Budapest Business Journal 2710 by Business Publishing Services Kft.

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

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BUSINESS JOURNAL BUDAPEST

VOL. 27. NUMBER 10

MAY 24 – JUNE 6, 2019

SPECIAL REPORT

Automotive SPECIAL REPORT

Automotive: Electric, Autonomous, Connected and Shared The importance of the car sector to Hungary’s economy is underlined by a survey of its market players undertaken for the first time by the Hungarian Investment Promotion Agency, the results of which are due to be unveiled at HIPA’s annual Automotive Conference on May 29. 16 BUSINESS

Race to Maximize the Success of Streaming For Hungarian viewers, HBO and Netflix and the like will probably never bring as many benefits as they do for their U.S. or Latin American peers, but they can still be a rewarding investment.  10

SOCIALITE

Electrifying Mobility

Talking Roma Cops and High Level Intrigue David Holzer meets Adam LeBor, the former foreign correspondent turned writer of the atmospheric crime thrillers “District VIII” and “Kossuth Square”, featuring the Roma cop Balthazar Kovacs.  22

NEWS

Brain Bar: Dangerous Ideas are Welcome On May 30 and 31, the Corvinus Campus in Budapest will host the annual Brain Bar, celebrated by internationally respected American hi-tech bible Wired as an event where “dangerous ideas” are welcome.  5

AL R PEC I

EPOR

PwC e-mobility expert Péter Bársony says the market is growing and praises the impact of state-owned e-Mobi, but says new legislation is urgently needed to help frame and promote growth, and warns the country will miss its 2020 BUSINESS EV target. 12

Closing the Circle on Plastic Recycling The young professionals behind the Denmark-based startup BlueBenu, which aims to tackle the issue of plastic waste, have been in Budapest as part of the Design Terminal mentoring program.  6

2 | 1 News BBJ

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester Eddy,

Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Bálint Szőnyi, Zsófia Végh. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

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Budapest Business Journal | May 24 – June 6, 2019

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HUNGARY MUST BOTH BUILD AND CREATE TO THRIVE Take a look at the facts and figures contained within this issue’s Special Report, and it is obvious the huge significance the automotive industry has for Hungary’s relatively small but exceedingly open economy. That’s fine in boom times, when the living is easy, fish are leaping and people are rushing headlong to buy a new auto. But automotive overdependence caries its own risks; just ask the Czechs. As our financial investment columnist Les Nemethy is always reminding us, the wise investor runs a diversified portfolio to mitigate risks. And as all good house wives and house husbands know, you don’t place all your eggs in one basket. When Daimler AG announced it was to build a second Mercedes factory at its Kecskemét base, it was done with much fanfare, and rightly so; EUR 1 billion factories do not come along every day. This was to be a so-called “full-flex plant”, one able to produce various kinds of vehicles from compact cars to larger sedans. The automaker didn’t say what models would be produced at the new plant other than that they would be both front- and rear-wheel drive models. But that was back in 2016, when the German economy was more buoyant. Now the waters have turned choppy, not helped by the headwinds from the on-off U.S.-China trade war, falling vehicles consumption in China, and the possibility of higher U.S. tariffs on European cars. And last week we learned, courtesy of German business daily Handelsblatt, that the Daimler board was to postpone the second factory and that BMW, although plowing ahead with its plant for now, was also giving the matter serious consideration. Flagship factories for marque brands look good, but there is a reason the Hungarian government was so excited by the

November 2018 announcement that Jaguar Land Rover is to place a technical engineering office in Budapest to support its European supply chain management. Partly the government was simply delighted by the competitive nature of winning the business in a regional competition, but more than that, it was the embodiment of the shift from the “Made in Hungary” concept to “Designed in Hungary”. On the face of it, a factory is a bigger commitment than an office, harder to move. But the work done in a technical engineering office is much more about brainpower than operating machinery; it is less directly susceptible to those choppy seas than manufacturing. In truth, no politician is going to turn down the chance of securing a shiny new factory deal. It resonates with voters, and speaks to our deep desire to want to build things, especially when it involves high end engineering and mechanics. But just like a good investor, prudent governments need a healthy balance between investment types. A Daimler spokesperson has since told index.hu that the Mercedes project is not in danger, the firm still plans to start manufacturing in 2020, and that a temporarily suspended factory should not be a surprise given the economics and that Daimler is run to make a profit. BMW has apparently assured the government it will be going ahead as planned. Automotive is going to continue to be a huge factor in Hungary’s economy. As Róbert Ésik, the president of the Hungarian Investment Promotion Agency says in our exclusive interview, one of his jobs is to make sure the industry and its investment here are as future proof as possible. Robin Marshall Editor-in-chief

Harvard Law Grads Meet in Budapest Harvard Law School Association of Europe will hold its annual reunion in Budapest from May 30-June 2. BBJ STAFF

“It is the first time that the Harvard Law School Association of Europe will host its annual reunion in Budapest. We expect around 150-200 high level Harvard alumni participants (lawyers, businessmen, academics, politicians) mainly from Europe,” Andrea Jádi Németh, one of the organizers, told the Budapest Business Journal. Events kick off on Thursday with an opening reception and dinner at the Hungarian Academy of Sciences from 7 p.m., featuring speeches by Salvo Arena, president of the HLSAE, Jádi Németh, president of Harvard Club Hungary, and István Stumpf, a member of Hungarian Constitutional Court. Friday morning sees a Danube cruise to the ancient Hungarian royal seat of Visegrád, followed by lunch in the town with keynote speaker Dr. Dénes Kemény, the former coach of the Olympic, World and European Championship-winning Hungarian men’s water polo team. The evening promises a festive reception at The Museum of Fine Arts including a private guided visit of the temporary Michelangelo exhibition and a welcome address by Dr. László Trócsányi, Minister of Justice. It will also feature a musical performance by internationally renowned soprano Andrea Rost and prodigy cellist Aleksander Simic. The night is rounded off from 11 p.m. with a visit to the Szimpla Kert ruin pub. Saturday starts gently with a guided tour of the Buda Castle area, before a private visit to

Harvard students at their graduation ceremonies on Commencement Day in Cambridge, MA. Photo by Jannis Tobias Werner/Shutterstock.com. the Hungarian Parliament at 1 p.m. for lunch and an academic session. The opening address will be given by László Palkovics, Minister for Technology and Innovation, with Prof. Christopher T. Bavitz of Harvard Law School (WilmerHale Clinical Professor of Law and the managing director of the Cyberlaw Clinic at the Berkman Klein Center for Internet and Society) delivering the keynote speech. That is followed by the annual meeting of the Harvard Law School Association of Europe. The evening sees a gala dinner and dancing at the Kiscelli museum, and the presentation of the HLSAE award. Guest of honor will be the Hungarian actress and producer Andrea Osvárt, with an artistic performance by the Hungarian 100 Members Gipsy Orchestra Sunday starts with an optional visit to the historic Széchenyi Thermal Baths, followed by a farewell brunch at the Corinthia Hotel Budapest. Harvard is the oldest continuously operating law school in the United States and is considered one of the most prestigious of its type in the world.

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

News///macroscope

Hungarian Economy Takes Leading Position in EU

The Hungarian economy showed a surprisingly strong performance in the first quarter of the year, not only in regional context, but even from an EU perspective. The 5.3% growth rate beat analysts’ expectations; however, a slowdown is expected for the rest of this year and for next.

ZSÓFIA CZIFRA

Having beaten market estimates, the Hungarian economy grew by a robust 5.3% in the first quarter of the year, according to the first reading of the data released by the Central Statistical Office (KSH). Seasonal- and calendar-adjusted data shows a 5.2% increase in the first three months of the year, above the consensual market expectations of 5.1%. This makes it the country’s second highest quarter of growth since 1996. Annual growth in Q1 2018 was 4.6%, while for the entire year of 2018 it was 4.9%. According to KSH, the main contributors to the growth were industry, construction and market-based services. GDP growth in Q1 was mainly boosted by an increase in investments, exports, jobs and wages, Minister of Finance Mihály Varga said in a reaction to the data, reminding that the government currently expects GDP to grow by 4.1% in both 2019 and 2020. Varga said that the last time economic growth in the first quarter of a year was similarly large was back in 2000, halfway through Fidesz’ first term in office; however, he also noted that back then government debt was also growing, which is not the case this time. Analysts were taken by surprise by the data. Gergely Suppan of Takarékbank expects a gradual slow-down in the

General Government Balance in Hungary (January-April 2019) Balance of the central budget (HUF billion)

General government balance (excluding local governments) (HUF billion)

-39.0

-80.7

-1119.5

-1081.4

Source:

coming quarters, mainly due to the ascending base effect; however, the annual growth rate might still reach 4.7% this year, and could come to 3.7% in 2020, he said.

External Environment

The better-than-expected figures came out in the midst of a somewhat worsening external environment, Gábor Regős, head of macroeconomics research at Századvég Gazdaságkutató emphasized, referring mainly to the slowing economy of Germany, which is Hungary’s largest export partner. Based on the first quarter data, he expects that the annual GDP growth will exceed 4% this year, while problems in the EU and in the global economy might pose a risk to the growth. According to Orsolya Nyeste of Erste Bank, the main driver of the economic growth is still the strong domestic consumption, which is backed by a tight labor market, and the ever growing wages this year. The bank is likely to raise its GDP forecast for this year based on the first quarter figures, from 3.8% to above 4%. Following the strong first quarter, the rest of the year might bring slower growth,

Dávid Németh, head analyst at K&H Bank said. The contribution of the construction sector will be somewhat lower in the coming months, and the agrarian sector also poses downward risks. All in all, the Hungarian economy might expand by an annual 4-4.5% in 2019, he predicted.. According to the latest data gathered by Eurostat, the European Union’s statistical body, the growth rate of the Hungarian economy was the best in the block. While economic growth also accelerated in the euro area and the wider EU-28 in Q1 compared to Q4 2018, Hungary’s economy grew at the fastest pace quarterly and annually.

Pack Leader

Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 1.2% in the eurozone and by 1.5% in the EU in Q1 2019. Hungary’s economy grew by 1.5% quarter-on-quarter and 5.2% year-on-year. With an annual GDP growth of 5.1%, Romania came second, while, Poland was third with 4.6%. That said, however, the first quarter data for eight countries (Estonia, Ireland, Greece, Croatia, Luxembourg, Malta, Slovenia and Sweden) are not yet available.

In spite of the outstanding performance and the fact that many international organizations have updated their GDP forecasts for Hungary, the OECD has stuck to its forecast of Hungarian economic growth of 3.9% this year. This projection is just below the Hungarian government’s 4% target; as for next year, the OECD says that growth will be 3%. According to the organization, private consumption remains strong, helped by rising real incomes and high consumer confidence coupled with supportive macroeconomic policies. Investment growth is “buoyant”, supported by EU funding, housing subsidy schemes and expanding production capacity, it added.

According to the latest data gathered by Eurostat, the European Union’s statistical body, the growth rate of the Hungarian economy was the best in the block. While economic growth also accelerated in the euro area and the wider EU-28 in Q1 compared to Q4 2018, Hungary’s economy grew at the fastest pace quarterly and annually. Hungary’s “strong recovery is an opportunity to introduce measures to improve fiscal sustainability, reduce old-age poverty and address access challenges in the pension and health system”, the OECD said. In a reaction to the report, Gábor Gion, state secretary for financial policy affairs, said the OECD’s forecast confirmed that Hungary was one of the most dynamically growing European Union member states.

Numbers to Watch in the Coming Weeks The KSH will publish data of the Hungarian labor market on May 29 for the February-April 2019 period. The next day will shed light on the investment figures of the first quarter of 2019, followed by the second estimate of the first quarter GDP figures.

4 | 1 News

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Protected Liget Center Changes Hands Again not only through development projects, but though the acquisition of buildings with huge potential and value as well. The location of the Liget Center complex is excellent, and the redevelopment of the Városliget will further boost the value of its location,” Steinberg explains. M7 Real Estate purchased the Liget Center in 2017 on behalf of the Central European Real Estate Fund 1 and has maintained

Wing has purchased the 7,000 sqm Liget Center Office, a protected Hungarian building as an example of Hungarian modernist functional architecture, located on Dózsa Győrgy út at the edge of the Városliget (City Park), from the U.K.based investor and asset manager, M7 Real Estate.

100% occupancy

GARY J. MORRELL

The building was originally delivered in 1950 and was at one time the headquarters of the Magyar Építőipari Munkások Országos Szövetsége (National Association of Hungarian Construction Workers) trade union. ING Real Estate bought the building and undertook its complete renovation and redevelopment of the building in 2002, to the designs of the renowned Dutch architect Erik van Egeraat. The redevelopment was considered an achievement, giving a long-term function as a class “A” commercial office building to what had been a run-down protected building. The property now consists of 7,000 sqm of fully let offices and a

3,800 sqm auditorium

connected by a corridor to the office area. The offices are fully let, although the large auditorium has been vacant

Liget Center, purchased by Wing. for years and Wing says it aims to find an appropriate function for the area. M7 undertook preparatory works for the redevelopment in order to make the project more attractive to potential investors while Tomlin, a multi-disciplinary Hungarian engineering and management services firm, acted as technical consultants for Wing on the deal. “We consider it our mission to preserve the Hungarian architectural heritage that defines Budapest, while finding new purposes for vacant properties. Its clean lines, spatial arrangement and architectural quality made this building

one of the best office buildings in Budapest both when it was constructed, and to this day,” says Noah Steinberg, chairman & CEO of Wing.

Long-term Strategy

“Moreover, the purchase of Liget Center perfectly fits into Wing’s long-term strategy to expand our property portfolio

at the project. “Within an efficient timeframe, we have executed our business plan for the Liget Center and sold the asset to a highquality buyer. Following initial works at the former auditorium, we have also created the potential for a new development at the scheme,” comments Balázs Magyar, managing director for Hungary at M7. The office sector is generally regarded as the investment destination of choice in Budapest, given the background of a limited supply of investment grade office assets and increasing demand. The acquisition reflects the attraction not only of new office projects, but also redevelopments; more investment transactions are being concluded for earlier generation office complexes such as Liget Center with value-add potential. “We are both developers and investors as we hold a large portfolio of properties, both assets that we have developed ourselves and properties that we have found in the market. We have found a niche in the market with investment projects that are too Hungarian for some institutional investors but too complex for some local investors and we are able to add value,” Steinberg adds.

Ecodome Awarded ’Platinum’ Certification Redwood Holding originally bought the The 5,000 sqm Ecodome office, located close to the development plot in 2007 in a tender un by Castle District, has become the third Budapest office the local municipality, but the project was put on hold due to the economic downturn. complex to be awarded LEED (Leadership in Energy Redwood subsequently acquired modified development permits in 2011 for the project to & Environmental Design) “Platinum” accreditation. meet the changing demands of tenants and a redesign was undertaken by DVM Group. The complex, a project by the Hungarian developer Tenant Demands Redwood Holding, was sold onto a group of “We were granted the first building permit in 2009 and at that stage we had already Hungarian investors prior to delivery.

GARY J. MORRELL

The highest category of award in the LEED system is given for projects achieving

80 plus

points after assessment by a third party professional. With regard to sustainability of sites, points are awarded for such issues as: development density and community connectivity, construction site activity pollution prevention, public transportation access,

provision of bicycle storage and changing facilities, alternative transportation parking capacity and maximization of open space. Points for water and energy efficiency are given for water-use reduction, innovative waste water solutions and water usage reduction, optimization of energy performance, and on-site renewable energy. Issues dealing with environmental quality include increased ventilation, biophilic design for the indoor environment. The LEED assessor on the project was Edina Hornok, head of sustainability consultancy at DVM Group

to services.[…] We would like to develop an at least 20,000 sqm project or an office at a AAA location, a size and location that is needed to justify the requirements of tenants,” he added. The other LEED “Platinum” accredited office developments in Budapest are the 21,000 sqm White House by GTC and Green House by Skanska, subsequently purchased by investors.

considered and incorporated features that confirm to sustainability accreditation and energy efficiency in response to developing tenant demands,” commented Bálint Erdei, founder & CEO of Redwood Real Estate. Elsewhere, the company is due to deliver the Hard Rock Hotel in the center of Budapest by the end of this year. The 10,000 sqm,

140 room

hotel complex will be the first Hard Rock managed hotel in Europe. “Office development requires a location in a good environment with direct access

Ecodome office center

1 News | 5

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Seeking a Higher Public Awareness for AI

Brain Bar: Where Dangerous Ideas are Welcome

Local stakeholders must work together to achieve a breakthrough in helping Artificial Intelligence-based tech gain market traction. Presenting their solutions to the public is key to the process, hence a recent exhibition staged by the AI Coalition.

On May 30 and 31, the Corvinus Campus in Budapest will host the annual Brain Bar, celebrated by internationally respected American hi-tech bible Wired as an event where “dangerous ideas” are welcome.

BÁLINT SZŐNYI

Local stakeholders are increasingly seeking visibility and cooperation to benefit from the tremendous potential Artificial Intelligence offers. One of the latest demonstrations of such efforts took place at an interactive exhibit by AI Coalition Hungary, a platform that brings together business, academia, research and government to find synergies in relation to AI-based solutions. Twenty exhibitors put their tech on display. “Artificial Intelligence can turn into an important engine of the Hungarian economy, securing a strategic position for Hungary in the field,” said Károly Balázs Solymár, deputy state secretary for ICT at the Ministry of Innovation and Technology. He was speaking at the AI exhibition at the Budapest University of Technology and Economics on May 9; there are hopes it will becomes an annual event. Noting that the value of global AI markets is set to hike by an

online conversations between fleshand-blood fellow officers. It can even ask colleagues questions to clear any concerns and to vote on whether the loan can be granted or not. Fókusz Takarékszövetkezet is an early adopter of that solution. “The biggest assets of the system are that it’s tireless and unbiased,” CEO István Sebestyén says of its first-hand experience.

annual

50%

between now and 2025, Solymár added that data policy deserves a special focus from the government, since it is imperative to allow public data to be used for AI purposes. The exhibition gave a taste of the wide range of use cases from robotic assistants to speech recognition. A great example of the latter is Clementine’s solution that turns hundreds of hours of call center recordings into text overnight. It also analyzes their content by the next morning, so performance reports can give a lot more detailed picture of how customer service works. “The system has shown that a lot more valuable information is created during customer interactions than you might think,” said György Körmendi, Clementine’s CEO. Since they also hand over the know-how of the product, internal staff of clients trained by Clementine can add new features as they see fit. “Feedback says that quality assurance of customer service has improved,” said Körmendi.

Virtual Loan Officer

Clementine has something innovative for handling loan applications in a more sophisticated manner as well. Its virtual loan officer assesses risk factors by reviewing not only all application-related documents but also previous relevant

Károly Balázs Solymár “This is important since we put extra emphasis on assessing loan applications within the shortest possible timeframe. On the other hand, the judgment of the automated system is not clouded by any bias, which ensures that every loan application is subject to the same evaluation process.” Logistics is another industry that can benefit from AI-based cost optimization. Dmlab’s application gives permanent feedback to drivers on how cost-efficiently they drive under any given conditions, and it also advises them when to use cruise control. The technology has earned Dmlab’s client Trans-Sped annual savings of

up to

HUF 60 million.

As Dmlab CEO Csaba Gáspár pointed out, big data, Artificial Intelligence and machine learning solutions create real value and advantages for businesses. “At the exhibit, those who have assessed their own sheer volume of data assets came to our stand with specific questions in mind,” he said. “In a way it was surprising to see how many were interested in the technology, but it is also somewhat understandable given the huge number of devices and processes out there that run on AI.”

DAVID HOLZER

This year’s dangerous ideas include whether we’re getting addicted to information, if we have any reason to be optimistic in these times of turmoil and whether philosophy can save business. The people behind Brain Bar call themselves “The world’s first Futuretainment company”. Futuretainment is apparently a “new media concept uniting elements from education, focusing on the future.” Brain Bar is big on the future. It sees itself as a global partner for those who shape the future, uniting young innovators, students, educators and big business in one place where they can learn from each other. The event gathers “the most interesting ideas from different fields and brings them together.” Speakers this year include the currently controversial Canadian clinical psychologist Jordan Peterson, described as a “life-changing professor of psychology” and Sherin Khankan, the first female imam in Scandinavia. On the face of it, the worldviews of Khankan and Peterson are poles apart so it’s definitely an achievement to have these two at the same event. Not as controversial but no less intriguing, other speakers include Sára Fábián, founder of Amigos for Children, the non-profit dedicated to preventing child abuse; Lajos Antal, Hungarian master of cyber-security; and bohemian soul diva Antonia Vai. Crime writer, writing coach and journalist Adam LeBor (see “Talking Roma Cops and High Level Intrigue With Adam LeBor” on page 22 in this issue of Budapest Business Journal) is also speaking. He told me, “As so much of the world clamps down on free speech, Brain Bar is an ever more important arena for the exchange of ideas. I’m very pleased to be part of it.”

More than Friends?

Sophia the Robot is also appearing and will reveal whether she would sacrifice herself for a human and whether we could be more than friends. Brands involved with Brain Bar include Google, BMW, KPMG, BlackRock, Bosch, T-Mobile, Red Bull and Vodafone. According to the organizers, the idea is to connect brands to creative people and hope the connection will change the world. Apart from presentations by the speakers, Brain Bar incorporates sessions that are designed to be audience-centric and encourage healthy dissent. Since the Brain Bar literature states that, in previous years, the youngest visitor was four years old and the oldest was 71, this should be interesting. Mythburn invites Brain Bar masterminds to debunk myths and send them up in flames. Battle of Minds is billed as “a frantic battle over the edgiest and most controversial issues of the future”, intended to encourage audience members to step outside their comfort zones. The Turning Point and Future Jobs sessions are probably the most important for young Hungarians. Turning Point offers audience members who were chosen

from

60-second

videos two minutes on stage to grill and challenge a mastermind. Future Jobs is described as a “next-generation job fair and a unique employer branding event where companies offer specially selected jobs.” Among the quotes on the Brain Bar publicity literature, is this one from Chris Hadfield, perhaps the world’s best-known living astronaut: “To think about the future and technology differently, that’s what Brain Bar does.” That’s probably enough.

Find out more and get your tickets at www.brainbar.com.

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Business

Closing the Circle on Plastic Recycling Four young professionals behind the Denmark-based startup BlueBenu, which aims to tackle the issue of plastic waste, have been in Budapest as part of the Design Terminal mentoring program. ZSÓFIA VÉGH

Unlike other methods on the market, BlueBenu’s solution is able to turn unsorted, unclean plastic waste into new plastic product while also producing eco-fuel along the way. The Budapest Business Journal talked with CEO Sarah Lasso and CTO Albert Kravos. BBJ: Right at the top of the list of recommendations to reduce plastic waste is cutting the use of single-use plastic bags. What role do you think recycling has here? Albert Kravos: Single-use plastic bags have their downsides but the biggest problem is that people don’t throw them in the trash or separate them appropriately. Consumers are responsible for the first separation and proper sorting before plastic enters the recycling bins. Governments should be responsible for providing local recycling stations instead of shipping waste overseas to places where policies are not applied vigorously, are poorly supervised, or not enforced at all by the authorities. Our plans extend to tackle the waste of poor communities, in order to address the source of plastic pollution and give waste plastics a means for recycling. Sarah Lasso: Sometimes communities are environmentally aware but have no waste management practices; they have no other choice but burning or throwing it away in improper locations such as the open environment. We want to give them an option to not only recycle, but also to use the potential of the plastic as a resource. BBJ: In what way does your solution differ from similar ones already on the market? AK: There are many ways to recycle plastic but they mainly need the waste to be sorted and cleaned. Our method is much more flexible as it can handle plastic that is contaminated or mixed with organic matter. This conversion process itself is not

Sarah Lasso (left) and Albert Kravos of BlueBenu. new. We have, however, adapted it from exclusively treating biomass to a more versatile use and to tackle plastic feedstock that cannot be traditionally recycled or is tricky to work with. The technology is called hydrothermal liquefaction, where we basically pressure cook the plastic with water in order to bring the material back to its original petroleum form. As an output, we have different product streams, one is eco-fuel. The fuel produced depends on the feedstock: in the beginning it would resemble light sweet crude oil, which needs to be refined to be used in cars. It could also be directly used in ships and heavy-fuel oil engines. In the long run, we aim to produce jet fuel, it being difficult to replace otherwise. Our ultimate purpose, however, is not to produce fuel but rather new virgin plastics and high value petrochemicals to close the circular economy of plastics and considerably reduce emissions. SL: In the beginning, the idea was to fully focus on maritime as ships use very lowquality fuel. Also, there have been many new legislations that they have to comply with. We moved away from the maritime fuel idea to focus on a fully circular economy process of reintegration of waste in the system as high value products. These new propositions have the potential to generate bigger socio-economic value for communities around the globe. BBJ: Where are you at with development? SL: Right now we are at the prototype stage, but we are a bit slow due to lack of funding and also because we are trying to develop it together with the market so

as to comply with pre-existing standards for specific industrial uses. It is a very complex and expensive project and we want to ensure a perfect product/market fit.

“We moved away from the maritime fuel idea to focus on a fully circular economy process of reintegration of waste in the system as high value products. These new propositions have the potential to generate bigger socio-economic value for communities around the globe.” AK: The product is a small containersized reactor which was designed in the first place to convert biomass into biodiesel. We are redesigning the reactor so that it can also accept mixed plastics and run continually. BBJ: Are you already in touch with companies? SL: We have partnered with Spike Renewables, an equipment manufacturer based in Florence. We have established contacts with municipalities and public bodies in Myanmar and Denmark. Municipalities are responsible for

implementing waste collection systems and either end up sending the plastic fraction to incineration or landfill. Here we want to open new solutions. And we are still in contact with the Danish maritime industry and associations for treating marine litter brought to shore by vessels and fisherman. BBJ: Why did you choose to come to Hungary and participate here in a mentoring program? SL: We are based in Denmark so we are familiar with the Scandinavian market. We wanted to open up a bit; looking for new partnerships, seeing how other markets operate. At Design Terminal’s mentoring program we participate in training, mentoring and meetings with corporate partners. This is also a community of committed startups that will be a promising network for the future. Moreover, we are experiencing personal growth and also sharpen our expertise in many different sectors. AK: During the power camp, we made contacts with some local refineries, which helps us to better understand their limitations in terms of infrastructure, so we got a clear idea of what fuels they will or will not accept. As a result, we can streamline our product development. We have also learnt more about market analysis in this way. We are looking for funding opportunities, although, we may still be early for angel investment as we are dealing with expensive hardware; we are not sure if dilution would be beneficial at this stage. We are currently applying for soft funds from the [Danish] government and the EU.

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Business

Asset Classes: the ‘Hybrid’ Preferred Stock In the latest in a series that aims to provide readers with information to help create a balanced investment portfolio, with acceptable yield, Les Nemethy and Loïc Cayssol look at preferred stocks.

Selected Preferreds Based on Dividend Yield Stock Symbol

Company Name

Dividend Yield

Current Price

Annual Dividend

52-Week High

52-Week Low

AHT-D

Ashford Hospitality Trust Inc 8.45% Cum Pfd Series D

8.37%

$25.25

$2.11

26.0

25.06

C-N

Citigroup Capital XIII Tr Pfd Secs Fixed/Fltg

8.33%

$27.18

$2.26

27.81

25.85

NYMTN

New York Mortgage Trust, Inc. 8% Cumulative Redeemable Perpetual Preferred Stock Series D

8.29%

$24.12

$2.00

DX-B

Deutsche Bank Contingent Cap TR II Tr Pfd Sec

7.89%

$24.17

$1.91

25.16

23.25

IVR-C

Invesco Mortgage Capital Inc Cumulative Redeemable Preferred Shares Series C

7.36%

$25.46

$1.88

SHO-E

Sunstone Hotel Investors, Inc. 6.95% Series E Cumulative Redeemable Preferred Stock

6.58%

$26.42

$1.74

27.22

24.65

BAC-W

Bank of America Corporation Deposit Shs Repr 1/1000th % Non-cumulative Preferred Shares Series W

6.41%

$25.85

$1.66

Source: Dividend.com

When investing in equities, investors have two main choices: common stocks or preferred shares. Whereas the previous article in this series dealt with common shares, this article focuses on preferred shares. Preferred shares enjoy some form of preference over common shares: this may be with respect to payment of dividends, or preference in terms of receiving funds upon liquidation of a company, or both. Sometimes preferred shares are also convertible into common shares. Preferred shares may also be voting or non-voting. They are known as a “hybrid” instrument, because they contain certain elements of equity and certain elements of debt, usually also having higher risk than debt, but lower risk than common equity. Preferred shares are a fixed-income investment; i.e. it pays out fixed earnings (dividends) on a regular schedule and is issued at a “par value”, for which it may be redeemed at a specified later date. Preferred shares generally have higher yield than bonds, to compensate for the higher risk, since their level of seniority is lower than bonds. An important feature of preferred shares is whether the dividends are cumulative

or not. In a cumulative issue, unpaid dividends accumulate in a notional account and before any dividend may be paid to common stockholders, this balance must be entirely distributed to preferred shareholders. Conversely, in a noncumulative issue, if a dividend payment is skipped, the preferred shareholder will never receive it. Preference shares and bonds are practical ways for a company to raise money without issuing new common shares, which are more expensive and dilute voting rights. Banks, insurance companies and utilities are typical issuers of preferred stocks. The market for preferred shares is a small one, because only a fraction of listed companies issues preference shares.

Improve Diversification

From an investors’ perspective, since preferred securities include features of both bonds and stocks, they may help diversify and strengthen a fixedincome portfolio construction. Preferreds, indeed, generally show relatively low correlation to other fixed income sectors and equities, which

means investing in them can improve overall portfolio diversification. In the current environment of low interest rates and rising volatility, preference shares have a certain attraction. They have typically less sensitivity to rising interest rates. In certain tax jurisdictions, preferred shares can have a significant tax advantages, particularly where dividends are taxed lower than interest. The chart is designed to give the reader an idea of several relatively well-known issuers of preferred shares, and the types of yields available. For those investors who do not have enough resources to manage risk by investing in a diversified portfolio of preferred shares, there are certain Exchange Traded Funds (ETFs) and Closed End Funds (CEFs) that focus on preferred shares. In this context, “closed” means that once the capital is raised for the fund, it is closed to new investment. CEFs start with a set number of shares for the life of the fund and, based on market demand, they may trade well above or below net asset value. In summary, preferred shares provide yet another option for investors to assemble

a diversified portfolio with decent returns, even in a relatively low interest rate environment. Investors forsake the safety of bonds and the uncapped upside of common stocks. Through convertibility, the upside may nevertheless be realized. Disclaimer: This article is intended for informational purposes only, and should not be relied upon for investment advice. Mention of specific equities if not an endorsement, merely to illustrate certain principles. It is very important to do your own investigation and analysis before making any investments based on your own personal circumstances.

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www. businessexitplanningbook.com) and a former president of the American Chamber of Commerce in Hungary.

1054 Budapest, Hercegprímás u. 11. info@madoffbar.com madoffbar.com MADOFF_OroszBarbi_hirdetes_252x77mm_04v.indd 1

2019. 05. 08. 13:57

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Business

WHO’S NEWS

Do you know someone on the move? /// Send information to news@bbj.hu

Hoós to Head EY Hungary’s Financial Services Risk Management

CIB Group started structural reorganization last fall. The arrival of Fekete is the third phase of this project. In line with the company’s growth–oriented Big Four professional services firm long-term strategy, Fekete is tasked with EY has announced the appointment of increasing CIB’s János Hoós as associate partner, leading share of the local EY Hungary’s financial services risk leasing market management team from April. and to boost Hoós, who has more than two decades placements in of experience in the banking sector, will both residential aim to help domestic financial institutions and corporate achieve dynamic growth in the increasingly segments. complex regulatory environment through “I think of it effective digital solutions. as my primary “The banking sector is one of the areas goal to keep Csaba Fekete strengthening the most affected by regulatory changes, such as the forint conversion of foreign market positions currency loans, and the introduction of of one of the most the immediate transaction system,” says significant companies on the Hungarian Hoós. “These measures have especially leasing market,” Fekete noted. burdened financial Due partly to the central bank’s new institutions. Now, “Growth Loan fix” (“NHP fix”) growth however, the credit package, new leasing financing is industry can expected to increase by more than 20%, feel relieved and according to Balázs Szabó, head of CIB’s turn towards corporate branch. growth and digital transformation Szirmák Named once again.” IPF’s European Head Hoós arrives at of Home Credit EY from ApPello, János Hoós a major banking Botond Szirmák, head of Provident Pénzügyi Zrt., has been appointed software supplier European home credit general manager in the CEE of the firm’s parent, British-based region, where he acted as CCO. International Personal Finance (IPF. Hoós started his career in 1998 at Szirmák will keep his current position at ABN Amro Bank, after earning his Provident Pénzügyi, but the appointment master’s degree at Corvinus University of means that he will Budapest (then the Budapest University be responsible of Economics). He worked at K&H Bank for the Romanian, between 2004 and 2016, in multiple Czech, and Polish positions such as senior audit advisor. markets, alongside During his tenure at the bank, he was the Hungarian one. responsible for projects such as the Basel “It is an honor II transformation, the introduction of the that the decisionbank’s credit financing system, and the makers of our standardization of modeling activities. parent company CIB Lízing Appoints CEO entrusted me CIB Lízing Group has announced the Botond Szirmák with leading appointment of Csaba Fekete as CEO as this strategically part of ongoing structural reorganization. important Fekete will be in charge of bank European business branch,” said Szirmák. cross-sales as well as vendor financing. “I will do everything to let our member The professional has a proven track countries coordinate their innovation record of more than two decades in processes via the central control of our the finance industry. home credit functions. Among other ADVERTISEMENT

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Budapest Business Journal | May 24 – June 6, 2019

Partner Appointments at Process Solutions Independent accounting business Process Solutions Kft. has announced the appointment of four new partners, within the framework of an organizational restructuring begun in February, according to a press release sent to the Budapest Business Journal. The new partners have been with the firm for a number of years; Tibor Tóth since 2003, Gyöngyvér Menyhárt since 2004, Dániel Sahó since 2005, and Balázs Urbán since 2011. As managers, they contributed to the coordination of the company’s largest international projects in the last decade. Process Solutions says that the four experts were selected by the board due to their ability to control partner teams without complications, and because their expertise guarantees that the new system will hasten the dynamics

in the company, allowing fast and efficient decision-making, as well as the most optimal capacity management possible. While the company has been conducting operations divided into management teams since 2014, the dynamic growth of the past few years necessitated the renewal of the organizational structure it says. The new partners at the helm of the former management teams will work directly with Process Solutions’ managing partners. “After the rearrangement, the new organizational structure will shape PS’ 2019 year to a great extent, and we will work at making positive changes, expected from the transformation in both everyday operations and the firm’s long-term strategy, felt by our clients and the entire PS team alike,” the company said in a press release.

From left: Dániel Sahó, Balázs Urbán, Gyöngyvér Menyhárt and Tibor Tóth

things, we will incorporate proven practices from each other in fields like credit risk management and HR management, which will strengthen the business successes of the whole company group through collaboration,” he added. Szirmák holds degrees from Corvinus University of Budapest, the University of Debrecen, and Eötvös Loránd University. He joined Provident in 2002, and was appointed head of the Hungarian unit in 2008. In the last

four years, he has also been supervising the operations of IPF’s South European region. Apart from his company positions, Szirmák has also been president of the National Association of Managers since 2015, a board member of the Confederation of Hungarian Employers and Industrialists, a member of the curatorium of the National Handball Academy, and an ambassador of the charitable Csodalámpa Foundation.

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From a New York Trip to Chatbots Spanning Continents Talk-A-Bot is an innovative Hungarian chatbot service provider with a growing clientele of large enterprises and ambitious ideas to spread its ideas to a broader market. BENCE GAÁL

“We had thought of the idea of chatbots before, but it became a reality in 2016, when managing director Ákos Deliága and chief problem solver Gergely Kalydi met with one of Nasdaq’s heads on a study trip to New York,” the company tells the Budapest Business Journal about its beginnings. “During the presentation, they realized what kind of potential chatbots hold, and when Facebook announced it was opening Messenger for chatbots, they immediately began founding the company with head of marketing László Papp and chief technical officer Tamás Szálka.” Since then, Talk-A-Bot has become the leading chatbot service provider not just in Hungary, but in the region. The company attributes that achievement to its way of thinking, which it says differs from that of their competitors; namely, that chatbots are not for “chatting”. “We are planning business solutions for unique business needs,

discussions that really contain functions,” Talk-A-Bot’s founders note. “We put the greatest emphasis on the UX within the bot, the most effective understanding of users’ intentions, and the highest correct answer ratio. This is how the

99%

correct answer

ratio among banking clients is born, while the market benchmark hovers around 20%.” The company aims at decreasing costs and increasing efficiency via corporate system integration such as webshop, database, SAP, CRM, CMS, and ERP; as well as a language system supporting more than 100 languages and a hybrid chat function. “We conduct the marketing of chatbots in-house as well, and the analysis of Big Data information, and the constant development of bots too.”

S TA R T U P S P O T L I G H T

The remainder cover the marketing, client relations, sales, and creative roles. Since its launch, Talk-A-Bot has accumulated a long list of serious market players among its clients, making a name for itself not only in Europe. “We have 35 large enterprise clients, with names such as Erste Bank, Heineken, Nestlé, MOL, OTP, NKM National Utilities, and Árkád. Our chatbots have concluded

million

interactions, with more than three million people using our chatbots,” the company tells the BBJ. “We have strategic partners like Rakuten Techstars, Microsoft, and

PayPal. In 2018, we participated in Rakuten’s accelerator program in Singapore, gaining a EUR 2 million capital investment, opening our first office in Singapore in January 2019, laying the groundwork for our expansion in Southeast Asia.” At the end of May, Talk-A-Bot will participate in the South East Europe Tech Tour event. “Our main goal is European and Southeast Asian expansion. For this, we are seeking appropriate partnership agreements, new business. We consider Tech Tour a high-ranking, special event for building relationships, and fortifying our European position,” the startup said, regarding the event.

Serious Market Players

The startup now has some 50 employees, with 30 working on chatbots, from system architecture to testing.

From left: Gergely Kalydi, László Papp, Ákos Deliága, Tamás Szálka.

The Race to Maximize the Success of Streaming For Hungarian viewers, HBO and Netflix and the like will probably never bring as many benefits as they do for their U.S. or Latin American peers, but they can still be a rewarding investment. ZSÓFIA VÉGH

Game of Thrones is over; the finale of the most popular original series by HBO may have left many sad and others disappointed, while yet more might wonder if there is ever going to be another hit as big. Content makers at HBO are working hard to create something equally “big” but

it is also true that viewing habits have changed. On-demand, streaming services, where everyone watches different things at different times, are now more used than ever, and we are only at the beginning. Businesswise, there is enormous potential for growth in streaming either original content or hits and popular series. Disney has finally decided to fully commit, and it is not by chance that many of the world’s biggest outlets including Amazon and Google, are also entering this segment, despite the fact that streaming videos and creating content for viewers is not exactly their strong suit. This segment is so much on the rise that it may be worth investing in it, according to experts of Equilor Investment Zrt., who recently held a session on investment opportunities in streaming. The service that is best known and is expanding fastest is Netflix. Since its launch in 1997 it has expanded to

Latin America and is growing its viewer base worldwide. Equilor presented three scenarios: basic, optimistic and pessimistic. The first one expects a 20% growth of users in the first five years and puts share price at USD 369.5 in ten years. The optimistic forecast calculates that the number of users will grow

25%

in the first five years, and share price will reach USD 637.7. The pessimistic scenario envisions a 15% growth and USD 194 share price.

Contenders

Netflix’s biggest contender is likely to be current partner Disney; its wide range of films, and franchise rights (not just Disney but also Pixar, Marvel, National Geographic and Star Wars) mean the company is excellently positioned to take a major slice from the streaming cake, once it has disentangled contracts to screen its products with other streaming sites, a process which could take as long as four years, some experts say. Disney+, its self-streaming service, is set to launch in North America, which may increase its viewer base experts currently

put at 25 million by 30% in the first five years, by when shares in Disney+ could be worth USD 29. There are other newcomers in the streaming segment whose future is less clear. One is Apple that aims to become a software service provider and stream video content (besides music and news). Pricing at this stage is unclear but it is unlikely to be profitable in the short term, Equilor notes. Amazon Prime Video is part of the prime service package and as such it is difficult evaluate according to Equilor. It has

100 million

subscribers and its subscription fee is USD 13 per month, but this package also includes other services (such as free shipment), so analysts at Equilor only count a third of it. If Amazon decides to introduce the service outside the United States, the first five years could see its base increase by 15% and in 10 years’ share value could be at USD 20. As for HBO Go, whose studio made Game of Thrones, Equilor calculates with a 10% increase in viewers numbers in five years and a share price of USD 9.5 in ten years’ time.

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Special Report Automotive

Plugging Into an Electrically Chargeable Future 12 Looking to Continue Cruising in Top Gear, Despite Road Bumps

14

Automotive: ‘More Electric, Autonomous, Connected and Shared’

16

Car Sharing Continues to Grow Market 18

The future is electric, connected, shared and autonomous, automotive experts agree. Here is how we get there.

12 | 3

Special Report

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Plugging Into an Electrically Chargeable Future Anyone driving an electric car across Hungary is much better off now than they were two years ago: they don’t need to worry about finding charging points as much, and are much more likely to see other electric vehicles on the road. But legislation to clarify the conditions around charging is still missing and, with the higher number of EVs, some new dilemmas have arisen. ZSÓFIA VÉGH

Since market-setting regulations were introduced in 2016, no significant changes have been made in the legislation around electromobility. The field has moved ahead regardless, in which the scheme to promote the purchase of electric vehicles and the construction of charging infrastructure by both market players and state-owned entities have had some role. However, the market is still awaiting a comprehensive e-mobility law, which would clarify some questions including conditions for charging, whether as a service, or charging at home. A government decree on certain state tasks related to the expansion of electromobility in Hungary, introduced at the end of 2017, is an important milestone, Péter Bársony, e-mobility expert of PwC, tells the Budapest Business Journal. It entrusted e-Mobi Elektromobilitás Nonprofit Kft. with responsibility for improving interconnectivity in the country. Having installed the

300th charger

at the beginning of May, e-Mobi has made a significant contribution to the development of the domestic market, Bársony says.

EV-market in Hungary Q1, 2019

Based on environmental category

Change in the number of newly registered vehicles with green license plate in Hungary (01.10.2015-31.03.2019)

ZEV – 19

BEV – 4,219

PHEV – 2,750

Annual breakdown Period

Number of cars

Annual breakdown

EREV – 2,937 Overall:

PHEV = Plug-in Hybrid Electric Vehicle BEV = Battery Electric Vehicle EREV = Extended Range Electric Vehicle ZEV = Zero-emissions vehicle

Monthly breakdown

Source: JÁK e-mobility industry association, Minister of Interior Department of Transport Administration and Registration, Transport Register

Overall, the construction of charging infrastructure is progressing at a good pace: connectivity has improved much, says the expert. A comprehensive registry of public charging points is still missing, although there are a number of interactive maps that help drivers orientate. According to the official statistics, by the end of last year, there were nearly 600 charging stations in the country; market experts now put this figure at more than 750 which equals more than 1,100 charging points (as there is more than one point at each station).

Business Potential

Having recognized the business potential, market players from the field of energy have taken an active role in the expansion of e-mobility. Eon, one of the pioneers, has installed between 20 and 30 charging stations thus far. It aims to expand further: the company recently signed an agreement with hypermarket chain ALDI according to which it will install chargers in the parking lots of ALDI’s 123 outlets (360 charging points in total). MOL has installed 18 rapid chargers under the NEXT-E program, an EU-project that aims to improve connectivity from the borders of Czech Republic to the Black Sea and the Adria. The network will offer drivers charging points at 252 places, of which MOL will install 100 in the region by the end of this year. A total of

141

charging points

will be available at MOL filling stations, 59 of these in Hungary. The company will also continue its own charger installation program: Budapest will see two new ones soon. ELMŰ-ÉMÁSZ has 65 filling stations, while NKM Mobilitás Kft., a subsidiary of state-owned utilities company Nemzeti

Közművek Zrt. (NKM), has installed nearly 60 chargers so far. Whether it is profitable to operate chargers at this point is questionable. “MOL was the first in Hungary to charge for electric charging, so we cannot talk about a competitive market environment as yet,” says Róbert TóthFekete, head of e-mobility at the Hungarian oil and gas giant.

“It would be important to clarify what we expect from e-mobility. Are we aiming to promote the new top models of the automotive industry or to spread innovative climate protection technology?” “However, MOL doesn’t enter a field where it sees no business potential.” With the systemic expansion of electric cars, e-mobility will certainly become a profitable business in the coming years, he adds. The number of cars with green number plates has also been rising. It is hovering around 10,000; by the end of March, 9,925 cars have been registered according to official statistics (see table). A large proportion of these cars (5,710) are second-hand plug-in hybrids coming from Western Europe.

Extended Range

There are also many extended range electric vehicles with green plates, which could hardly be considered green. If these

are excluded from the total, Hungary has around 7,000 electrically chargeable vehicles (ECVs), Bársony says. Hungary will not achieve its target of

30,000 ECVs

by 2020. But, looking at the current pace of electric car growth, it could certainly be achievable within a few years, the expert notes. That growth may be warmly welcome, but electric cars have created some new dilemmas as well. About two-thirds of electric vehicles in Hungary are used in the capital and in the agglomeration, which means thousands of cars with green number plates are driven, charged and parked in the city for free. With the growing of number of cars on the roads in general, this is unsustainable in the long run. So, lawmakers need to rethink incentives linked to green number plates, which will definitely cause some heated debates, e-mobility industry association Jedlik Ányos Klaszter (JÁK) warns. “It would be important to clarify what we expect from e-mobility,” says Zoltán Vígh, managing director of JÁK. “Are we aiming to promote the new top models of the automotive industry or to spread innovative climate protection technology?” With a price tag usually over HUF 10 million, new electric cars are still considered a luxury for most. Their charging, especially at home, which accounts for 70-80% of all charging in Western Europe, is also a question under debate. Today, electric car owners in Hungary charge their vehicles at home with electricity from universal service, that is, at a supported price. This may change with the new legislation which is likely to arrive this fall according to market insiders.

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14 | 3

Special Report

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Budapest Business Journal | May 24 – June 6, 2019

Looking to Continue Cruising in Top Gear, Despite Road Bumps The automotive sector in Hungary, so often tagged the “engine” of the local economy, reached its highest rate in March in the past two-and-a-half years, the most recent figures reveal. The Budapest Business Journal discusses the market with some of the most prominent players. CHRISTIAN KESZTHELYI

figures from the Central Statistical Office (KSH). Growth in the sector well exceeded the

increase

in overall industrial output. The automotive sector accounts for about 30% of manufacturing output, KSH says. Opel’s plant in Szentgotthard puts out small and midsize gasoline and diesel engines for Opel car assemblies around Europe. Last year this one plant alone rolled out 313,000 engines. “This is a decline in comparison with previous years due to overall changes on the market (less demand for diesel and a market shift from traditional body styles to SUVs),” Zoltán Kaszás, spokesperson for Opel Szentgotthárd Kft. tells the BBJ. Nevertheless, following the Groupe PSA take-over of Opel from GM, the product portfolio is about to change.

Start Your Engines!

The ground breaking for the second Mercedes factory on June 5, 2018. Then it was described as a “Full-flex plant”. Mercedes has denied press reports the factory will be put on hold. The Hungarian government has treated the automotive sector as a national strategic industry for long years, with statistics revealing that the local economy is heavily dependent on the chiefly German manufacturer-dominated sector. The

automotive industry provides 10% of Hungarian GDP, and 25% of the country’s exports. The output of the automotive sector rose by 12.8% in March, as compared to the same month a year earlier, according to latest

“Starting in December this year we will be producing the award-winning 1.2liter three-cylinder turbo PureTech PSA engine in parallel with the current engine lineup. The integration works for the new engine are already underway. We are reconstructing our machining and assembly lines to accommodate the new product. This intensive work is largely performed by our own technicians and maintenance people,” Kaszás adds. Following the launch of the new engine type, Opel expects production volume to rise again in the years to come. Audi Hungaria Zrt., which develops and produces engines for its parent Audi AG and

Honda’s Electric Vision Honda’s “Electric Vision”, renewed and emboldened at the 2019 Geneva Motor Show, is for 100% of the brand’s European sales to feature electrified powertrains by 2025. The Honda e, presented as a production prototype in Geneva, is Honda’s first model to benefit from a dedicated EV platform and takes a bold step with its design and technology. The compact electric car offers trademark Honda driving dynamics, aided by the sporty rear-wheel drive format and advanced electric powertrain. Honda is progressing its “Electric Vision” for Europe by confirming the name of its first fully electric urban vehicle – the “Honda e” – and by announcing that the

next-generation Jazz will be available with a hybrid powertrain featuring the brand’s Intelligent Multi-Mode Drive (i-MMD) technology and will make its international premier at the Tokyo Motor Show later this year. The i-MMD hybrid system that will be available with the next generation of the popular Jazz hatchback has already won widespread acclaim across Europe for delivering high-levels of real-world efficiency and refinement in the new CR-V Hybrid. Ahead of its 2025 electrification

goal, Honda will expand the application of It was also announced the new its i-MMD dual-motor hybrid system, with Honda Power Manager Concept, a fully the introduction into smaller segment cars integrated energy transfer system that an important first step. can distribute electricity to and from the Honda announced in May that main grid, as well as directing power flow reservations for the Honda e are now from renewable sources and managing open in the United Kingdom, Germany, the interaction of an electric vehicle France and Norway. A dedicated online battery connected to the home. reservation website allows customers “When appropriate, Power Manager to reserve a priority status to order the can draw on energy from the EV battery electric urban vehicle with a refundable to power the home, and minimize the reservation fee. Customers will then be demand from the main grid. It even able to place an order from later this year allows energy stored in the EV to be sold with first deliveries of the vehicle from back to the grid to generate an income spring 2020. for the owner.” “We are delighted to be offering a Honda is participating in a trial in reservation option to our customers in western France, where Power Manager select European markets for the first time units will be installed in a pilot scheme, with the Honda e,” said Jean-Marc Streng, as part of the development of a regional general manager, Automobile Division – “smart grid” to be completed by 2020. Honda Motor Europe Ltd. “The Honda e in prototype form has received an overwhelming response and with more than 24,000 registrations of interest across Europe, customers now have the opportunity to secure priority status to order the model.”

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

other members of the Volkswagen Group in Győr, saw a successful 2018. The factory put out

1,954,301 engines

through an investment of approximately EUR 1 billion, offering a capacity of up to 150,000 units a year and creating more than 1,000 new jobs. “The plant in Hungary will bring greater capacity to our worldwide production network. After investments in China, Mexico and the USA, we are now strengthening our activities in Europe to maintain a worldwide balance of production between Asia, America and our home continent,” András Salgó from the corporate and governmental affairs department of BMW Group Magyarország told this newspaper.

last year, slightly down from the 1,965,165 in 2017, according to a press statement Audi sent the BBJ. The production unit produced 100,000 vehicles, again slightly down from 2017’s 105,491. Audi’s turnover was also down at EUR 7.377 million as compared to EUR 7.55 mln in 2017. Nevertheless, Audi Hungaria’s head count has grown, from 12,307 at the end of 2017 to 13,084 in 2018. Recruitment Launched “2018 was an anniversary year for us, and “We are on target with our project. As one that took us past remarkable milestones. The production of electric powertrains brought already communicated, preparation of the land has started this year. The BMW Group Audi Hungaria, in the company’s 25th year will take over the land once it is prepared of operation, to the era of electromobility,” for the construction of the plant,” he added. Achim Heinfling, managing director of Audi The company says it has already started Hungaria, says. recruiting for the new plant. “True, we also had many a challenge — In mid-May, news broke that due to the fluctuations in production caused by challenges facing the German automotive the switch to the WLTP standard is a good industry, several large manufacturers are example — which took a lot of our time and energy. Taking all the above in consideration, rethinking their plans. Citing information from Daimler HQ in Stuttgart, and the we can say that in 2018 the company German business newspaper Handelsblatt, maintained a sound production volume with online news portal index.hu reported that the good financial results. The competition is building of a second factory by Mercedes’ in heating up in the segment which will go Kecskemet might be affected. on presenting challenges for us in 2019: In a statement sent to the BBJ, the press we will have to introduce efficiency and office of Mercedes Benz Hungary Kft. insisted savings measures in order to maintain the its plans have not changed. competitiveness of Audi Hungaria,” he adds. “Countless developments are running at the Competition indeed is getting stronger Hungarian site in addition to the expansion. in the industry that sports more than 600 active automotive companies. BMW Group The factory operates at full capacity, and its production program is already saturated for is currently building a plant in Debrecen

Special Report | 15

“Currently, at Magyar Suzuki both production and staff are stable; we “The competition is heating produce two models in two shifts,” up in the segment which the statement adds. Suzuki praised Hungary for offering a will go on presenting favorable tax and financial environment. “The government’s measures and the challenges for us in 2019: available EU Funds greatly facilitate the we will have to introduce R&D activities and development of digital environments. Also, the reduced employer efficiency and savings contributions, supplier and investment measures in order to promotion programs represent an advantage,” maintain competitiveness.” the statement adds. The Esztergom factory has been playing a leading role in innovation and applying manufacturing technologies since 1992. the next year, as the demand for compact cars Magyar Suzuki Corporation concluded a manufactured here continues to grow,” it says. three-year factory modernization project in “The Mercedes-Benz factory in Kecskemét 2016, implementing significant developments is a major player in the Hungarian economy. in automation and robotization. The company currently employs about 4,700 Following the modernization, people. In the past, successful business year, manufacturing processes have become safer, we again produced more than 190,000 cars more efficient and more environmentally and achieved nearly EUR 3.6 bln in net sales,” friendly. With respect to the level of the press office says. robotization, Magyar Suzuki leads the way in “Mercedes-Benz Manufacturing Hungary Hungary with Kft., as an enterprise, has paid about EUR 26 mln in taxes and contributions robots to the Hungarian state and to the city working throughout the production of Kecskemét.” It adds that Daimler AG “possesses only good experiences in Hungary line, where the installation is also aided by smart systems. Currently, Suzuki is and counts long-term on its investment”. working on a HUF 5.3 billion multi-phase Magyar Suzuki Corporation has also innovation development project at its factory been a significant player in the Hungarian in Esztergom, supported by EU funding, national economy for 27 years. “In line with the steady market growth since 2015, market through which the manufacturer expects “new, competitive, safe and thoroughly tested expansion continued both in Hungarian Suzuki prototypes will be created at Suzuki and in the European market in 2018,” the factory by 2020,” the statement concludes. Japanese-owned manufacturer tells the BBJ.

770

No one can predict the future. But we know how to get there. Electric has gone Audi. And so it begins. The new Audi e-tron’s combined energy consumption: 23.7–24.6 kWh/100km, CO2 emissions: 0 g/km. The values specified are based on the default factory setup recorded at the type approval and are valid at the time the ad is posted. The designated values were measured according to WLTP. They do not apply to individual vehicles and are not part of the information notice, but serve the purpose of comparing different types of vehicles, in accordance with the provisions of Regulation (EC) No 715/2007. These values are influenced by additional equipment, accessories, driving habits and other non-technical (e.g. environmental) factors. The motor vehicle shown in the picture is an illustration and may contain additional equipment. The information given here is not comprehensive, for further details, contact the dealership!

Audi_etron_252x158_BBJ.indd 1

2019.05.22. 17:45:43

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Special Report

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

PRESENTED CONTENT

Automotive: ‘More Electric, Autonomous, Connected and Shared’ The importance of the car sector to Hungary’s economy is underlined by a survey of its market players undertaken for the first time by the Hungarian Investment Promotion Agency, the results of which are due to be unveiled at HIPA’s annual Automotive Conference on May 29. ROBIN MARSHALL

possibility of a U.S.-China trade war, and strict emission policies to adhere to, especially in Europe. “Since this industry represents such a big share of our economy, it is vital for us to understand how we can support the growth and development of the industry in Hungary,” the president says. The automotive sector is a good bell weather of the evolving mission HIPA performs. There has been a noticeable switch from simple job creation to a more targeted focus on so-called value-added jobs, for example. With the unemployment rate

down at

3.6%

it is, to put it crudely, now a matter of quality over quantity. “The biggest problem in Hungary is not any more that we have huge numbers of unemployed people,” Ésik points out. Automotive does not just deliver bluecollar manufacturing jobs. Increasingly, it is about white-collar engineering and programming roles. The vehicles of the future “will be more and more electric, autonomous, connected and shared”, Ésik says. Those trends will demand much in the way of research and development.

“We decided this year we would prepare such a survey, first of all due to the importance of the sector, and to understand the impact on the competitiveness of the Hungarian entities of these players from all those external factors that are happening now in the R&D Capability automotive industry and in the economy “We can see that companies in Hungary in general,” Róbert Ésik, the president of are increasing their R&D expenditure HIPA, tells the Budapest Business Journal year after year. In the last two years, the in an exclusive interview. R&D spending increased by 38%, from Just as importantly, the study also HUF 62 billion to HUF 86 bln, in the aimed at helping the agency be able to automotive companies that took part “come up with policy advocacy proposals in our survey. At the end of 2018, we and also to understand the development plans of these companies”. Ésik says HIPA already had approximately was able to involve close to 50 companies, employing more than 100,000 people, employees out of the total automotive workforce of working in various R&D positions, so there 172,500, meaning more than 50% of the is an increasing share of R&D capabilities.” employment base is covered. And automotive really is vital to the economy. Aggregate figures from 2016-18 show

4,200

nearly

EUR 5 billion

in automotive investments, Ésik says, creating 25,000 jobs. “That is why it is very important for us to understand this sector and to make sure that this industry will be future-proof in Hungary and will continue to help our economic development.”

to bring their future-proof technologies to the country. So, yes, I think there is an increased share of our policy advocacy activities, and these are the type of events that help us to get good inputs from the players,” he says.

Increased Focus

Clearly, then, what Ésik calls the “people element of the equation” still matters; it is just that what they do is changing. “In spite of all these rapid technology changes, humans will remain at the center of the automotive industry, whether it is production or development, but they will need to have totally different skills, knowledge and training. That is why we believe there will be an even greater need for a tight cooperation between the education system and industry. And from a company point of view, employee training, education and development will be a key driver to increase productivity.” More on that, later. Even as the profiles of the jobs coming to Hungary are changing, the role of HIPA itself is evolving, I suggest to Ésik. More emphasis is gradually being placed on policy advocacy, as evidenced by this survey. “As an investment promotion agency, I think we have three main roles and activities,” the president says. “One is to show case Hungary as an ideal location to do business internationally. Second is to provide our management consultancy services to our client base, which are the foreign companies and Hungarian SMEs as well. And also to perform policy advocacy activities, to come up with suggestions for the government and policy makers on how to improve the business environment. And yes, you are right that there is a change in the weighting of these three different activities,” he acknowledges. “Since we are not any more in the modus of extensive growth, we are focusing more on intensive growth with the actual client and investor base; we try to work more and more together with existing companies, ensuring that they are able to grow in a sustainable way and they are able

“We should not forget that we are also a one-stop shop for investors: his pain point is my agenda, basically. That is why we deal with all kinds of issues, whether it is buying a piece of land, whether it is electricity supply, whether it is tax regulation, whether it is educational policy. We are not the owners of these policies, but we want to work on topics that are relevant for the players of the economy and in that sense, of course, there is an increased focus on human capacities.” An important part of that is making sure there are enough Hungarian SMEs capable of joining the value chain of the multinational automakers and so-called Tier 1 suppliers. Not just of making parts to order, but increasingly to develop them from scratch. The agency maintains a data base of suitable suppliers, but also works with SMEs, sometimes alongside specific original equipment manufacturers, sometimes on its own, to provide soft skills training, improve quality management and control, promote R&D. It is also involved in linking up businesses and academia to help develop dual education at both school and college levels: Ésik says in 2018 there were

54,000 students

in vocational dual training, and 24 higher education institutions that offered dual education programs. It seems that, if the automotive sector is to continue driving Hungary along the road to sustainable economic success, HIPA will have an important role to play, not only in attracting investors in the first place, but also in ensuring there are the numbers of suitable workforce and SMEs to keep things moving.

Top Five Investing Countries: Annual Breakdown of HIPA-managed Automotive Projects (by Volume of Investment), 2014–2018

Three Themes

The survey, and the conference, has three main themes: Technology and Innovation; People; and Suppliers. As Ésik says: “There is a significant transformation which is going on in the industry, driven by different factors such as technology changes (i.e. eMobility), such as digitalization, which is more related to production, such as changing customer behaviors; the appearance, for example of car sharing. And there is an increased focus in environmental and social responsibility of the industrial players.” At the same time, there are declining auto sales in China to contend with, uncertainties around Brexit, the looming

2014

2015

2016

2017

2018

India

Germany

Japan

India

USA

Switzerland

South Korea

Japan

France

USA

Germany

Hungary

China

Japan

Sweden

Canada

Spain

Canada

Hungary Source: HIPA

HANGULATVILÁGÍTÁS ÉS FINOM TAPINTÁSÚ FELÜLETEK A MEGNYUGTATÓ VEZETÉSI ÉLMÉNYÉRT

A feltüntetett modell egy ötajtós Civic 1.5 VTEC Turbo Sport Plus Rallye Red színben. Üzemanyag-fogyasztására és CO2-kibocsátására vonatkozó adatai NEDC-mérés szerint: 4,8-7,1 l/100 km és 109-161 g/km; WLTP-mérés szerint 5,3-8,4 l/100 km és 119-190 g/km. Az adatok az EU által szabályozott mérések alapján kerültek megadásra, összehasonlíthatóság céljából. A valós körülmények között mért adatok változhatnak.

18 | 3

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Budapest Business Journal | May 24 – June 6, 2019

Car-sharing Continues to Grow Hungarian Market “We offer a wider range of models from 3-door compact cars to urban SUVs to serve different life situations,” Fischer says. With premium cars also in the fleet, the company also targets users to whom this matters. Those using car-sharing services regularly often use the cars of all providers and will likely benefit from a third player in the market, Fischer adds.

Car-sharing is supposed to complement rather than offer an alternative to transport in the city. Still at an early stage, shared mobility in Budapest (and Hungary) has enough room for more companies, market players agree. ZSÓFIA VÉGH

For a couple of weeks, a new citylight campaign has been running in the most frequented parts of Budapest. It shows a photo of a young man, standing in front of a BMW with the Széchenyi Chain Bridge behind him. The slogan reads: “Gábor (32), developer. He has 100+ BMWs”. The campaign is by DriveNow, the newest player in the local car-sharing market, which arrived in Hungary in April. Unlike other companies already present, DriveNow says its offers a wide range of models of BMWs and Minis for every life situation.

Business Potential

Originally a car-sharing service run by BMW, which first launched services in Munich six years ago, DriveNow merged with a similar service run by Daimler, Carto-go, a year ago. It has now expanded to cover 13 cities, most recently in Budapest. “The number of initial registrations in the first two weeks has surpassed all our expectations,” Péter Fischer, head of Wallis Autómegosztó Kft., the local franchise partner of DriveNow, tell the Budapest Business Journal. The fleet of more than

200 cars

added a third to the existing carsharing fleet in Budapest, taking it to roughly 1,000.

While the company operates more or less within the same service zone as its competitors, its target group and the composition of its fleet is somewhat different.

“The number of car sharing service providers in Hungary is increasing: this means that market players see the business potential in alternative transport and shared mobility,” Péter Bársony, an e-mobility expert at PwC Hungary tells the BBJ. Bársony says about shared mobility that, with many overlaps in their target segments, these alternative transport companies both complement and compete with each other. “What they all have in common is that they all target users who have an innovative and environmentallyresponsible approach to transport”, Bársony says. Beyond that, it is a matter of money which option they choose, he adds. Those using public transport belong to this group as well, Bársony notes. Cycling and shared mobility represent the next level in community transport. This flexibility is complemented by other “perks” shared cars with green license plate are entitled to, including free parking. The

PROMOTION

Continental’s Budapest Site Wins 2018 Factory of the Year Award GyártásTrend magazine and its publisher, PPH Media organized the Factory of the Year competition for the fourth time. A total of nine categories were available for companies that have domestic production plants, and the overall Factory of the Year award was given to the company that applied in several categories and reached the first place in at least one. The Hungarian event, hosted by the prestigious “Die Fabrik des Jahres” competition organized by the publisher’s parent company, is increasingly recognized and well-known in Hungary. The prestigious Factory of the Year award was won by the Budapest site of Continental Automotive Hungary Ltd., a first-time applicant in the category of annual net sales above HUF 10 billion. The award was received by Dr. Róbert Keszte, managing director of the German technology company’s Budapest plant. “We are very pleased to have reached first place in three different groups, and it is an enormous professional honor that we were named the best in the overall category as well. In our Budapest factory we use the most innovative solutions of Industry 4.0, and this award confirms that we are on the right track,” said the head of Continental Automotive Hungary Ltd. The Budapest site of the company, which is one of ten locations it has in Hungary, was awarded the first place in the “Best producer”, “Industry 4.0” and “Energy efficiency” groups by the judges.

Continental Wins Industrial Energy Efficiency Award at Hannover Messe Technology company Continental has also been named the winner of the Industrial Energy Efficiency Award (IEEA), presented for the first time at the 2019 Hannover Messe trade fair. Deutsche Messe works with EuPD Research, an independent market research and consulting company, to honor outstanding energy efficiency processes within industry. Continental won over the jury with its highly flexible Conti Thermo Protect insulation system in the large industrial companies category. The silicone material can be used in industrial systems worldwide. The award was presented by Prof. Dr. Peter Radgen, Professor of Energy Efficiency at the

Institute of Energy Economics and the Rational Use of Energy at the University of Stuttgart, and Claire Range, Manager Energy Efficiency in Industry, deutsche Unternehmensinitiative Energieeffizienz e.V. (DENEFF), during the Digital Energy Forum at the Hannover Messe trade fair. “We are delighted to have won this award, which shows that our products are making an essential contribution to mitigating climate change and preserving resources,” says Stefan Füllgraf, who accepted the award on behalf of Continental.

Continental’s Budapest factory.

highly flexible Conti Thermo Protect (CTP) insulation system has already proven its worth in industrial thermal insulation. Continental developed the special silicone rubber compound as a flexible form of Highly Flexible System thermal insulation for complex line and for Efficient Thermal insulation piping systems and for other components. Whether for valves in steam pipes, braided The material provides unique market hoses, or heating pipes in tire presses, the solutions for insulating flexible, hightemperature pipes and hoses. In its supplied state, the product has a consistency similar to modeling clay and is easy to cut, manipulate, and apply in a precise manner. When heat is added, the material vulcanizes by itself to become a reusable molded product with rubberyelastic properties – making it particularly suitable for complex, hard-to reach and winding/flexible components. As a result, it can be applied to conduit pipes and valves through which vapors or fluids flow at temperatures of up to 250°C. In its noncured state, the product is malleable; the From left: Dr. Gábor Nick, Professional Partner of Factory of the Year vulcanized material feels like rubber but is 2018, Scientific Associate of MTA SZTAKI, Dr. Róbert Keszte, Managing stable and very hard to destroy. Even a layer Director of Continental Automotive Hungary Kft, István Molnár, Head of just ten millimeters reduces thermal loss of Digital Factory Engineering at Continental Automotive Hungary Kft, by 60%. The reduced ambient temperature Viktor Péczeli, IT Director of Continental Automotive Hungary Kft. is also an advantage for work safety.

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

exemption from parking fee can, in fact, be a competitive edge over traditional cars, the expert says. As is the case with many services, shared mobility arrived in Hungary with a bit of delay. There is some advantage to entering a market late, though; latecomers don’t have to go through the process of trial and error typical of early entrants and can immediately start using a model that works. In this case, that has meant skipping the so-called station-based model some Western European cities tried earlier and, instead, operating a free-floating fleet, where users can leave the vehicle wherever they want within the operational zone.

Largest Fleet

Hungarian oil and gas giant MOL introduced its car-sharing service, MOL

“The number of car sharing service providers in Hungary is increasing: this means that market players see the business potential in alternative transport and shared mobility.” Limo, in 2017. With 450 electric and traditional vehicles, it has the largest fleet in the market. “We have more than 45,000 registered users, half of which have used our services at least twice,” says Richárd

Steeping out on Your (Shared) Scooter Despite the fact that Hungary has not traditionally been a motor scooter-loving nation, Blinkee.city, a scooter-sharing service introduced a year ago, has proved popular since its launch. It offers a solution to the problems that all cities with heavy traffic struggle from: parking, noise and air pollution, Tamás Varsányi, managing director of Blinkee.city Kft. tells the BBJ. The company, supported by utilities business Eon, has recently expanded its fleet

to 150 electric scooters, from an initial offering of 50. Its client base is somewhat younger than that of car-sharing companies, aged 20-35, which is partly attributable to the fact that scooters can be driven from the age of 16, Varsányi explains. Regarding further expansion, he cites other European cities that have fleets of 2,0003,000 scooters; in Budapest, there would be room for 500, he calculates.

Sáreczky, managing director of MOL Limo. Customers have driven nearly five million kilometers since the launch; users are aged between 20 and 35 years of age, and are mostly men, which seems to be trend at other service providers as well, according to MOL. Cars are used most often in the morning hours and in the evening during the rush hour commute to and from work. That said, on the Pest-side, cars generally stand idle for a few minutes only. In Buda, the most frequented pick-up places are Római part and Kelenföld railway station. Car-sharing services are not meant to replace cars and public transport but complement it, most experts agree. But they can be an option for those who have not yet bought a car. If people can let go of the idea of owning a car, the savings and the environmental benefits can be significant. In Munich, where car-sharing took off six years ago, about

2,000

parking places

have been freed up, Fischer says. A calculation by Vienna shows that the use of shared cars in the past two-to-three years equaled to 7,000 tonnes of fewer emissions, he adds. Will car manufacturers enter this segment as well? Absolutely, Bársony says. “What’s more, they will have to change their operating models as future users do not want to buy a car; rather, they want a service that allows them to get from A to B.”

Special Report | 19

Péter Bársony This means that traditional car manufacturers need to think about how and within what time frame they can transform their operations so that they themselves become a mobility service provider. “They need to enter a market segment where other industry players have already done so and have been there for some time.” One step is to start a car-sharing service, for which the launch of BMW DriveNow is a good example.

PROMOTION

500,000th Suzuki Vitara Rolled off in Esztergom The most popular choice amongst Hungarian car buyers has been a favorite of all generations since its release. Magyar Suzuki Corporation, a significant player in the Hungarian economy for three decades now, has reached an important milestone with the half-millionth Vitara rolling off its production line in Esztergom, Suzuki’s third-largest production facility following Japan and India this March. The model, produced in Hungary since spring 2015 and given a facelift in September 2018, has been Magyar Suzuki’s greatest success thus far and Hungarian customers’ No. 1 favorite, dominating the domestic new car market for three years now.

Source of Hungarian pride

The Vitara is the first Suzuki model ever to reach such an impressive production number in such a short period of time. Not even previous favorites such as the SX4 or the new generation Swift could reach this production volume in Hungary, although both came close to it. The car is undeniably the unrivalled champion of the domestic car market since 2016. Vitara continued to maintain its leading position in the passenger car category in the first quarter: between January 1 and March 31, 2,255 units of this model were registered. Of the half million Vitaras produced at Magyar Suzuki, 31,658 were registered in Hungary, while the rest were exported not only to Europe but, for example, to Dominican

Republic, Guatemala and even Vanuatu, an island in the southwest Pacific. “This confirms the validity of our objective and mission, to develop products of high value by focusing on our customers’ needs. The results show that we are on the right track. One of our primary goals is to make consumers’ dreams come true through exciting and innovative products, and I think Vitara is a perfect model to achieve this,” said Yoshinobu Abe, the Managing Director of Magyar Suzuki Corporation.

Rich heritage

The model’s success is coded in its DNA. The first-generation Vitara is often called the pioneer of the SUV category. In fact, Suzuki made a successful entry to the SUV market and secured a competitive position thanks to the Vitara’s versatile off-road performance, urban car-like dimensions and consumption characteristics. Suzuki’s engineers dreamed up a vehicle that moves confidently on and off the road, both in the countryside and in the urban jungle. In addition, it was available in a variety

At left, the 1988 model Vitara and the 2018 version at right. of colors and with two polishes, even with a removable fabric top, which made it popular with younger city-dwellers. The second generation of Vitara debuted in 1998, and as indicated by its name, the Grand Vitara sported larger dimensions and a more powerful engine, and was also better equipped. Shortly afterwards, in line with the thenrecent changes of the automotive industry, the third generation was reborn in a completely

renewed body with rounded shapes in 2005. We needed to wait 10 more years for the fourth generation, which debuted in 2015. This model was not only produced in Hungary, but Hungarian experts also participated in its development and the prototype was almost completely finalized here. In 2018, Vitara celebrated its 30th birthday with a more refined design and more advanced safety features.

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Car importers Ranked by total net revenue (HUF mln) in 2018 CaR bRands

–

addRess pHone email

eleCtRiC

www.suzuki.hu

top loCal exeCutive CFo maRketing diReCtoR

diesel, gas

–

1991

Suzuki

–

(0.01) Suzuki Motor Corporation (97.53), Itochu (2.46)

yoshinobu abe – –

2500 Esztergom, Schweidel J. utca 52. (33) 541-100 –

Audi, Volkswagen, SEAT, Skoda

Audi, Volkswagen

– (100)

János eppel, peter gstattner – –

1139 Budapest, Fáy utca 27. (1) 451-5100 prsajto@porsche.hu

magyaR suzuki zRt. 1

oWneRsHip (%) HungaRian non-HungaRian

HybRid

Fleet management

✓

yeaR establisHed

seCond-Hand CaR tRade

171,885

assistanCe

628,015

leasing

no. oF veHiCles sold in 2018

RepaiR

total net Revenue in 2018 (HuF mln)

FinanCing

Company Website

spaRe paRts supply

Rank

seRviCes

poRsCHe HungaRia keReskedelmi kFt.

331,323 (2017)

37,371

✓

–

✓

–

✓

–

1990

Audi, Volkswagen

opel soutHeast euRope kFt.

241,358

49,129

✓

–

✓

–

✓

–

1990

–

Opel

– Groupe PSA (100)

enrico de lorenzi Péter Oriskó –

2040 Budaörs, Szabadság út 117. (23) 446-100 info@opel.com

toyota CentRal euRope kFt.

150,745

✓

–

1990

Toyota, Lexus

–

– Toyota Motor Europe NVSA (100)

Jacek pawlak – –

2040 Budaörs, Budapark Keleti 4. (23) 885-101 infohu@toyota-ce.com

142,400

20,047

✓

–

✓

2000

Ford

–

– Ford Motor Company (100)

viktor molnár – –

1138 Budapest, Népfürdő utca 22. (1) 777-7555 inform@ford.com

108,601

5,816

✓

–

✓

–

2004

MercedesBenz

MercedesBenz, smart

– Daimler AG (100)

Jörg dieter schmidt Joachim J. Wolf Edina Kozári

1133 Budapest, Váci út 96-98. (1) 887-7000 internet-hu@daimler.com

97,236 (2017)

✓

–

1992

–

Alfa Romeo, Fiat, Jeep, Fiat Professional

–

– FCA Italy S.P.A. (100)

andrew terence Higgins – –

1138 Budapest, Madarász Viktor utca 47. (1) 458-3100 customercare.hu@fiat.com

76,829

✓

1993

Bentley, Porsche

–

– Porsche Holding GmbH (100)

szabolcs nagy Tamás Tótvári Péter Árvay

1139 Budapest, Fáy utca 27. (1) 451-5500 info@porschepest.hu

Renault

– (100)

tamás Wachtler – Gabriella Kelemen-Tűz

1138 Budapest, Váci út 140. (1) 358-6000 ugyfel.kapcsolat@ renault.hu

–

AutoWallis Nyrt. (100) –

andrew John prest Roland Czeilinger –

2051 Biatorbágy, Budai út 16. (1) 451-4851 info@wae.hu

Nissan

– Nissan Europe S.A.S. (Ÿ), Nissan Motor Manufacturing (UK) Ltd. (Ÿ)

tomasz latala-golisz Paul Robson Laurent Lamotte

1117 Budapest, Inforpark sétány 3/B (1) 371-5300 hungary@ nissan-services.eu

www.porschehungaria.hu

www.opel.hu

www.toyota.hu, www.lexus.hu

FoRd közép- és kelet-euRópai ÉrtÉkesítő kft. www.ford.com

meRCedes-benz HungáRia keReskedelmi kFt. www.mercedes-benz.hu

FCa CentRal and easteRn euRope kFt.

www.fiat.hu, www.alfaromeo.hu, www.jeep.hu, www.fiatprofessional.hu

poRsCHe inteR auto HungaRia kFt.

Renault HungáRia kFt.

www.porscheinterauto.hu

www.renault.hu, www.dacia.hu

Wae autóFoRgalmazási

10 és szolgáltató kFt. www.wae.hu

nissan sales CentRal & easteRn euRope 11 keReskedelmi kFt. www.nissan.hu

69,771

18,433

✓

–

1991

–

Renault, Dacia

32,747

2,553

✓

–

1991

–

Jaguar Land Rover, Isuzu, Ssangyong

31,391

5,265

✓

–

2005

–

Nissan

CaR bRands seCond-Hand CaR tRade

Fleet management

HybRid

26,194

5,641

✓

–

1995

Kia

22,104

4,387

✓

–

2007

Hyundai

20,742

1,814

✓

1927

20,402 (2017)

✓

–

16,776

3,800

✓

–

diesel, gas

oWneRsHip (%) HungaRian non-HungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

eleCtRiC

yeaR establisHed

assistanCe

volvo autó HungáRia keReskedelmi és szolgáltató kFt.

leasing

RepaiR

Hyundai Holding

13 HungaRy kFt. www.hyundai.hu

no. oF veHiCles sold in 2018

FinanCing

kia motoRs

12 HungaRy kFt. www.kia.com

total net Revenue in 2018 (HuF mln)

spaRe paRts supply

Rank

seRviCes

Company Website

Kia

– KIA Austria GmbH (100)

kim dowan, kim youngrae – –

1117 Budapest, Budafoki út 56. (1) 324-2000 info@kiamotors.hu

Hyundai

– AutoBinck Car Distribution and Retail B.V. (100)

pál kovács Péter Tajthy Ibolya Ördög

1186 Budapest, Cziffra György utca 15. (1) 889-0700 info@hyundai.hu

Volvo

–

– Volvo Car Corporation (100)

gábor bodrogai Ágnes Tárkányi Andrea Sztárcsevity

1044 Budapest, Váci út 50–58. (1) 238-8100 huinfo@volvocars.com

1993

–

Peugeot

Frey Automobil Holding Kft. (100) –

györgy balkányi, Zsófia Bálint kovácsné – –

1194 Budapest, André Citroen utca 1. (1) 279-5555 peugeothungaria@ peugeot.com

1994

–

Citroën

Frey Automobil Holding Kft. (100) –

györgy balkányi, andrás albrecht Julianna Kiss Kozmáné Nóra Hajdú

1194 Budapest, André Citroën utca 1. (1) 348-4848 kapcsolat@ c-automobil-import.hu

–

– Mazda Motors Logistics (100)

tibor együd Erika Káldi Eszter Burovinc

1117 Budapest, Infopark sétány 1. Building I (1) 464-5000 mazda@mazda.hu

Jaguar, Jaguar, Jaguar, Land Rover Land Rover Land Rover

– AutoBinck Car Distribution and Retail B.V. (100)

pál kovács Péter Tajthy Ibolya Ördög

1186 Budapest, Cziffra György utca 15. (1) 882-8930 info@jlr.hu

gábor mátrai, Heinz schneiter – –

1149 Budapest, Mogyoródi út 34–40. (1) 422-3910 gabor.matrai@ mitsubishimotors.hu

www.volvocars.hu

p automobil

15 impoRt kFt. www.peugeot.hu

C automobil

16 impoRt kFt. www.citroen.hu

mazda motoR 17 HungaRy kFt. www.mazda.hu

16,592

2,401

✓

–

1992

7,382

500

–

2011

bRitisH automotive

18 HungaRy kFt. www.jaguar.hu, www.landrover.hu

mm impoRt kFt. 19 www.mitsubishi.hu

Special Report | 21

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Mazda

6,351 (2017)

✓

–

2004

Mitsubishi

Frey Automobil Holding Kft. (100) –

gablini pRemium kFt.

1,886

169

✓

2007

Infiniti

–

(100) –

gábor gablini, péter gablini Regina Spenger Péter Váradi

1134 Budapest, Váci út 45. (1) 799-2250 infiniti@gablini.hu

emil FRey impoRt kFt.

1,600 (2017)

173

✓

–

1993

–

Subaru

–

Frey Automobil Holding Kft. (100) –

gábor mátrai, Heinz schneiter – –

1149 Budapest, Mogyoródi út 34–40. (1) 470-9010 info@subaru.hu

✓

–

2011

BMW I

– Individuals (100)

massimiliano di silvestre – –

2220 Vecsés, Lőrinci út 59. (29) 555-100 ugyfelszolgalat@bmw.hu

2,097

✓

–

1993

–

– Honda Motor Europe Ltd. (100)

Roland berger Jarmila Pavova Dagmar Zinner

2040 Budaörs, Puskás Tivadar út 1. (23) 506-406 info@honda.hu

www.infiniti.hu

www.subaru.hu

bmW veRtRiebs gmbH magyaRoRszági Fióktelepe www.bmw.hu

Honda motoR euRope limited magyaRoRszági Fióktelepe www.honda.hu

Ÿ= would not disclose, NR = not ranked, NA = not applicable

BMW I Performance, BMW, MINI MINI

Honda

This list was compiled from responses to questionnaires received by May 22, 2019 and publicly available data. Data is based on companies’ own data revelations. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14. or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Socialite

“Leaving aside the obviously terrible humanitarian aspect, Keleti was an absolute godsend for me as a writer,” LeBor says. “I thought, this is an epoch-making event I’m seeing here and it’s unfolding five metro stops away from me. All the borders have collapsed. No-one’s in charge. Hundreds of thousands of people are marching around Europe with no papers or false papers. And nobody knows who they are. I’m not going to get better than that.”

Talking Roma Cops and High Level Intrigue With Adam LeBor Photo by Zoltan Tuba

Contemporary Crime

Having devoured Adam LeBor’s gripping and atmospheric crime thrillers “District VIII” and “Kossuth Square”, I had hoped we’d rendezvous in a dive somewhere on Budapest’s meanest streets. Instead, we meet at noon in a squeakyclean Café Frei in Obuda. Rather than rub shoulders with villainous bruisers, I sit next to a large plastic ape. DAVID HOLZER

Published in 2017, “District VIII” is LeBor’s first crime novel to feature Gypsy cop Balthazar Kovacs. I’ve just finished “Kossuth Square” (the second in what LeBor is calling the Danube Blues series), named for the square in which the Hungarian Parliament Building sits. This came out in April of this year and was selected crime Book of the Month by a critic for The Times. The Daily Mail said of “Kossuth Square” that it is: “An elegant, atmospheric tale that twists and surprises at every turn.” LeBor is also the author of conspiracy thriller “The Budapest Protocol” (2013), set in 1944, and several non-fiction works. Reviewing this book in The Times, Kate Saunders wrote “LeBor is a distinguished writer of nonfiction and his first novel shows that he’s just as good at making it up.” Saunders nails a key element of what made me inhale LeBor’s Budapest fiction. No matter what’s happening with the plot, the milieu his books describe feels utterly believable, even to someone with my superficial knowledge of Budapest. I was curious as to how LeBor, a fitlooking character in his late 50s with a seasoned journalist’s sharp eyes, had arrived in Budapest in the first place.

Our man in Budapest

“I came here in 1991 to be a foreign correspondent,” he tells me. “I was working at The Independent newspaper on the home desk and it was boring. I

Although Keleti provided the spark, LeBor had been circling around a contemporary crime novel set in Budapest for some time. “After my first thriller, “The Budapest Protocol”, I thought I’d like to do something much more ambitious; a detective series where the links between characters are unpeeled over time. I met some Gypsy [Roma] police officers at a reception at the British Embassy a few years ago and I thought their stories were interesting. Some said their families didn’t want them to become policemen. Other non-Gypsy policemen could be wary of them because of previous experiences with the Gypsy community. I realized that if I made my central character a Gypsy cop I had inner conflict, which you need.” Not that I know the reality but the Roma element to the stories feels authentic. “I’d written several articles about Gypsy life in Budapest and Hungary,” LeBor tells me. “I spent some time out on patrol with the police officers and did some research into the social codes of Gypsy society and the role of women. But the rest I made up. The characters are all products of my imagination.” Which leads me to my final question: whether I could use LeBor’s books as a rough guide to Budapest? I’d already discovered that Kádár, the Jewish restaurant on Klauzál Square does exist. What about the Tito Grill, the “Balkan restaurant on Rákóczi Square” mentioned in both books, is that real? LeBor smiles. “No,” he says.

Adam LeBor could see all the action was on the foreign desk. I told them I wanted to be a foreign correspondent and they said they needed someone in Budapest. I thought that if things went wrong, I could always go home but I fell in love with the city and stayed. It was an interesting time to be in Hungary, in a region on the cusp of changing from one system to another. I travelled a lot, covering Poland, Czechoslovakia and what was then Yugoslavia. Then I married a Hungarian and had a family here.” LeBor came to Budapest at the time of what is described in “Kossuth Square” as vadkapitalizmus or “wild capitalism”. How has the city changed since then? “It’s become Westernized. When I came here, if you couldn’t speak Hungarian, it was hard to operate. The city had also been sealed off for about 40 years. I remember the excitement when the first Okay Italia restaurant opened, and they had proper pesto sauce.”

Would LeBor say the changes are for the better? “Here’s an example of how I feel about the way Budapest has changed. When I first went to the Great Synagogue on Dob Utca in 1990 it was very dilapidated. You could see all the rusty nameplates on the benches. I’d look at them and wonder what happened to the people. Did they still go to the Synagogue or were they deported, taken away? Now the Synagogue has been done up it’s beautiful but some of the historic atmosphere has been lost. That’s something you can say about Budapest in general. Each time it’s restored it loses a little bit of its atmosphere. But, of course, a city should be restored. You can’t just let it crumble away.” “District VIII” and “Kossuth Square” are set in the summer of 2015 when, as The Guardian newspaper put it at the time, “a refugee camp took shocking shape in the heart of a European capital”.

“District VIII” and “Kossuth Square” are available at Bestsellers bookshop on October 6 Budapest. LeBor is currently writing book three of the series, with the working title of “Margaret Bridge”. The U.K. television rights to the series have been sold. Lebor’s website is www.adamlebor.com.

www.bbj.hu

Budapest Business Journal | May 24 – June 6, 2019

Socialite | 23

Next Kapi out, new Egytőről Vintage Hits Wine Bars Disznókő is the first big estate that you encounter on entering Hungary’s worldclass Tokaj wine region. What a sight for dry eyes it is, providing a fine fix for wine lovers with its contiguous vineyards spreading out over the undulating slopes, behind the futuristic tractor shed and the Sárgaborház restaurant. The flatland opposite the estate is the start of the Great Plains. ROBERT SMYTH

Behind the Sárgaborház lies the Kapi vineyard, with its volcanic and light clay soil, where the grapes ripen early. It is from Kapi that Disznókő brings out a 6 puttonyos Aszú in the best vintages, with the newly released 2015 Kapi 6 puttonyos becoming just the fourth ever release (after 1999, 2005 and 2011).

“The second part of the harvest was rainier, so the noble rot could develop very well. We were able to select intensely botrytized, perfectly balanced and aromatic Aszú berries.” It is not only a single-vineyard aszú, quite rare in itself, but also a singlevarietal wine of 100% Furmint. While Aszú is usually based on a backbone of Furmint, whose thin skins easily allow the noble rot in, it is typically fleshed out with lusciously fruity-floral touches by the likes of Hárslevelű and Sárgamuskotály (the same grape as French Muscat Blanc), and several others. However, in 2015 the botrytized Furmint was considered ripe, rich and aromatic enough to go it alone, with the warm vintage bringing an extra dimension. The vegetative season in 2015 was hot and dry with heatwaves during summer, according to managing director László Mészáros, with blossoming starting already at the end of May, which in turn resulted in early ripening. The first wave of Aszú berries (the ones used for Kapi) were shriveled rather than botrytized (i.e. afflicted by noble rot) and were picked from September 21 to October 1. The individually picked aszú berries were poured into stainless steel vats and stored there until the vinification; the grapes for the base must picked later, in the first half of November. The Aszú berries were macerated uncrushed in actively fermenting must for two days. After a long pressing, the longer than

usual fermentation took place in stainless steel vats and small barrels until the middle of December. The wine was aged in oak barrels of 225 liters for two years with 25% of new oak, and bottled in May 2018. Kapi 2015 has a purity about it, with tropical and citrusy aromas and flavors, with a super smooth finish, more airy and ethereal than most aszú. Just 4,974 individually numbered bottles have been made and it costs HUF 32,000 a bottle from various outlets including the winery itself, with a special offer running until May 31, whereby if you buy five, the sixth bottle is free. Mészáros described 2015 as an excellent year for botrytis. “The second part of the [Aszú] harvest [which lasted until November 12] was rainier, so the noble rot could develop very well. We were able to select intensely botrytized, perfectly balanced and aromatic Aszú berries,” he said. This led to Disznókő’s first ever 100% Hárslevelű Aszú; Tokaj’s second grape has thicker skins than Furmint, making it harder to get noble rot, but in 2015 botrytis was abundant. One of the new releases for Egytőről (a cooperation between a number of wine bars, winemakers, wine distributor Bortársaság and website Wine Flow, aiming to spread the message of good quality wine at nice price),

The Disznókő estate in Tokaj, with its tractor shed at center. also comes from Tokaj, from Gizella winery’s László Szilágyi. The Furmint (75%) and Hárslevelű (25%) blend, a dry white from 2018, comes from several vineyards: the Bomboly in Mád, the Kastély in Bodrogkeresztúr and the Tarcal trio of the Barát, Deák and Szilvölgy. The Hárslevelű from the Barát vineyard was the only component to be vinified in oak “to give texture”. Szilágyi worked with the team comprising representatives of the wine bars. He admitted to learning a big lesson from the cooperation and is now even considering making his Estate wine, which currently has 15% Hárslevelű in it, a full Furmint-Hárslevelű blend. The Egytőről wine is citrusy and floral with zesty acidity and a touch of oak. Yet further evidence of the magical marriage between the two Tokaj grapes in dry wine was provided by Szilágyi and Gizella recently scooping a gold medal at the United Kingdom’s Sommelier Wine Awards for Szil-Völgy, Furmint/Hárslevelű 2017 (HUF 6,950 from Bortársaság). Disznókő also won gold for its delightful and delicious Late Harvest 2017 at the same awards. Tokaj maestro István Szepsy won a gold for his Édes (Sweet) Szamorodni 2013 (HUF 14,000), which is made using a different method to Aszú but like other

great sweet wines of the world, whereby mixed bunches of both botrytized and regular “healthy” grapes are picked together and then fermented. The other Hungarian winner at the Sommelier Wine Awards was a Bikavér 2016 blend from Eger’s János Bolyki; this wine is from the lighter Classic (not Superior) category but is striking for its freshness, purity of fruit and “moreish” drinkability. It is also cracking value at HUF 2,990 from Bortársaság. The Egytőről red from 2018, a single-varietal Kékfrankos, comes from another exciting and dynamic Eger producer, Gergő Böjt. He described 2018 as a hot year in Eger but added that the local soils helped retain the acidity. Made entirely in the tank, this has delightful potpourri aromas, as many of the best Kékfrankos have, and oozes sour cherry, raspberry and strawberry on the fresh and vibrant palate. The Egytőről wines will cost HUF 1,200 per 1.5 deciliter glass, and HUF 5,000 per bottle, from the participating wine bars: Doblo Wine & Bar; 0,75 bistró; Palack; Andante Borpatika; Tasting Table; and Cuvée Borszaküzlet és Borbár. The team has got it very right with these two wines, which will be launched on June 13 at a terrace party at 0,75 bistró.