Construction of BMW car plant in Debrecen to begin next spring

The development project worth 1 billion euro will strengthen the Hungarian economy amidst increasing global trade tensions

The mayor of Debrecen László Papp can take a good night sleep now, after German carmaker BMW gave the final go ahead to the construction of a 1-billion-euro plant in his city. 

The local council of Debrecen is finishing up groundwork at the site of the plant, and construction will begin in the spring of 2020, BMW said on 3 December in a statement, quoted by Hungarian media. BMW Group has previously taken over ownership of the land.

To upgrade the transport infrastructure around the site, Hungary has allocated some 130 billion forints (EUR 388.4m) with additional 35 billion earmarked for improvements to the local school system.

The development project was announced way back in 2018 but BMW was careful in its implementation given the increase of protectionism-induced trade tensions and fluctuations in vehicle demand. Finally, the German carmaker decided that the Hungarian plant, its first new factory in Europe since 2005, will help to extend its market reach in the Old Continent, where it sells 45 percent of its cars.

The plant in the city of Debrecen, about 230 kilometers east of Budapest, will have a production capacity of 150,000 cars and both combustion and electrified BMW models can be assembled on a single production line.

Overdependence on car manufacturing

The plant is seen as a serious boost to the local economy, too, with Minister of Foreign Affairs and Trade Péter Szijjártó praising “the Hungarians’ high-quality work, diligence and excellence in performance” as key factors for the BMW decision.  

Hungary, a strong bus manufacturer in the past, has found new vistas in attracting leading foreign carmakers. BMW now joins Daimler (Mercedes-Benz brand), Audi, Suzuki and Opel which already have car plants in the country. Audi recently announced investments to launch serial production of electric engines in Hungary.

Car manufacturing accounts for around one-third of Hungary’s exports, and with BMW this could rise to around 40 percent. Analysts fear that overdependence on carmaking poses a risk to Hungarian economy should vehicle demand drop significantly.