Expert commentary from Laszló Molnár, Managing Director Hungary, Rohlig SUUS Logistics
In 2023, the automotive sector employed around 100,000 people and was responsible for generating 20 percent of the national GDP. What is more, the value of transportation equipment produced in the country reached over 12.2 trillion forints in 2022. These numbers look impressive, don’t they? Moreover, we should keep in mind that the sector has been in decline since 2019, when there was a record production of Hungarian automobiles, mainly due to the COVID-19 pandemic. So, the potential of the automotive sector in Hungary is greater than what we are observing now.
Hungary’s strong position in the automotive industry is attracting great interest from foreign investors, including Germany. Mercedes, BMW and Audi have their car factories in Hungary. Furthermore, the world’s largest producer of batteries for electric cars, China’s CATL, has built its $7.6 billion factory there. This is just one example of the investments made by manufacturers producing components for electric cars and the electric cars themselves. By 2031, investments of USD 13 billion will be made in the battery segment in Hungary. In addition, there is a significant increase in Chinese involvement in the Hungarian automotive industry, mainly due to the recently announced construction of a $14 million electric car factory by BYD.
Investors are encouraged with business subsidies, as well as the transfer of developed land for investment, including the provision of access roads, among others. Undoubtedly, a key factor in the business development of auto manufacturers is also a comprehensive logistics service, which we provide in Rohlig SUUS Logistics. Why end-to-end logistics support is so crucial? The supply of raw materials to factories, very often from China or other Asian countries, ensures the continuity of production. This is why there is a growing interest in Vendor Managed Inventory, which consists of managing the export as well as the customer’s inventory of components while deferring payment and customs and tax costs until the goods are taken out of stock.
Companies also need to store and distribute their finished goods. The automotive sector accounts for 90 percent of Hungary’s exports. The main destinations are Germany, the UK, France and Italy. This only confirms that Hungary, as well as the entire CEE region, is a good hub for the whole of Europe. That’s why the development of the country’s transport infrastructure is so important. Confirmation of the high priority of road investments is the fact that Hungary was the first country to complete its part of one of the most important routes for global automotive transport, the Via Carpatia. New motorway construction work is currently underway on sections totalling 120 kilometres, with plans to extend these motorways by a further 2,000 kilometres by 2030. In turn, a significant step in the development of intermodal transportation infrastructure is the construction of one of the most modern rail terminals in the world – the East-West Gate, which, interestingly enough, will be controlled via a 5G network.
