German-based automotive supplier ZF Hungary has announced plans to axe 110 jobs at its Hungarian base, citing the downturn in the European automotive sector and declining orders. The reorganisation is part of a wider scheme by ZF's German parent company to lay off 20% of its workforce, or 11,000, by 2028 due to challenges related to the EV transformation.

Hungary's top automotive manufacturers so far have been spared from the effects of the slowdown, despite the sector's high dependence on the German market; however, there has been a slow but steady job erosion at suppliers, involving mainly temporary and contracted workers.

The layoffs at ZF Hungary is major news, as it marks the first major job cut at a Tier 1 supplier, which is connected directly to the slowdown in Germany's automotive sector, economic portal G7.hu writes.

Just 15 months ago, the company announced a HUF24bn investment (€60mn) to produce shock absorbers and rear axles for electric vehicles to be manufactured from 2025 at the BMW plant in Debrecen and the Mercedes factory in Kecskemet.

The latest production data showed that the output of the automotive industry sector, accounting for 25% of the manufacturing sector fell 13.5% year on year in November and 8% in January-November.

Meanwhile, Hungary's automotive industry continuous to break records year-by-year over the last ten years, with double-digit growth annually. Total production value of the sector reached HUF13 trillion (€32.3bn) at the end of 2023, or 18% of GDP.

Hungary’s manufacturing sector has shown resilience despite the energy crisis in 2022 and the recession a year later. Data from the Central Statistical Office (KSH) shows that employment in the sector remained stable to the end of September 2024, with a slight increase compared to the beginning of the year.

Tight labour market conditions have eased and the number of vacation dropped from 17,000 to 13,000 in the 12 months leading to Q3 2024.

According to a compilation by Eurofund, Hungary had one of the highest proportions of automotive jobs in the EU, trailing only Slovakia, the Czech Republic and Romania.