Hungary's automotive sector outpaces industrial growth despite week-long strike at Audi

Hungary's automotive sector outpaces industrial growth despite week-long strike at Audi
Automotive sector output rose 4.8% in January despite strike at Audi.
By Levente Szilagyi in Budapest March 14, 2019

Hungary's industrial output rose by an annual 4.4% in January, the Central Statistical Office (KSH) confirmed preliminary data on March 13 in a second reading.

Adjusted for the number of work days in the month, output grew by 5%. Industrial output was up 0.6% m/m.

Vehicle manufacturing output grew by an annual 4.8% in January, beating the overall increase in industrial output despite a week-long strike at German carmaker Audi's plant in Gyor. The German premium carmaker was forced to put production on hold at its headquarters in Ingolstadt as deliveries of engines from Gyor stopped. The Hungarian plant is one of the largest engine producers in the world, rolling out 2mn units a year.

Last year the three leading car makers Audi, Mercedes, Suzuki turned out a total of some 500,000 cars or some 2.8% of the 19mn cars manufactured in the EU. Hungary's annual car production could rise to 800,000 by 2023 when BMW's new production plant comes into operation.

In related news, Japanese car maker Suzuki announced that it has turned out the 500,000th Vitara compact SUV model at the Esztergom factor. The Vitara was launched in 1988, and Magyar Suzuki started producing the fourth-generation model in 2015, which received a facelift in 2018. Suzuki remains the leading brand on the market with a15.6% market share.  

With more than 90% of production going for exports, Hungary's vehicle sector remains vulnerable to fluctuations in demand and is exposed to the escalation of international trade disputes, analysts warned.

Other segments of the industry grew by above average. The manufacture of electrical equipment grew at the highest rate among the subsections, by 27% year-on-year. 

The output of the food, drink and tobacco products segment, which makes up 10% of manufacturing, increased by 4.7%. The output of the computer, electronics and optical equipment segment, which makes up 12% of manufacturing, rose by 3.2%.

Industrial growth is expected to accelerate from 3.6% in 2018 to around 4-5% this year as new capacities will be added in the vehicle industry. Downside risks stem from the slowdown of Hungary's main export markets, the Eurozone and trade disputes.