains in Szentgotthárd in 2026.

She stressed the importance of scenario-based planning. At the same time, Opel's head in Hungary also believes that the automotive industry's impact of trade policy agreements and government regulations carries with it a number of uncertainties.

Tibor Sőregi, Plant Manager of NIO, which started 10 years ago, said that since 2022 they have opened five new markets in Europe: globally they have increased their sales by 30%, selling 160,000 cars in 2023. Although they don't yet have a car manufacturing base in Europe, they already have a battery exchange station in Biatorbágy.

He added:

it's still difficult to compete with Chinese manufacturers and developers: price competition is fierce across the market.

However, according to his assessment, electric cars are no longer significantly more expensive than petrol cars in China.

What direction are Hungarian automotive suppliers heading in? Digitalisation and rethinking supply chains could be the key to progress.

Leading suppliers and SMEs of the Hungarian automotive industry discussed trends, investments, crisis management, competitiveness and development directions at the second Executives' Roundtable of the Portfolio-MAGE Automotive 2024 conference.

Róbert Keszte, Country Director of the Continental Group in Hungary, believes that software has become one of the biggest value drivers in the automotive industry.

Hungary and Europe as a whole are not competitive enough in developing these, especially compared to Chinese manufacturers.

However, there is not enough buying power in the market, and someone has to finance the investment that manufacturers are making in environmental protection, partly because of regulatory pressure. He added that one of the most important elements of manufacturing efficiency is labour efficiency: some Hungarian companies are at pre-AI automation levels.

Attila Bíró, Managing Director of Knorr-Bremse Fékrendszerek Ltd., said that the primary question for supply chains is whether there will be affordable energy in our region. That is why nowadays more materials, such as aluminium raw materials for energy-intensive production, is sourced from China or even India instead of the Central and Eastern European region.  

 

Regarding the labour market situation, he reported that the Kecskemét factory is effectively integrating workers from abroad.

He also considers it a success that their labour costs per euro have fallen by 40%.

According to Anna Novotni, Vice President of Hajdu Group, automotive suppliers have also been intensively exposed to market effects. An electric car has a completely different component structure: as a metal component manufacturer, this is a particular challenge for the company.

The market pie needs to be redistributed due to rising costs and increased raw material prices, and the group also needs to redefine its overall customer base.

Therefore, they should be actively seeking opportunities outside the automotive industry. At the same time, higher value-added products need to be brought into manufacturing, she added.

According to István Ács, Managing Director of Bosch Rexroth Ltd., the market is highly volatile: the companies that will survive are those that have digitised as deeply as possible. Those that have done so can intervene effectively in their production systems.

There are many examples of SMEs recognising this and large companies helping to integrate it. He added that Bosch Rexroth has recently set up a digital experience centre to showcase the latest manufacturing/industrial technologies in practice.

Read our previous report from the Portfolio-MAGE Automotive Industry 2024 conference at the link below:

Cover photo and photos in the article: Portfolio - Ákos Stiller