Economy 13 January 2026, 8:10am

Historic downsizing in the automotive industry: unprecedented in modern times, Hungary also at risk

Portfolio

In the European automotive supply sector, more than 100,000 job losses have been announced over the past two years. Demand remains weak, Chinese competition is intensifying and the green transition is putting pressure on traditional business models. According to an article in the Financial Times, the depth of the crisis is already foreshadowing consolidation and capacity reduction at the institutional level, the effects of which may also filter through to Central and Eastern European industries, including Hungary.

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The FT reports that, according to data from CLEPA (the European Association of Automotive Suppliers),

automotive suppliers on the continent have announced 54,000 layoffs for 2024 and a further 50,000 for 2025. This means that the total number of planned job cuts will exceed 100,000 within two years.

According to the organisation's secretary general, such a prolonged wave of layoffs has no precedent in the sector's modern history. Demand has remained persistently below pre-pandemic levels, primarily due to the slow uptake of electric cars in Europe.

The article also cites specific examples of companies. The German company Bosch, which operates in Hungary, has announced that it will eliminate 13,000 jobs by 2030. Meanwhile, Mahle has decided to cut 1,000 jobs, and Valeo, Forvia, Schaeffler and Continental — which all have a significant presence in Hungary — are planning capacity reductions of thousands in their automotive divisions. While these companies have a presence in Hungary, no breakdown of the planned layoffs by country is available, so the extent to which their Hungarian subsidiaries will be affected remains unclear.

Some company executives are no longer discussing a cyclical downturn, but rather a structural transformation. This transformation is characterised by the simultaneous erosion of the profitability of European suppliers due to the transition to electric vehicles, price competition from Chinese manufacturers, and US customs measures.

According to the FT, the 'elephant in the room' is China. The rapid rise of increasingly sophisticated yet much cheaper Chinese vehicles and components is putting pressure on European manufacturers, which many believe can only be managed through political protection.

In light of this, the European Commission is considering introducing 'Made in Europe' regulations that would require a minimum proportion of suppliers to be based in Europe. However, car manufacturers fear that this would further undermine their competitiveness.

From the perspective of the Hungarian economy, this process is particularly sensitive because the automotive industry and its supply chain represent a significant proportion of the manufacturing sector. While the Hungarian Central Statistical Office's (KSH) flash reports do not provide a breakdown of employment in the automotive industry, the wave of layoffs in Western Europe and the decline in production volumes suggest that Hungarian suppliers will not be unaffected, particularly if consolidation and capacity restructuring become a multi-year process across Europe. While it is possible that production may increase among domestic and other Central and Eastern European companies due to favourable wage costs, if companies become less competitive, employment in the sector will also decline in Hungary over time.

Cover photo: EU