Although the global automotive industry still grew by 4 percent in 2025, its growth could effectively come to a halt this year due to cost pressures, geopolitical tensions, and the challenges of the transition to electric vehicles, with an increasing number of players facing deteriorating profitability and rising risks. The Hungarian automotive industry is particularly sensitive to international shocks due to its export exposure and cost sensitivity.
Last year, growth varied significantly by region: while new car registrations in the European Union rose by only 1–2 percent, China further strengthened its dominant role in the global market—which now accounts for more than one-third of global sales—with nearly 10 percent growth.
Workers at the Audi Hungaria plant in Győr. Photo: MTI/Zoltán Máthé
The expansion of Chinese production capacity, coupled with slowing domestic demand, is resulting in increasingly intense export pressure, which is intensifying competition for European manufacturers.
The industry must simultaneously adapt to cost shocks, a tightening regulatory environment, and rapid technological transformation. At the same time, rising energy prices and geopolitical uncertainties are shifting demand and production toward electric mobility.
According to Tünde Bujdosó, Director of Risk Management at Allianz Trade in Hungary, global growth in the sector could slow to between 0 and 1 percent in 2026, which essentially amounts to stagnation.
She noted that deteriorating profitability and persistent cost pressures are already clearly reflected in the 2025 insolvency data.
Based on an analysis by Allianz Trade, 475 major bankruptcies were recorded worldwide last year (up from 469 the previous year) among companies with annual revenue of at least 25 million euros; 7 percent of these occurred in the automotive industry, making it the fifth-most affected sector.
In Hungary, liquidations related to the automotive industry account for 7–8 percent of all proceedings, which is in line with international data. The number of automotive companies has been steadily declining since 2023. According to Allianz Trade,
insolvency risks in the automotive industry are primarily concentrated at the lower levels of the supply chain and among dealers,
where lower margins, limited ability to pass on price increases, and the financial burden of financing inventory and accounts receivable are placing increasing pressure on companies’ cash flow.
The Hungarian automotive industry—which accounts for about 20 percent of total industrial output—is a strategic sector due to its significant economic weight. However, because of its export exposure and cost sensitivity, it is particularly vulnerable to international shocks, the company pointed out. Companies’ profitability is increasingly squeezed by rising wage and energy costs and higher raw material prices, while automakers’ efforts to drive down prices are also reducing profit margins.
Photo: Pexels
Tünde Bujdosó believes that the outlook is shaped by mixed factors: falling inflation and interest rates, as well as declining battery prices, could support a pickup in demand and the transition to electric vehicles, while risks related to raw material supply, differing carbon dioxide emission regulations, and consumer uncertainty could hold the market back, while technological competition and China’s dominance may permanently limit the room for maneuver of European manufacturers.
Allianz Trade monitors the creditworthiness of more than 83 million businesses worldwide and, drawing on its database, regularly produces analyses on, among other topics, the global automotive industry. Allianz Trade Hungary, which is celebrating its 30th anniversary this year, is the Hungarian subsidiary of the global trade credit insurer. Its services include credit insurance, debt collection, company information and buyer credit assessment services, as well as surety and guarantee insurance.
Via MTI; Featured photo: Audi Hungaria
