The first half of the year saw nine new investment decisions, amounting to nearly EUR 320 million, according to the Hungarian Investment Promotion Agency. This marks a notable improvement in the number of projects, investment volume, and job creation compared to the same period in 2023, the agency tells the Budapest Business Journal.
The continued confidence of German investors in Hungary is demonstrated further by recent research conducted by the German-Hungarian Chamber of Industry and Commerce (DUIHK). According to its findings, four out of five German investors would choose Hungary again as an investment destination, a solid testament to the favorable conditions the country provides.
According to HIPA, one of the most significant announcements in 2024 came from the German automotive supplier Schedl, which chose Hungary for a new greenfield investment. The company’s HUF 37.5 bln (EUR 101.1 mln) projects in Debrecen (230 km east of Budapest by road) and Kecskemét (89 km to the southeast) will include the construction of manufacturing and warehouse units to handle wheel assembly and sequencing.
These facilities will support the production of electric vehicles by BMW and Mercedes-Benz, scheduled to begin in Hungary between 2025 and 2026. The investment will create 160 new jobs, further bolstering Hungary’s automotive sector.
In the technology field, Evosoft Hungary Kft., a German-backed software development company, has expanded its research and development operations at its Budapest and Miskolc (182 km northeast of the capital) locations. The HUF 3.4 bln project, which will create 75 new R&D jobs.
The aim of this investment is to develop new drive technology that will enable the virtual commissioning of production lines, improving time and cost efficiency in manufacturing processes. The inventive nature of this project earned it the “Innovative Product Investment of the Year” award from HIPA in February 2024.
The investment decisions made by German companies in the first half of 2024 are expected to create around 900 new jobs, predominantly in the automotive sector, which remains the backbone of German investments in Hungary. The demand for skilled professionals in this field continues to grow as companies focus on expanding their high-value production activities in the country.
Looking ahead, opportunities for cooperation between Hungarian and German companies are expected to thrive, particularly in emerging sectors such as automotive engineering, alternative propulsion technologies, autonomous driving, and premium vehicle manufacturing. These areas are seen as complementary to the existing strengths of the Hungarian economy and offer higher value added for both investors and the country.
According to the German chamber’s 2024 business climate survey, nearly half of the respondents highlighted Hungary’s robust supplier network as one of its key advantages. This places Hungary second among the six regional countries the DUIHK surveyed, with nearly 800 domestic suppliers, both direct and indirect, listed in HIPA’s database.
The Hungarian Investment Promotion Agency continues to play a pivotal role in attracting new investments and supporting the reinvestment of existing German companies in the country. A range of state aid schemes, including regional investment aid, R&D support, training aid, and funding for renewable energy investments, are available to encourage continued growth. In recent years, significant changes have been made to support these structures, including increasing the maximum R&D grant from EUR 15 mln to EUR 25 mln and raising the cap for training aid to EUR 3 mln.
These strategic incentives aim to boost the competitiveness of companies operating in Hungary and help them move up the value chain. With continued reinvestment from long-term players alongside the arrival of new companies, Hungary remains an attractive destination for German capital, and the expectations of HIPA remain positive.
“The government continues to place significant importance on its relationship with Western European companies and expects that German investors will remain active players in the Hungarian economy in the future,” said István Joó, HIPA CEO and also the Government Commissioner for the Implementation of Large Foreign Direct Investments, on September 20 at the Audi plant in Győr.
He was speaking during a ceremony to mark the launch of the series production of the Cupra Terramar in Hungary. Originally a sub-brand of Seat, Cupra is now a stand-alone marque within the Volkswagen Group.
“The appearance of the sister brand model in the company’s portfolio is a tribute to the company and a tribute to our country. It shows that it is worth investing in Hungary and that it is worth further expanding the capacities built up through initial investments,” Joó noted.
This article was first published in the Budapest Business Journal print issue of October 4, 2024.
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