As a strategic consulting firm specializing in the automotive sector, Top Tier Consultants works collaboratively with industry stakeholders to provide guidance and insight. Here’s a glimpse of what Hungarian Tier-2 and Tier-3 SMEs can expect in 2025, as we set the stage for our next automotive future-focused presentation at the Hungarian Supplier Association (MAJOSZ) conference, scheduled for April 10–11 in Debrecen.
1. The Decline of Electrification in 2024
In 2024, the European vehicle market stagnated (<1% growth), and sales of battery electric vehicles (BEVs) saw a slight decline (-2%) — a stark contrast to the significant growth of previous years. This trend has mixed implications for Hungarian suppliers:
For Suppliers: Continued production of internal combustion engine (ICE) vehicle programs offers stable revenue streams. The slowdown in electrification is not necessarily bad news for them, as ICE programs remain more predictable and profitable in the short term.
For OEMs: The situation poses a major challenge. All leading manufacturers are committed to the European Green Deal, and failure to meet electrification targets could lead to hefty fines and reputational damage.
The real issue for Tier-2 and Tier-3 SMEs is uncertainty:
The unpredictability of production volumes.
Potential delays in the start of production (SOP) for new programs and uncertainty surrounding end-of-production (EOP) timelines for existing programs.
Challenges in planning production capacity and sales.
Given that program timelines often span nearly a decade — from nomination to SOP about two years and up to seven years of serial production — this uncertainty is particularly burdensome. Top Tier Consultants offers detailed vehicle platform- and program-level forecasts, supported by a database covering over 30,000 European vehicle types, helping clients navigate these challenges with confidence.
2. Modest Growth in 2025 but a Surge in Electrification
Due to macroeconomic challenges, we do not expect significant growth in the automotive sector in 2025, with a projected increase of just 2–3% compared to 2024. However, electrification is set to gain momentum. The 2025 tighteining of the EU Green Deal regulations now in effect mean major automakers are targeting an average of 20% electric vehicle sales by 2025. While debates continue about the feasibility of 2030 and 2035 goals, compliance with current regulations is critical to avoid fines and reputational risks.
For Hungarian suppliers, this means preparing for the rising demand for EV-related components while adapting to volatile production forecast volumes.
3. Long-Term Outlook for Vehicle Electrification
Electrification is inevitable, with or without state subsidies — the key questions are the pace and the timing of price parity between BEV and ICE powertrain variants. In China, price parity between BEVs and ICE vehicles was achieved in 2024, albeit with significant sacrifices in profitability for carmakers and state subsidies. Once BEV production costs reach parity with ICE vehicles, consumer adoption in Europe is expected to accelerate significantly.
Hungarian suppliers should adopt a long-term perspective, investing in capabilities to supply EV programs while maintaining access to ICE programs in the short term. Flexibility in adapting to evolving market demands will be critical.
4. Intensifying Challenges for Tier-1 Suppliers and Their Ripple Effects
The structural changes in the industry present significant challenges:
EV production requires fewer components and less labor.
OEMs are increasingly in-sourcing key components (e.g., electric motors, inverters) to retain workforce levels, putting pressure on Tier-1 suppliers.
For Hungarian Tier-2 and Tier-3 SMEs, this translates into additional challenges. Diversifying product portfolios and improving efficiency will be essential strategies. On the bright side, there will still be a need for local SMEs to manufacture smaller production volumes (10,000–20,000 units annually), as multinational Tier-1 suppliers focus on scaling up their operations.
5. Addressing Information Gaps and Strategic Support
One key takeaway from the Supplier Association conference is the critical lack of market forecasts and data for suppliers, which complicates production planning and capacity utilization optimization.
Top Tier Consultants provides tailored platform- and program-level forecasts covering over 30,000 vehicle types in Europe. These insights help suppliers:
Accurately assess future demand.
Confidently manage uncertainty.
Optimize capacity planning and investment decisions.
Join Us in Debrecen on April 11, 2025
During our upcoming presentation in Debrecen, Top Tier Consultants will delve deeper into these challenges and share practical recommendations to help suppliers succeed in an increasingly complex market.
Conclusion
While 2025 may bring uncertainty for Hungarian automotive suppliers, it also presents opportunities for those willing to adapt and grow. With the right information and strategies, Suppliers can successfully navigate the complexities of electrification and market fluctuations.
Top Tier Consultants is committed to supporting the Hungarian automotive industry by providing the forecasts and strategies needed for success. We look forward to continuing this dialogue in Debrecen this April. Together, we can shape the future of the Hungarian automotive sector.
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