As Europe’s economy stutters and automakers eye restructuring moves, Suzuki has secured a ‘strategic partnership’ with Hungary’s government to secure its low-cost manufacturing operations there.

The Hungarian government and Magyar Suzuki Corporation (MSC) have signed a ‘strategic partnership agreement for cooperation to strengthen the existing economic bonds and promote sustainable and steady operation’. Suzuki says the new agreement ‘establishes the framework for further expansion of MSC’s manufacturing and developing activities in Hungary, and also enables MSC to maintain its competitiveness on the European market.’

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“In the present situation in the European car market, even in very tough economic circumstances, we have been able to maintain our production and even launch new models from time to time, being in a special position as Suzuki’s sole manufacturing company on the continent providing vehicles to all of the European markets,” Hisashi Takeuchi, Managing Director of Magyar Suzuki Corporation said.

COMMENT 

This agreement may be short on detail, but for Suzuki, the long-term commitment from Hungary’s government is very welcome. It is a small player in Europe and makes low-margin small cars. Another small player, Daihatsu, exited Europe because of high costs on Japanese imports to the EU (the common external tariff and high yen wiped out its margins on small cars). The low-cost manufacturing operations in Hungary keep Suzuki viable in Europe (potentially also important if, post-VW fallout, it finds another strategic partner). A friendly host government can only help. And Hungary’s government, for its part, is obviously very keen to keep Suzuki in Hungary. 

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