German carmakers have agreed to not shut down their factories in Hungary, the Central European country's Prime Minister Viktor Orban said on Friday.

A slew of automotive companies across Europe have announced plant closures and big layoffs recently as they struggle with weak demand, high costs, competition from China and a slower-than-expected transition to electric vehicles.

Hungary needs to create a competitive economic environment so that no factories would be closed down in the country, Orban said in an interview on state Kossuth radio.

"We have agreements with these companies ... not only will they not shut down the factories but they will develop them," Orban said.

"They think that there is trouble in Germany but the Hungarian economic environment is more favorable to them and they are better able to preserve their jobs here."

The prime minister did not specify which companies the government had an agreement with.

Hungary's economy is heavily dependent on its auto industry. Investment is dominated by three countries - Germany, China and South Korea.

BMW's plant in Debrecen is expected to open and start producing electric vehicles next year. Mercedes-Benz is converting its factory in Kecskemet to produce EVs, while Volkswagen's Audi is making cars and electric motors in Gyor.

Orban, who is scrambling to revive a struggling economy ahead of the 2026 election, had said earlier that new factories belonging to BMW, China's BYD and battery maker CATL would start production by the second half of next year, which could help boost GDP.