Could the Hungarian car industry be ruined by the Russian-Ukrainian war?

The Russian-Ukrainian war is already causing serious problems for the Hungarian car industry. The main reason for this is that the suppliers there cannot deliver. It is also a problem to transport smaller components from China by rail to Hungary.

The car industry has collapsed

The car industry has not returned to its old self, neither in Hungary nor in other countries, yet another crisis is already upon us. Not too long ago, the difficulties were caused by the coronavirus pandemic. This time, there is a setback due to the effects of the Russian-Ukrainian war. Csaba Kilián, the Executive Secretary of the Hungarian Automobile Industry Association, spoke about his concerns.

First, in the field of logistics and the supply of raw materials, the effects of the war can already be felt.

However, according to the expert, it largely depends on from where each company procures their raw materials. Companies that work with Ukrainian suppliers are already perceiving the problem, as those companies have not been available for days, writes napi.hu. 

It is also a serious problem that the war could damage logistics routes.

The question is how they may be triggered in the future or how long the war will last. Many parts and components arrive in Hungary via Ukraine and Russia.

Great Chinese influence

According to Csaba Kilián, there are companies in the Hungarian automotive industry where the proportion of Chinese suppliers reaches up to 40-50 per cent. These Chinese suppliers mostly transport the products to Hungary via Russia and Ukraine by rail.

Supply difficulties lead to higher prices.

However, the extent of the rise in prices can only be estimated for the time being. Ukraine is an important trading partner for Hungary. Many connections are made between Ukrainian and Hungarian companies, especially in connection with steel and aluminium raw materials. In addition, these products have become significantly more expensive in 2021. For example, the price of aluminium has quadrupled in the recent period.

There may be problems not only with manufacturing but also with purchasing.

Vg.hu writes that the purchasing power of the population is declining due to the war. In addition, due to uncertainty, many prefer to save up instead of buying a car. A similar pattern was observed in the first half of the coronavirus epidemic.

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Source: vg.hu, napi.hu