GM in ‘Advanced Stages’ of Talks on Hungary Plant
In what could become the largest American investment in Eastern Europe since the collapse of the hard-line Communist regimes there, General Motors said Thursday that it may soon become the first American auto maker to produce cars in Hungary.
The world’s largest auto company is in the “advanced stages” of talks with a Hungarian trade group about opening an assembly plant for small cars, as well as an accompanying engine factory.
GM officials said they hope to announce a definitive agreement soon, but gave no timetable for the completion of their ongoing negotiations. The company said the talks have been under way for at least two years, predating the revolutionary changes that have been sweeping across Hungary and the rest of Eastern Europe.
GM is coordinating the negotiations through its GM of Europe subsidiary, based in West Germany, rather than through its world headquarters here. Since the talks are in Europe, a GM spokesman said the company has not reported to the U.S. government on its discussions with Hungary. He said GM has not received any special encouragement from the Bush Administration to accelerate the talks now that Hungary is moving rapidly away from communism.
GM said its plans call for relatively low-volume car production in Hungary, and officials added that it is still unclear whether any of the Hungarian cars would be exported to Western Europe. GM said it has no plans to sell any of those cars in the United States.
The scope of the Hungarian venture “depends on how much new manufacturing can be absorbed over there,” noted one GM official. Hungary has no auto industry, and so it may be difficult to quickly establish a manufacturing base capable of producing enough cars for export markets.
GM’s European operations already buy auto parts from a Hungarian manufacturer, in exchange for the right to import into Hungary about 1,000 small cars built in GM plants in Western Europe. That trade agreement, announced in 1987, helped pave the way for the current talks, officials said.
GM’s announcement follows one earlier in the week from Suzuki, a Japanese auto maker that is partly owned by GM. Suzuki said it has agreed to build a relatively small, $140-million factory north of Budapest, which would produce 15,000 mini-cars a year by 1992.
There was no indication, however, that GM and Suzuki were coordinating their activities.
Separately, GM also said it is negotiating with the Soviet Union about the possibility of manufacturing automotive components there for use in Soviet-built cars.
