Economy 13 June 2025, 11:15am

Hungarian car industry hits the brakes, with major companies at decade lows

Portfolio

It was a difficult year for the big Hungarian carmakers last year: the last time Audi in Győr produced fewer engines than last year was in 2009, while Mercedes-Benz in Kecskemét had its second lowest production volume in the last decade, and Magyar Suzuki's car production fell to a two-decade low, excluding 2021. The decline in production output reflects the slowdown in the European car market, which is the most important market for domestic factories, the deteriorating economic environment and the challenges surrounding the transformation of the industry. However, these are not the only factors explaining the deterioration in the performance of domestic factories: there are also specific stories behind the decline. Now that Magyar Suzuki's results have been published yesteray, we take a look at how the biggest domestic car makers performed last year.

Audi Hungaria

The transformation of the automotive industry has also had an impact on Audi Hungaria and its performance in fiscal year 2024, as reflected in the 1.58 million engines produced at the Győr plant last year, down nearly 5% from a year earlier.

The last time the plant produced fewer engines than this was in 2009, following the global economic crisis of 2008.

Last year, 388,000 fewer engines were produced than in the year before Covid and the war in Ukraine in 2019, almost a fifth fewer than in the year before.

In 2024, Audi Hungaria produced six types of petrol and two types of diesel engines, as well as two ranges of electric motors, with power outputs between 122 and 244 hp. Of the engines produced in 2024, 1.11 million were three- and four-cylinder petrol and diesel engines, and 13,000 five-cylinder and 228,000 six-cylinder engines, 67,000 six-cylinder diesel engines and 3,728 ten-cylinder engines were also produced.

2024 was the last year in which ten-cylinder engines were produced at the plant.

Of the total, 151 899, or nearly one in ten, were electric. The electric motors are fitted in the Audi Q8 e-tron, Audi Q6 e-tron, A6 e-tron and Porsche Macan. The Group's new all-electric models, based on the PPE (Premium Platform Electric) platform developed jointly with Porsche, are also built in Győr.

However, the Győr plant is not only producing powertrains, but also cars, where a new record of 179,710 units is set (including cars for the Brazilian SKD production).

99,288 Audi Q3s, 63 759 Audi Q3 Sportbacks and 16,663 CUPRA Terramars will be produced in 2024 and from September 2024 onwards.

This growth was achieved by differentiating demand for the Volkswagen Group brands in the EU on an annual basis, with sales of the Audi parent brand down 9.4% overall and Cupra sales up 10.3%. It should be noted, however, that the Győr plant does not only produce for the European market: the Q3 models are also sold in the USA, for example.

Last year, Audi's sales in Győr fell by 5.4% to €8.6 billion, although the base was also high, with Audi Hungaria reaching the highest revenue in its history in 2023.

Material expenses (including the cost of materials), the largest cost item, decreased substantially by 4.6%, which partly offset the decline in revenues.

At the same time, the company's result at operating level increased by 4.7% to €368.1 million.

The result from financial operations, on the other hand, turned into a minus of €31.6 million, compared with €29.4 million a year earlier. As a consequence, net profit also showed a decline, falling 14.2% to €303.9 million after tax.

The Győr-based company does not pay any dividends to the parent company, and the after-tax profit for 2024 has been transferred in full to the profit and loss reserve.

Audi Hungaria spent €340 million on investments, with the main projects being the new generation of electric drives, the preparation for series production of the MEBeco and the preparation for the production of the Audi Q3 successor.

Audi Hungaria has been producing engines for more than 30 years, and last year the 45 millionth power unit, a 220 kW electric drive, was delivered from the company in CO2-neutral “green trains” to Ingolstadt, where it was installed in an Audi Q6 e-tron, the first production model based on the PPE platform, which is manufactured entirely in Győr.
Preparations for the next generation of electric motors, the MEBeco (Modularer E-Antriebs-Baukasten, modular electric drive concept), will start in 2024. The new electric motor family will be produced at Audi Hungaria in greater depth, with the electric drive rotor, the power electronics and the plate package being manufactured in Győr.
In addition to the Audi RS Q3 and Sportback, series production of the CUPRA Terramar, designed in Barcelona and built in Győr, has started at Audi Hungaria. Audi Hungaria is the first Audi plant to produce a vehicle from a sister brand.

The latter, and the start of production of the new generation Q3, is linked to the fact that Audi agreed with the works council and management in March to partially transfer production of the Q3 from Győr to Ingolstadt. Initially, production of the new Q3 will take place entirely in Győr, but the integration of the Cupra Terramar production will require the optimisation of production capacity. Since the Audi Q3 is a very popular model in the Audi range, the company expects similar or even greater market interest in the new Q3 generation.

The production cooperation between Győr and Ingolstadt will take these into account and be adapted to ensure optimal capacity utilisation in both plants,

the company said.

Two thirds of the Audi Q3 and one third of the Cupra Terramar will be produced at the Győr plant.

According to the company, the Győr plant will continue to operate at full capacity in the coming years.

Mercedes-Benz Manufacturing Hungary

Compared to Audi in Győr, the figures for the Mercedes-Benz plant in Kecskemét show a bigger decline, partly due to the increasing challenges experienced in recent years, the volatile international environment and the restructuring of production.

Last year, more than 146,000 vehicles were produced, down 16.1% from a year earlier.

The last time fewer cars were produced was in 2021, a year in which the global chip shortage, among other things, hit the car industry. The company's parent company also did not perform well at group level last year, with Mercedes-Benz sales in the EU down 2.6% overall. Weakening demand partly explains the lower production figures at the Kecskemét plant. However, a more significant impact on production was the fact that the plant switched from three to two shifts in the second half of the year in preparation for the transition to the new model cycle from 2026. In a statement to Kecsup, the company spoke of a “transition period”, which if it means the whole of this year until the launch of the new models in 2026, is expected to see a further drop in production numbers in 2025.

In line with the decline in sales, the company's revenue fell by 17.8% to €4.2 billion. The company still achieved the second highest revenue in its history.

Thanks to the normalisation of raw material prices, material costs also decreased by nearly one billion euros (-18.2%), but the company still experienced a 22.9% drop in operating profit.

Net profit was €57.6 million, 39.8% below the record level of a year earlier.

No dividend will be paid to the parent company out of the 2024 result.

The expansion of the Hungarian site and the transformation of the plant's production portfolio is ongoing. As part of its business plan, Mercedes-Benz is investing more than €1 billion in the Kecskemét site, with the first buildings - the new company doctor's surgery and fire station, as well as the new production hall for the body shop - coming on stream in 2024. In addition, a completely new building will be constructed for the new assembly line and the existing second painting plant will undergo a comprehensive modernisation. During the year, the new battery assembly building for the final assembly of high-voltage batteries for pure electric models was also constructed and the installation of equipment has started.

Series production of the current compact models was scheduled for 2024. The two millionth car, a pure electric EQB, rolled off the production line in the second half of the year. In 2024, Mercedes-Benz Manufacturing Hungary produced the CLA Coupe, CLA Shooting Brake, A-Class and hybrid versions of these, Mercedes-AMG Performance compact models and the all-electric EQB.

However, the vehicles produced in Kecskemét are gradually coming to the end of their model life.

In their place, production of the new MMA platform (Mercedes-Benz Modular Architecture) will start in early 2026, to be joined shortly afterwards by the all-electric models of the MB.EA platform (Mercedes-Benz Electric Architecture). It was therefore necessary to reorganise production, preparing the site for the arrival of the new models and future tasks. In the second half of the year, the plant switched to a two-shift operation, with some of the employees undergoing training and further training at the same time. At the Kecskemét site, both electric vehicles with internal combustion engines and all-electric vehicles are produced on the same production line and with the same staff, the company said.

Magyar Suzuki

Magyar Suzuki yesterday presented its 2024 results, which showed that a total of 111,000 cars were produced in Esztergom,

a 28.5% drop.

This is partly explained by a base effect, as in 2023 inventory levels at European distributors and domestic dealers were low as a result of the previous chip shortage, leading to increased production rates. The production volume in 2024 is more in line with trends in previous years and medium-term expectations, but it should be noted here (as for other domestic car manufacturers) that production remains substantially lower than pre-Covid levels, in line with automotive trends.

From a production point of view, the activities of the Yemeni Houthi rebels have caused difficulties. In January last year, production was halted for a week due to delays in the arrival of Japanese-made engines needed for domestically assembled models. The disruption was caused by attacks on merchant ships in the Red Sea, which forced shipments to take an alternative - longer - route to their destinations. The ships were bypassing Africa, which added about two weeks to the delivery time compared to the Suez Canal route. This posed a major logistical and organisational challenge.

Like the other two major domestic carmakers, Magyar Suzuki's revenue fell last year by 21.8% to €2.2 billion, down from a record €2.9 billion.

This compares with a much more spectacular decline in the operating profit line, again explained by the base effect. In the company's accounts, the change in stocks of own-account inventories has reversed compared to the previous year. Whereas in the previous year the increase in own stocks was recorded as a positive item - at that time it added approximately EUR 62,3 million to the result - in the current year it is recorded in the opposite direction, as a negative EUR 66,6 million.

This difference had a negative impact on the operating result of some EUR 129 million, which is sufficient in itself to explain the EUR 115 million fall in the result.

Overall, operating profit fell by 80.8% to €27.4 million. Profit after tax was positively impacted by an increase in the result from financial operations, but the company still posted a 75.1% fall (€35.3 million) in net profit.

Suzuki maintained its leading position in the domestic car market, with 15,732 vehicles registered last year, giving it a market share of 12.94%, thanks in part to the Vitaras and S-CROSS produced in Esztergom and the Swift imported from Japan.

A milestone for the Esztergom factory was the inauguration in February of its own solar farm, which will save HUF 270 million a year, following a two-million-euro investment and nearly two years of development.

Magyar Suzuki forecasts a slight increase in the domestic new passenger car market in 2025 compared to the previous year. The Esztergom production base is working continuously to avoid supply chain problems in 2025. In this regard, the company said that the Chinese rare earth export restrictions affecting automotive companies have not had a negative impact so far.

The company expects production and sales volumes for this year to be similar to 2024 levels.

Summary

If we look at the results of the three largest Hungarian car manufacturers as a whole, a total of 437,200 cars were produced in the three plants last year, a 13.9% drop compared to a year earlier. Of course, this does not reflect the total production output, as the engine production volume of Audi in Győr is not included.

However, the revenue summary already shows that engine production in Győr declined last year. Despite this, Audi Hungaria is still by far the biggest revenue generator, accounting for 57% of the total €15 billion revenue. However, compared to last year's record year, the combined revenues of the three largest Hungarian car manufacturers fell by 11.9%.

Finally, as far as net results are concerned, the largest aggregate decline is seen in this line. In total, the three companies delivered a net profit of €396.8 million, down 32.9% on last year.

The last time we saw lower aggregate profit figures was in 2012.