EUROPE: Hungarian group Acemil has teamed up with CRRC Zhuzhou Locomotive Co to build a rolling stock manufacturing plant in Hungary, which is intended to supply vehicles for the European market.
CRRC ZELC is one of six subsidiaries of the Chinese state-owned holding group that employs more than 10 000 people. The production facilities are expected to be operational from next year. The two companies would also like to establish a facility for railway education and training, research and development.
In Acemil, the Chinese group believes it has found a reliable local partner. The Hungarian logistics, railway manufacturing, energy and IT group was established at the end of 2022, initially to deal with China – Europe railway logistics. It is 100% owned by a private equity fund.
Chinese presence in Hungary
The plans have gained momentum in the wake of a diplomatic visit by China’s President Xi Jinping to Budapest in May, reflecting efforts by the Hungarian government led by Prime Minister Viktor Orbán to maintain a good working relationship with the Chinese administration. In recent years Chinese companies have built various production plants in Hungary, including battery factories and car manufacturing sites, at locations such as Debrecen.
CRRC in Europe
CRRC has already supplied small batches of rolling stock to various operators in the EU, but its only orders at scale have come via its Vossloh Rolling Stock subsidiary. CRRC ZELC acquired Kiel-based Vossloh Locomotives GmbH in May 2020. Primarily a manufacturer of shunting and trip freight locomotives, this established the Chinese company’s presence in the European market.
The key products CRRC ZELC would like to manufacture for the EU market are main line and shunting locomotives, electric multiple-units and double-deck trainsets. CRRC ZELC and Acemil envisage that all four of these product lines could in future be manufactured in Hungary.
Acemil Zrt Board Member Dávid Kovács emphasises that the partners are well placed to build on Hungary’s ‘great railway manufacturing heritage’, noting that ‘Ganz and later Ganz-MÁVAG supplied railway vehicles for the international market over many decades’.
‘We would like to bring Hungary back to the map of the European railway rolling stock production’, he insists. ‘Our long-term strategy is to offer products with a minimum of 51% EU added value. Because this is what we see the market demanding.
‘CRRC is the first company in Europe, maybe even in the world, to establish joint centres for the localised supply of such a wide range of key services for the rail industry’, suggests Kovács.
Full-service offering
‘We are also going to establish a maintenance base here to service all the existing and future product portfolio manufactured for the European market. We would not just like to sell railway vehicles to our customers, but we would like to offer a package with full service with mobile maintenance staff. Because our experience is that the current needs of the customers are to get full-service packages allowing them to worry less about maintenance.
‘We are looking ahead, to 2025 and beyond’, Kovács explains. ‘We can be sure that there will be a huge demand for new locomotives for a variety of reasons. Currently there are about 55 000 locomotives in Europe. The average age of those in western Europe is 20 to 23 years, in eastern Europe 35, in Hungary it is 40 to 50 years. And a green transition is happening in Europe, amid expectations from the EU institutions of further progress with network electrification and overall decarbonisation. The existing suppliers just won’t be able to keep up with this demand.’
CRRC Shandong agreement
Acemil has also concluded an agreement with another CRRC subsidiary, CRRC Shandong Co, for joint manufacturing and assembly of freight wagons in Hungary, for which a separate factory would be built. ‘We have an existing collaboration with CRRC Shandong’, Kovács explains, adding that ‘we are ready to start the manufacturing of wagons in the first quarter of 2025.
‘The concept is similar’, he continues. ‘We would like to manufacture wagons with more than 51% European Union added value. CRRC Shandong is the only supplier in China which has a TSI certification for its wagon portfolio, and it has already supplied wagons to several European freight operators.
‘As with the locomotive market, we also see a large demand for new wagons in Europe, as their average age is more than 40 years. We anticipate that the pace of replacement will accelerate significantly as a result of the upcoming introduction of digital automatic couplers. Many operators may find it cheaper and more rational to replace their older wagons rather than change the couplers.
‘Therefore, we expect that in the coming 10 years there will be demand to replace more than 100 000 of the roughly 500 000 wagons operating in Europe. And the current production capacity in Europe is approximately 6 000 to 8 000 wagons a year. Even if this is increased, the capacity will not be sufficient to satisfy the demand.’
