BMW has announced it will be investing €1 billion in a new car factory in eastern Hungary – a move that could position the country as a focal point for high-end car manufacturing in the region.
The new plant will be based near the city of Debrecen and will have a capacity of 150,000 per year, according to BMW.
Already, around one-third of Hungary’s exports consist of car manufacturing. And BMW is not the first major carmaker to set up manufacturing in Hungary: Daimler and Audi both have plants there, and as we reported last week the latter hare recently launched serial production of electric engines at its Hungary plant.
While the move will be seen by many as a positive one for Hungary’s economy, Peter Virovacz, an analyst at ING in Budapest, has been quoted as saying that it will also increase the country’s dependence on the car industry and thus its exposure to any wider slump in car sales in the event of a global economic downturn.
Furthermore Hungary, along with other Central European countries, has been dealing with a serious labour shortage partly due to a mass emigration to the west for higher wages.
He said: "The biggest question mark regarding this investment will be the Hungarian labour market ... it is already very hard to find 1000 employees, let alone in two years from now," he said.