AUTOMOTIVE INDUSTRY IN HUNGARY

5 key arguments that make Hungary an ideal location for investments in automotive industry:

• Tradition of innovation – e.g. János Csonka invented carburettor in 1890, Ferenc Pavlics created moon walker and Mars vehicles from 1961–1988 or Ferenc Anisits managed BMW diesel engine development from 1981–1999,

• Availability of talented, creative, flexible and qualified labour pool (3,500 of 97,000 employees in the automotive industry are academically qualified engineers),

• Central location, a possible hub for Europe,

• Reasonable and competitive labour costs combined with the highest productivity in CEE,

• Excellent local supplier network.

Hungary has longstanding traditions in the motor industry which celebrated its centennial last year.

Automotive industry is one of the economic sectors that has benefited the most from the heavy foreign direct investment inflows after the change of regime. Quarter of total FDI in manufacturing is invested in the automotive industry. Like the whole manufacturing sector, automotive is FDI driven and mainly pulled by the foreign companies invested in Hungary since the 1990’s. Simultaneously the small and medium-sized local automotive companies had become stable and strategic partners of local based and Western-European car manufacturers. Owing to the quick introduction of modern corporate management and quality assurance systems, productivity in Hungary reaches the Western-European average.

Source: Hungarian Central Statistical Office, *ITD estimate
Automotive sector contributes to the total industrial output with EUR 10.6 billion which is 16% of the total amount. Since the motor companies especially OEMs and TIER1s manufacture mainly for export, the 630 automotive companies’ account for 25% of total exports.

Manufacturers, such as Suzuki or Audi, are continuously expanding their capacities and their workforce so that they meet growing demand. This is one of the reasons why 14 out of the world’s top 20 TIER1s have already established their operations in Hungary. Another reason is the country’s central geographical location. As a part of the “Detroit East” countries, Hungary can supply the manufacturers and the customers in the neighbouring Central and Eastern, Western and Southern European countries.

source: Association of the Hungarian Automotive Industry; *ITDH estimate

The superb network of technical colleges and universities provides excellent training and education for engineers. The automotive industry today employs approximately 97,000 people in Hungary, out of which 3,500 are highly qualified engineers. Thereof more than 50% of them are mechanical engineers, 11% are information-systems engineers, 10% are electrical engineers, 9% are automotive engineers and 39 % are quality-assurance engineers and chemical engineers. Almost 20% of the working engineers are engaged in product-improvement, while the others are active in technological development, production, quality assurance and sales.

Recognising the availability high level of the skilled, talented workforce and positive experiences of the already present foreign companies, many of the majors have chosen Hungary for their research activities, such companies include: Audi, Bosch, Knorr-Bremse, Magna-Steyr, ThyssenKrupp, Arvin Meritor, Denso, Continental, Visteon, WET, Draxlmaier, Edag and Temic Telefunken.

Latest Greenfield investments:
Tha Japanese Bridgestone has brought its breakthrough BIRD production system out of Japan to Hungary. By investing EUR 195 million in Tatabánya, the company builds a construction facility capable of a 8,000 tyres per day capacity with 185 employees.
The Korean Hankook Tire will invest EUR 528 million by 2010 in its Dunaújváros facility that will produce 10 million tyres per year and employ 1,500 people.
The Japanese Asahi Glass has invested USD 162 million to build its facility in Tatabánya that will employ 600 people to produce safety glasses.
The Japanese Ibiden has invested more than EUR 100 million in the first phase in its factory in Dunavarsány and will employ 1,200 people to produce ceramic filters for diesel engines.

The German ZF Hungary is investing EUR 74 million in Eger to build its second manufacturing operation in Hungary. On 15,000 sq m premises with 1,400 employees will manufacture 1.2 million steering gears, 1.7 million A/C pumps and 120,000 gearboxes per year.

The most outstanding investors are awarded by the Minister of Economy and Transport for their contribution to the economy every year in 6 categories.
In 2005 out of the six awards 3 were received by companies from the automotive sector:
Ibiden, Largest Greenfield Investment Award for its new plant in Dunavarsány,
Suzuki, Largest Expansion Award at its Esztergom plant,
Audi, R&D Cooperation Award for its R&D collaboration with the University of Győr and Budapest.

In 2006 two automotive companies were awarded:
Asahi Glass, Largest Greenfield Investment Award for its factory in Tatabánya
Bosch, R&D Cooperation Award for its R&D collaboration with the University of Miskolc

Testimonials by foreign automotive companies in Hungary:
“The management of the AUDI Hungaria Motor Ltd. is proud of the company
having become one of the greatest investors in Hungary thanks to the steady
flow of success since the foundation. Our output level amounts close to 1.8
million of engines a year, and owing to our motor development centre,
machine tool factory as well as production designing and product
construction we are the determining force in the Hungarian and European
automobile industry.” Thomas Faustmann, CEO // Audi Hungaria Motor Ltd.

“I’m convinced that Suzuki made the right decision in choosing Hungary for its European
general headquarters: the move has proved to be hugely beneficial for us, as sales figures
have been demonstrating for the last 15 years. The strategic rationale for this decision was
to achieve maximum synergy by combining two great assets: the reliable and economical
product range designed by Japanese engineers to meet continuously evolving market
demands, and the creativity, excellent problem-solving abilities and discipline of the
Hungarian work force. The plan’s success is evident in the unsurpassed quality of the Suzuki
automobiles and auto parts manufactured here in Hungary.” Kazuhisa Toda, General
Director // Magyar Suzuki Corporation

“People make the difference” A creative and
flexible workforce is one of the strengths
that helps General Motors Powertrain
Hungary to successfully meet the challenges
facing today’s rapidly changing automotive
industry. Rudolf Hamp, General Director //
General Motors Powertrain, Hungary Ltd.

Further information available at ITDH:
– production, sales statistics
– automotive directory
– wages in the industry
– clusters, associations, corporate research centres, centres of excellence
– relevant secondary and tertiary education statistics