In the automotive world, after announcing the Mercedes-Benz decision, it plans to move the production of its popular A-Class from its German factory in Rastatt to its Kecskemet plant in Hungary. This change, to come into force from the second quarter of 2026, could mean a dramatic loss of up to 20,000 jobs in Germany. What prompted the car giant to take such a step, and what are the consequences for the European labour market?
Mercedes Decision: From Rastatt to Kecskemet
Mercedes-Benz confirmed that the production of the A-Class series, which has so far been carried out in German Rastatt, would be gradually transferred to Hungarian Kecskemet. This plant, which is the largest production center of Mercedes in Europe (it only has a bigger one in China), celebrated the production of a two million vehicle in October 2024. From 2026, the Kecskemet factory will produce not only cars with combustion engines and hybrid plug-ins, but also fully electric vehicles. Together with the A-Class model, electric GLB and the new C-Class will be created in the same place, which will strengthen Hungary's position as a key automotive hub.
The relocation of production is expected to last until 2028 and is part of a wider cost optimization strategy. The Hungarian plant currently employs more than 5 000 people and was declared the "most attractive employer" in 2024. Mercedes also plans to open its first R & D centre there, which will further strengthen the local economy.
Dramatic Effects for Germany: 20,000 Unemployed
The most painful aspect of this decision is the potential loss of employment by about 20,000 German workers. By 2023 Germany had already lost 120 000 jobs in the manufacturing sector, and now the situation may deteriorate. AfD politician Christian Abel commented on platform X: "Mercedes-Benz has for decades symbolized German engineering excellence and economic development in Germany. However, like many other car manufacturers, the company cuts jobs in Germany and expands its operations in other countries. As a result, all production of A-Class moves to Hungary. 20,000 employees are expected to lose their jobs".
Abel blames the government's "green climate and energy policy" for this, calling for radical changes, such as the completion of the energy transition, the abolition of the ban on internal combustion engines and the elimination of emission limits. It stresses that without this, Germany may lose its attractiveness as an industrial location and even consider "Dexit" – exiting the EU.
Why Hungary? Secret of Orban's success
Hungary triumphs thanks to the economic policy of Prime Minister Viktor Orban, based on political stability, low taxes and a skilled workforce. Trade Minister Peter Szijjarto confirmed Mercedes' decision, stating: "Hungary demonstrates economic brilliance at a time when all Europe is suffering from the consequences of the war in Ukraine and erroneous policies of the EU headquarters in Brussels".
This is not the first time German car giants have invested in Hungary. In December 2025, an expansion of the Rheinmetall factory in Szegeda was announced, creating over 300 new jobs in the high technology sector, including electromobility and renewable energy. The Hungarian government supported the investment with 13 billion forints, highlighting Hungary's role as a hub for future technologies.
Wide Context: Crisis in German Industry
Mercedes' decision follows a broader trend where car manufacturers cut costs in Germany and seek cheaper locations. High energy costs, EU regulations and global competition make Germany less attractive. In 2024 and 2025, the automotive sector in Germany faced a wave of layoffs, and the relocation of production to Hungary could be a signal to other companies.
Is this the end of the era of German automotive dominance? For now, Mercedes assures that the transfer is intended to improve efficiency, but for thousands of families in Rastatt it is cold reality.
Source:Merkur.de, Reuters.com, Rmx.news, Msn.com
