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Mercedes Announces $1.1 Billion Investment in Hungary, Construction of New Car Manufacturing Plant
Posted on: August 01, 2016

Foreign Minister Peter Szijjártó and Mercedes-Benz’s Production and Supply Chain Director Markus Schäfer announced at a joint press conference on Friday, July 29th that Mercedes' intends to build a new production plan in Kecskemét by 2020 at an initial investment cost of $1.1 billion. Schäfer highlighted prior Mercedes successes Kecskemét that have contributed to the global successes of the company, where a manufacturing has been in operation since 2008.

Schäfer also said that Mercedes had successfully outdone all of its rivals with regard to both sales and growth, but indicated that one must also succeed in remaining on top and the company is also one of the front-runners in the most important automotive industry trends such as autonomic driving, electro mobility and connectivity. Mercedes will be introducing 10 new models to the market within the next year, he added.

“The site in Kecskemet had deserved the confidence required for the decision; cooperation had been developed with the Hungarian Government, the Hungarian Investment Promotion Agency (HIPA) and the Municipality of Kecskemét, which has opened a new era in the success story that is Mercedes-Benz”, Schafer added.

Foreign Minister Szijjártó said that the car factory’s contribution to Hungary’s gross domestic product (GDP) could increase to 0.4 percent from the current level of 0.2 percent as a direct result of the project. Exports from Mercedes-Benz’s production represent 3.2 percent of total Hungarian exports, and this figure will increase by 3 percent once the project is complete.

Szijjártó also added that the Hungarian government, in cooperation and collaboration with the Municipality of Kecskemét, had undertaken major infrastructure development commitments. “A multimodal transport hub will be constructed at Kecskemét railway station, new bicycle paths will be established throughout the city and work on widening route 54 connecting the Mercedes-Benz factory to the M5 Motorway to four lanes would also soon commence. In addition, the northern ring road around Kecskemét would be completed and the development of Kecskemét Military Airport would begin to enable its use for trade and civil purposes”, he explained.

Szijjártó also stressed that the announcement indicated yet another success within the field of Hungarian-German strategic partnership and friendship; a quarter of all foreign working capital invested in Hungary comes from Germany and the project by Mercedes-Benz is the seventh automotive industry investment project in Hungary to be announced this year.

The Minister stressed: “While changes of frantic speed that have both political and economic consequences are going on throughout the world, Hungary can state that both the people and invested capital are safe in Hungary; The Hungarian Government has become successfully involved in the never before seen tough competition for investments”. “The situation in Europe is far from normal, the increased terrorist threat in places that used to be regarded as safe and the appearance of no-go zones mirrors the extent to which the world has become fragile and vulnerable”, he noted.

The Foreign Minister also stressed that investor confidence on the part of international corporations is a decisive factor in the total performance of the Hungarian economy and said the Government’s target of making Hungary Central Europe’s production center was a success in view of the fact that the performance of Hungarian industry has increased by 26.3 percent during the past six years. “The automotive industry represents the backbone of the economy; last year the sector’s production value broke all previous records and increased by a further five percent to 3,349 billion forints (EUR 10.7bn) during the first five months of this year. This means that the sector is now responsible for 31 percent of industrial production and provides jobs to 157 thousand people, 13 percent more than at the end of last year”, he highlighted.

According to publicly available data, Mercedes-Benz Manufacturing Hungary Ltd. achieved revenues of 3.4 billion euros last year after 2.8 billion euros in 2014. The company posted after-tax profits of 65.8 million euros in 2015 and 63.9 million euros in 2014.

(Ministry of Foreign Affairs and Trade)

Honorary Consul Gyorgy Simon
Gyorgy Simon is Honorary Consul in Salt Lake City

Gyorgy Simon is the Honorary Consul in Salt Lake City