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Hungary Autos Report Q1 2011
Business Monitor International, Nov 2010, Pages: 52
The Hungary Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Hungary's automotive industry.
Hungary's auto sector makes up approximately 20% of the country's total exports and with the production sector relying heavily on a weakened Germany, recovery is not expected to be imminent. Demand for new vehicles in Germany is predicted to fall by 20% y-o-y and production levels are expected to see a small 5.5% y-o-y growth by the end of 2010. BMI forecasts that there will be a minimal increase of 6% y-o-y at the end of 2010 with levels rising annually over the next four years. Total production is expected to rise from 182,500 units in 2009 to over 303,000 in 2015. There is another glimmer of hope with new car registrations increasing by 11% y-o-y in September as well as continued investment into the parts sector from companies such as Audi, Suzuki and Daimler.
Audi increased engine production in Hungary 32% y-o-y in H110, taking the total production to 876,932. Other parts makers such as Provertha and ZF Friedrichshafen have announced that they will be increasing their staff in order to meet the increasing demand. However, despite what appears to be a significant improvement, BMI believes that actually it may be no more than a better use of resources and capacity. The weakened forint against the euro boosted export growth and production decreased by more than 47% in 2009 to 180,500 units. This provided a very low base on which to compare for this year. Actual growth will still be fairly small in 2010.
Meanwhile, there is talk of planned investment from Germany and the US. Audi stated in October that it would invest a total of US$1.3bn in engine production at its plant in Gyor. This is being partly subsidized by the Hungarian government and will improve production. It will also create jobs through the manufacture of the next generation A3.
Other planned investors include General Motors Company (GM), which has announced that it will invest US$700mn to expand its Opel engine factory in Hungary. Production is expected to increase significantly by 2015 and aims to create 800 new jobs. This boost in investment is expected to attract more international interest which will generate growth; however the investment is focused on the already developed areas of the country leaving under-developed regions chasing the ever-growing divide. While recovery in Europe remains unstable, the auto sector in Hungary will not see any marked improvements. However, in the long term, BMI predicts that Hungary will remain an attractive investment for suppliers and this will help with recovery. The industry is estimated to be worth US$12.2bn and despite exporting 88% of all production; a domestic presence is slowly developing.
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