Audi ramps up Hungarian production in boost to economy

Wed Jun 12, 2013 9:03am EDT

* Starts production at 900 mln euro new Gyor plant

* Will more than triple Hungarian output capacity to 125,000 cars per year

* A3 car to be made exclusively in Hungary

* Car sector a key driver of exports, economic growth in Hungary

By Gergely Szakacs

GYOR, Hungary, June 12 (Reuters) - German carmaker Audi launched production on Wednesday at a 900 million euro ($1.2 billion) plant in Hungary, giving a much-needed boost to the country's sluggish economy.

The new plant in the town of Gyor, 120 kms (75 miles) from Budapest, will more than triple the premium brand manufacturer's annual output capacity in the indebted central European state to 125,000 cars.

Audi has invested 5.7 billion euros in Hungary - more than any other foreign firm - since it opened its first plant there two decades ago. It said its new premium compact A3 would be the first model entirely made and assembled in the country.

It already operates the world's biggest engine factory on the same site, which churned out a record 1.9 million units last year.

Prime Minister Viktor Orban, who faces an election next year, said the new plant would help kick-start an economy recovering from recession and "help us get closer to making Hungary into a regional centre of the car industry."

Orban has been heavily criticised for his unorthodox brand of crisis management that includes Europe's highest bank tax and new levies on some businesses.

But he has spared the car sector.

The new Audi plant will make the make A3 Limousine, the A3 Cabriolet, the TT Coupe and Roadster. Gergely Suppan, an analyst at Takarekbank said once at full capacity, Audi could boost Hungary's economic output by about 1 percent.

Rival Daimler has launched a new four-door Mercedes coupe, one of three new compact models it is launching in a bid to win back its premium car crown, at a 800 million euro plant in Hungary completed last year.

Audi, which wants to become the world's top premium brand carmaker by 2020, said the new A3 model would go on sale in Europe in the autumn and early next year in the U.S. and China.

The new plant will boost Audi's Hungarian workforce of 9,157 employees by 2,100, the carmaker said.

($1 = 0.7533 euros) (Reporting by Gergely Szakacs; Editing by John Stonestreet)

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