ZF Hungary, a subsidiary of the German automotive supplier ZF, has announced plans to cut 110 jobs at its Hungarian facility. The decision comes in response to the downturn in the European automotive sector and declining orders. This restructuring aligns with ZF’s broader strategy, as its German parent company aims to reduce its workforce by 20%—amounting to 11,000 job cuts—by 2028 due to the challenges posed by the shift to electric vehicles (EVs).
Despite Hungary's heavy reliance on the German market, the country’s major automotive manufacturers have so far been largely unaffected by the slowdown. However, suppliers have experienced a gradual but consistent reduction in jobs, mainly affecting temporary and contracted workers. Industry experts warn that further job losses may be inevitable if demand does not recover in the coming years.
The job cuts at ZF Hungary represent a significant shift, marking the first major reduction at a Tier 1 supplier directly linked to Germany’s automotive sector slowdown, according to economic news portal G7.hu. This signals potential difficulties ahead for Hungary’s broader automotive supply chain, which heavily depends on Germany’s vehicle production trends.
Just 15 months prior, ZF Hungary announced a HUF 24 billion (€60 million) investment to produce shock absorbers and rear axles for EVs. These components were set to be manufactured from 2025 at BMW’s plant in Debrecen and Mercedes’ factory in Kecskemét. However, with the current downturn, there are concerns about whether projected production levels will be maintained as planned.
Recent production data highlights a 13.5% year-on-year decline in automotive industry output in November, with an overall drop of 8% between January and November. Despite this downturn, Hungary’s automotive industry has maintained consistent growth over the past decade, often posting double-digit annual increases. The sector’s total production value reached HUF 13 trillion (€32.3 billion) at the end of 2023, accounting for 18% of the country’s GDP.
Hungary’s manufacturing sector has demonstrated resilience, weathering the 2022 energy crisis and the subsequent recession. Data from the Central Statistical Office (KSH) indicates that employment in the sector remained stable up to September 2024, with a slight increase compared to the beginning of the year. However, analysts caution that prolonged difficulties in the German market could lead to broader employment challenges in Hungary’s automotive sector.
Labour market conditions have eased, as the number of unfilled positions dropped from 17,000 to 13,000 in the 12 months leading to Q3 2024. While this suggests a temporary stabilization, concerns persist about the potential for further workforce reductions if the industry fails to regain momentum.
According to a report by Eurofound, Hungary ranks among the EU nations with the highest proportion of automotive industry jobs, behind only Slovakia, the Czech Republic, and Romania. This heavy reliance on the sector underscores the importance of maintaining stability and competitiveness in an increasingly uncertain European market.
With ongoing transformations in the global automotive industry, including the transition to electric mobility and evolving consumer demand, Hungary’s suppliers must navigate an increasingly complex landscape. Industry stakeholders emphasize the need for strategic investments, innovation, and diversification to mitigate the risks posed by external market fluctuations.
