Bridgestone Invests For Global Export


Japanese tyre manufacturer Bridgestone Corp has announced that it is to invest some EUR267mn (US$345mn) to triple tyre production capacity at its facility in Hungary. The site will produce some 18,000 tyres per day by mid-2017. The company states that the expansion will be to keep production in line with global demand. BMI believes that, despite our bearish outlook on vehicle production in the country, we will see some investment from auto suppliers seeking to export.

No Return In Sight
Vehicle Production, CBUs

Production and Manufacturing in Hungary

BMI maintains a relatively bearish outlook on vehicle production in Hungary, forecasting a 1.3% decline in 2012. Although we forecast moderate increases in production levels over the remainder of our forecast period to 2017, we believe total production levels will not return to their 2008 highpoint (see graph) during this time.

Furthermore, we believe that weakening industrial confidence both at home and abroad, deteriorating credit channels, poor external demand, and tight domestic policy will all act to hold back firms' capacity and appetite for large-scale investment projects over the next few quarters. Leading indicator data continue to bear out this view, with industrial production growth still in negative growth territory, and latest industrial survey readings falling to their lowest levels since late 2009 (see our online service, September 21, 'Only Modest Growth Expected In 2013').

Supplier Segment

Despite this relatively bearish vehicle production outlook, and for manufacturing more generally, a number of firms have recently invested in the country, particularly in the supplier segment. On October 19, South Korean tyre manufacturer Hankook Tire announced that it is to invest more than HUF2.40bn (US$11.29mn) to expand its Hungarian facility, producing 34,000 tyres per day, exporting to European automobile manufacturers.

BMI believes that the ongoing decline in passenger car sales across Europe has had a rather muted impact on the auto supplier segment in the region (see our online service, August 16, 'Supplier Segment Stays Strong, Despite Autos Downturn'). We expect to see ongoing investments in the supplier segment across the region.

This article is tagged to:
Sector: Autos
Geography: Hungary, Hungary, Hungary, Hungary