German press: BMW and Mercedes investments in danger in Hungary?

Leading German business newspaper Handelsblatt wrote in a Sunday analysis that German automotive industry is facing significant problems so giants like BMW and Daimler Mercedes will probably start to cut their budget in Hungary by postponing or even cancelling some of their planned investments.

BMW not to build a new factory in Debrecen?

As we reported before, BMW and Hungarian minister of foreign affairs and trade, Péter Szijjártó,  announced in July 2018 that the German car manufacturer was going to build an over 1 billion euro factory for the production of conventional and electric cars in the eastern Hungarian city of Debrecen. The minister added then that the factory would have the capacity

to manufacture 150,000 vehicles a year and it would start off with 1,000 employees.

The agreement already pushed up real estate prices in and around the city and the Hungarian government signed the grant agreement with the company in October. Based on the plans, the building of the new factory is going to start this year.

However, according to portfolio.hu, BMW had two profit warnings since then; the number of sold vehicles is falling which might result in a possible correction in the plans. Though production director Oliver Zipse still have hopes regarding the planned enlargement of the production in a low-cost city like Debrecen, Nicolas Peter, the company’s financial director already said that the monetary state of the company is tense enough to

think twice about creating exaggerated capacities in the future.

This is because markets do not perform as good as previously expected, so the control over the costs weakens. Managing director Harald Krüger said last week that they would do everything they can.

Mercedes has already made its decision

The article highlights that huge German premium car manufacturers like Audi (Győr), Mercedes (Kecskemét) and BMW (Debrecen) had great plans in Hungary before.

However, meanwhile, BMW is still analysing the situation, another automobile manufacturer giant, Mercedes, having a huge car factory in Kecskemét, Hungary, already made its decision. The leadership of the company stopped the enlargement of the plant and postponed the start of the production there for at least one year – Handelsblatt reported based on information received from company officials. According to the previous plans,