Budapest Business Journal 2910

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

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BUSINESS JOURNAL BUDAPEST

VOL. 29. NUMBER 10

MAY 21 – JUNE 3, 2021

SPECIAL REPORT

Automotive

NEWS

Forecasts Raised in Light of Startling GDP Data Q1 GDP data took analysts by surprise, showing that the Hungarian economy had expanded in the first three months of the year compared to the previous quarter.  3 BUSINESS

Cybersecurity More Important Than Ever in Home Office Age Greater teleworking has, in turn, made cybersecurity a vital issue for business. In Hungary and CEE, organizations recognize the need for improvements but more effort is needed, the Microsoft “2020 Central and Eastern Europe IT Cloud Security Survey” reveals. 9 SOCIALITE

Making Music in a Pandemic

Those who enjoy live music have had a hard year, and the immediate future doesn’t look too bright either. If it’s tough on the fans, what must it must be like for the musicians. 21

Focusing on the Future

S PE

RE CI A L

POR

T

Attila Szabó, Ford’s top man in the Czech Republic and Hungary, describes how commercial vehicles have helped the automaker weather the COVID storm and discusses rising sales and alternative revenue streams.  10

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News THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Kálmán Béres, Zsófia Czifra,

Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Bálint Szőnyi, Zsófia Végh.

LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu

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What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

BBJ-PARTNERS

It’s been a week or so in which it is hard not to feel positive. The eye-catching and surprising Q1 GDP figures, as reported in our Macroscope feature on page three, indicate the Hungarian economy is far more robust than we thought and poised to bounce back in double-quick time, possibly as soon as this summer.

The Ministry of Finance is sticking to its growth prediction of 4.3% for this year, but a range of analysts (not all of them particularly pro-government) have been plotting more ambitious targets ranging from 5-7%.

Even the European Commission is more optimistic than the government here in eying 5% GDP growth for Hungary. (Much of the improved situation is down to the better-than-expected performance of industry, within which automotive carries the most significant weight. The special report in this issue is dedicated to the latter sector and how it has coped with COVID.) In truth, I am anyway predisposed towards being in a sunny disposition right now since I got my second COVID-19 vaccination on May 19. It was in the midmorning of our deadline for this issue, which was what the scientists might call “sub-optimal,” but I was keen to get it over and done. Even better, and not to brag, but I got the Moderna jab, which I keep being told is a real rarity in Hungary. By a strange coincidence (not least because we live in entirely different health districts), our wine columnist Robert Smyth (you’ll find his latest offering on page 22 of this issue) also got the Moderna shot. He knows just one person other than me to have received it and said it was described to him as the Mercedes Benz of COVID vaccinations.

Before you accuse me of being singled out for special privileges, I ought to add that, since I got my jab in my hometown of Gödöllő, there are presumably a fair few of my local compatriots (Gödöllőites?) who are also going about with an armful of Moderna magic. I am just grateful it is one of the vaccines approved by the EU and the United Kingdom, which will presumably make the journey home to see my aged mother for the first time in a year and a half that much smoother once Hungary gets added to the “green list” for travel.

What hasn’t been going smoothly is the distribution of the government immunization cards to legally resident non-Hungarian citizens, as we report on page five. While Hungarians have been getting the cards in as little as eight days from receiving their first jab, foreigners have not. I subscribe to the cockup theory rather than the conspiracy variety.

It seems the issuing system, which pairs ID card numbers with health records, did not factor in the different number sets used for non-Hungarian citizens.

We are told work is ongoing to fix this; the best advice, for now, is to visit your local kormányablak (government window) in person with all your paperwork or try downloading the newly launched EESZT mobile vaccination app. However, you will need to be already registered with the e-government ügyfélkapu (customer portal) for the latter.

Robin Marshall Editor-in-chief

Photo by Fortepan / Magyar Műszaki és Közlekedési Múzeum / Archívum / Negatívtár / Pölös István gyűjteménye

VISIT US ONLINE: WWW.BBJ.HU

THE FEEL GOOD FACTOR RETURNS

THEN & NOW

In the color photo, the “Nemzeti Regatta” (“National Regatta”) of the majority state-owned Balaton Shipping Company (Balatoni Hajózási Zrt. or Bahart) leaves the Badacsony marina (168 km southwest of Budapest on the northern shore of Lake Balaton) on May 18. The trip marked the 175th anniversary of boating on “the Hungarian Sea,” as the lake is sometimes known. In the black and white picture, taken from the Fortepan public archive, the steamboat “Baross” is moored near Siófok (104 km southwest, but on the southern shore) in 1908.

Photo by MTI / György Varga

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Budapest Business Journal | May 21 – June 3, 2021

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Budapest Business Journal | May 21 – June 3, 2021

News///macroscope

Analysts Raise Eyebrows and Forecasts in Light of Startling GDP Data

ZSÓFIA CZIFRA

Despite of the third wave of the coronavirus pandemic, which hit Hungary hard, the economy grew in the first quarter of the year on a quarteron-quarter basis, and the annual contraction was the smallest since the start of the pandemic.

According to preliminary data released by the Central Statistical Office (KSH), the economic performance grew

by

1.9%

in the first three months from the previous quarter and, as the raw data shows, decreased by 2.3% from the same period of last year. The pace of the contraction eased from 3.5% in Q4 2020. The annual shrinkage was 1.8% according to seasonally and calendar adjusted and reconciled data for the first quarter.

The main drivers of the increase were industry, financial and insurance

Inflation in EU Member States (April 2021)

Malta Italy Ireland Cyprus Denmark Eurozone Estonia France Latvia The Netherlands Slovakia Austria EU-27 Bulgaria Spain Belgium Germany Croatia Slovenia Finland Lithuania Romania Sweden Czech Republic Luxemburg Poland Hungary

Greece Portugal

The first-quarter GDP data took analysts by surprise: the latest release by the KSH shows that the Hungarian economy expanded in the first three months of the year compared to the previous quarter.

On an annual basis, the pace of contraction eased in Q1 from the last quarter of 2020.

Market watchers have already raised their forecast for this year.

Increased Demand

“All this means a significant increase in aggregate demand, which will be accompanied by increasing internal inflationary pressures,” he added.

According to him, the Hungarian economy might return to its pre-crisis level even before the summer.

Players in the Hungarian economy have gotten accustomed to the restrictions, and segments affected by the lockdown have learned to deal with the hardships; thus, the constraints have held back the economic performance a lot less than previously expected, Gábor Regős, from economic think-tank Századvég, commented.

However, he noted that the performance of the various sectors has been diverse: while tourism has been

of

5.1%

in 2020.

Hungary’s first-quarter GDP data was enough to put the country near the top of the list compared to EU peers, but not quite enough to make it into the first three. In the first quarter of 2021, seasonally adjusted GDP decreased by 0.6% in the euro area and by 0.4% in the EU, compared with the previous quarter, according to a flash estimate published

by Eurostat, the statistical office of the European Union.

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 1.8% in the euro area and by 1.7% in the EU27 in the first quarter of 2021.

around

“The fact that the Hungarian economy was able to show such dynamic growth on a quarterly basis in a quarter which showed a rather mixed picture in advance means that there is a much higher recovery potential in the economy than expected.”

Savings and increased spending can also play a big role in it; however, a lot depends on how fast international tourism will be back on track,” the analyst says.

Gergely Suppan, head analyst at Takarékbank, said that the latest data clearly shows the strong resilience and recovery ability of the Hungarian economy. Due to the excellent pace of vaccinations and the gradual easing of restrictions, a quick rebound is expected from the second quarter of the year.

The European Commission (EC) is even more optimistic than the Hungarian government: even before the latest GDP data came to light, the EC had raised its growth projections for the Hungarian economy in its spring economic forecast. The EC now predicts 5% annual growth, up from the 4% it said in its winter forecast in February, while the Hungarian government puts 2021 GDP growth at 4.3%. As for 2022, the EC said Hungary’s economy was expected to expand by 5.5%.

Source:

activities, and information and communication, KSH said in its preliminary release.

Péter Virovácz, head analyst at ING Bank, said the data had surprised even the most optimistic analysts. “The fact that the Hungarian economy was able to show such dynamic growth on a quarterly basis in a quarter which showed a rather mixed picture in advance means that there is a much higher recovery potential in the economy than expected,” he said.

He also raised his forecast, emphasizing that it might be more realistic now that the Hungarian economy could expand at or above 6% annually this year.

expectations,” Minister of Finance Mihály Varga commented on the data. He attributed the growth to “a successful vaccination program and an effective economic policy.”

He noted, “Hungary has started to catch up, gaining a step-up advantage among EU member states, and can expect double-digit growth in the second quarter.” The government expects the Hungarian economy to grow by 4.3% in 2021, after a recession

likely to hold back the economy, industry has contributed to the growth.

“The positive data shows that the economy has a better-than-expected potential for resilience and restart; therefore, annual growth might be higher than estimated earlier and could come to

5%.

Quick Rebound

The revival of European and overseas tourism, the robust performance of the U.S. economy, and the large sums of EU funds will further accelerate the recovery process from the second half of the year.

According to Suppan, the Hungarian economy might return to its pre-crisis level by the third quarter of this year at the latest. However, it might happen even sooner, Suppan says. He also uplifted his expectations for annual GDP growth from 6.6% to above 7%.

“According to the GDP data of the first quarter, the Hungarian economy started the year well above

Numbers to Watch in the Coming Weeks The Central Statistical Office (KSH) will publish data on the state of the April labor market on May 28. The next day, we will find out how much money Hungarians made in March. First-quarter investment data will be released on May 31, followed by a detailed reading of the first-quarter GDP data by KSH on June 1.

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News

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Budapest Business Journal | May 21 – June 3, 2021

Investment Volumes for CEE Expected to Reach EUR 10 Bln As the pandemic continues to influence capital markets negatively, investment flows for CEE (Bulgaria, the Czech Republic, Hungary, Poland, Romania, and Slovakia) are down by almost 48% on Q1 2020 at about EUR 2 billion. However, longer-term predictions for investment volumes are favorable, with a post-pandemic recovery anticipated.

GARY J. MORRELL

“Despite the slow start, we currently estimate that CEE 2021 yearend volumes will accelerate to reach similar levels to 2020, of around EUR 10 bln. Preliminary EMEA volumes are estimated to be down circa 32% year-on-year,” says Kevin Turpin, director of CEE research at Colliers International.

constituted

Váci Greens Building “D,” the final phase of the six-building Váci Greens office development, has been sold by developer Atenor to GTC. The transaction is expected to go through in Q2 2021 Total CEE investment volume reached EUR 10.4 billion for COVID-hit 2020, compared to the peaks of 2018 and 2019 recorded by the consultancy at EUR 14.4 bln and EUR 13.8 bln, respectively.

All countries in the region recorded year-on-year declines in volumes compared to the first quarter

of

2020,

except for Hungary. Despite that, investor sentiment suggests a strong pick-up in activity in the second halfyear, subject to progress with measures against the pandemic and the opening up of travel, according to Colliers.

In the first quarter, Poland represented about 65% of the total volume, followed by the Czech Republic (14%) and Hungary (11%). This means around EUR 1.3 bln in investment for Poland, EUR

State of Emergency Decrees Extended to Fall as 5 millionth Innoculation Approaches NICHOLAS PONGRATZ

The Hungarian Parliament has voted to extend pandemic defense measures, ensuring government decrees issued under the state of emergency, which were otherwise set to expire on May 23, remain in force. The state of emergency will automatically cease 15 days after the start of the fall parliamentary session, although the government could decide to end it before that.

Gergely Gulyás, the head of the Prime Minister’s Office, had previously said that restrictions for citizens who haven’t been inoculated against the coronavirus could remain in force until August. Later, Gulyás said he expected the number of people inoculated against the coronavirus in Hungary to reach five million by May 28, which would trigger further easing of pandemic restrictions. As of May 19, the figure stands at 4,790,996.

The expected timing aligns with data from virologist Miklós Rusvai, who said

“Our view remains that while some shifts are inevitable, core, wellperforming assets should hold up well, with more pressure on secondary product. Due to the high levels of interest from investors in logistics assets, we expect to see further compression in this asset class,” Turpin explains.

As for where the money comes from, Western and Northern European funds have dominated the first quarter of 2021, accounting for 50% of volumes, with capital coming mainly from the United Kingdom and Germany, representing 32% of the total transacted volume. CEE investors

that the epidemiological indicators have been improving. He told TV news channel M1 that the amount of virus hereditary material in wastewater had decreased, indicating that the third wave of the pandemic may subside by the end of May. To reach that five million threshold, the government allocated “at least” HUF 16 billion for an information campaign to promote vaccination against the coronavirus, reported state news agency MTI. The government acknowledged that information campaigns could “significantly contribute to the success of the inoculation program.”

As of May 14, the ratio of Hungarians who have firm plans to get vaccinated against COVID-19 or have already received their first jab stands at 64%, according to a weekly survey by the Central Statistical Office (KSH). Among them, more than 50% of 16-18-year-olds have registered for a coronavirus vaccine, Ágnes Galgóczi, the head of the epidemiology department of the National Center for Public Health, told public media on May 16.

300 million for the Czech Republic, and EUR 230 mln for Hungary.

Regarding sectors, office secured 50% of the total transaction volume, followed by industrial and logistics with 28% and retail at 11%. Pricing has remained relatively stable overall, but further compression in the industrial sector is expected throughout the year, subject to transactional activity, which will, in turn, rely on product availability.

Prime Yields

Colliers puts prime Budapest office yields at 5.25% compared to 4.25% in Prague and 4.7% in Warsaw; Budapest continues to offer attractive yields for high-quality products. The consultancy has recorded minimal movement in prime yields, primarily due to the ongoing lack of transactional evidence to support further shifts.

28%

of the total volume.

“CEE domestic investors, consisting of mainly Polish, Czech and Hungarian capital, have also remained very active, particularly in their respective domestic markets. While travel restrictions challenge the ability for many investors to view opportunities and dampen investment volumes, capital from Singapore and South Africa managed to deploy,” says Turpin.

Subject to the pandemic being brought under control and allowing economies to function with fewer restrictions, CEE is expected to begin a recovery throughout 2021 and 2022, at an average pace of around 4.3% annually.

Prime CEE Yields City

Office

Industrial

Prague

4.25%

5%

Budapest

5.75%

7%

Warsaw

4.7%

6.25%

Source: Colliers International

Coronavirus ///roundup Company Vaccinations

Companies are also playing a role in getting their employees vaccinated, according to novekedes.hu (Growth).

The Hungarian Chamber of Commerce and Industry (MKIK) and the Hungarian Banking Association urged their managers to give employees one paid day of leave on the day of or after they get a COVID jab. Additionally, Audi, MOL, Suzuki, and Wizz Air have organized onsite shots for workers registered in the vaccination system.

Currently, COVID vaccines from China and Russia account for 52% of the total of 10,133,015 doses Hungary has received, according to koronavirus.gov.hu, the government’s official pandemic website.

Of these, the last shipment of Russian Sputnik V vaccines arrived in Hungary on May 11, according to the Minister of Foreign Affairs and Trade Péter Szijjártó.

In the past two weeks, Hungary has also received a brace of deliveries of Chinese Sinopharm vaccines, with 1.2 million doses in each case. An additional

330,000 doses of the COVID vaccine developed by Pfizer and BioNTech arrived in Hungary on May 18.

Meanwhile, Hungary is also making strides in its own vaccine development undertaking. On May 17, State Secretary László György said at a daily pandemic press briefing that Hungary would lay the cornerstone of a national vaccine factory in Debrecen in 100 days. The plant will ensure self-sufficiency for vaccine production for Hungarians and the Carpathian Basin from the end of 2022, György said.

Progress with immunity certificates has also been underway. On May 14, Hungary launched a mobile application that serves as a COVID immunity certificate for those who have received their first jab.

The Hungarian government has also made further agreements with several countries for mutual acceptance of these immunity certificates. These now include Bahrain, Croatia, the Czech Republic, Montenegro, North Macedonia, Romania, Serbia, Slovenia, and Turkey.

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Budapest Business Journal | May 21 – June 3, 2021

Foreign Citizens Face Difficulties Getting Immunization Cards As Hungary’s vaccination rollout progresses and the number of jabs given increases, the government plans to ease virus curbs further, according to Gergely Gulyás, head of the Prime Minister’s Office. But foreigners legally living in the country have faced problems securing the immunization certificates that would enable them to benefit.

However, the system cannot handle foreign ID cards or passport numbers and cannot link them to the TAJ numbers; thus, it cannot produce the cards for legal, vaccinated, nonHungarian residents. Many of their Hungarian peers got their cards within eight days of their first shot.

The BBJ contacted Központi Okmányiroda, the issuer of immunization cards, requesting further information. At first, it said there was no problem, and both Hungarians and nonHungarians were getting the card.

When told that was not the case, the issuer said anyone facing such problems should report it to the relevant government offices with documents verifying that their shots have been administered and registered, and they will receive their immunization certificate in the mail shortly after the visit. It is also possible to report the problem online at the website of http://magyarorszag.hu. Központi Okmányiroda said that there is now no need for a prior office appointment in the case of personal visits.

Working on a Solution

ÉVA KASZAP

Speaking at the government’s weekly press briefing held on Thursday, May 13, Gulyás announced the loosening of several more lockdown restrictions.

As of May 28, people can organize wedding receptions, larger funerals will be authorized, and summer camps for children will open from mid-June after reaching a certain level in vaccination.

Thanks to its mass vaccination campaign, the government hopes to have administered at least five million first doses of the coronavirus vaccines by the end of May, inoculating 50% of the population, Gulyás said.

Outdoor terraces reopened in Hungary some four weeks ago. According to latest regulations, indoor dining, museums, thermal spas, hotels, theaters, cinemas, gyms, libraries, and many other recreational venues will open gradually.

These facilities, however, will be available only for those individuals in possession of a government-issued immunity card.

However, the latest reopening measures resulted in complaints from many non-Hungarian legal residents, as they are facing difficulties in receiving the plastic cards. The confusion was not helped by some mixed messages from the authorities.

Initially, foreign nationals were told to contact their general practitioners at the vaccination point where they received their shots and tell them that they do not have Hungarian citizenship.

This would require doctors to delete the original vaccination records and create a new one, making the process even longer. At the same time, it was

News | 5

Image is illustrative only. Photo by Nattakorn_Maneerat / Shutterstock.com not clear to doctors that they needed to register foreign citizens with any distinctive identification marks.

The German Embassy confirmed to the Budapest Business Journal that “a large number of inquiries” had been made about the cards by German nationals living in Hungary. It added, “For questions regarding the immunity card, we recommend that our compatriots visit the government’s website (www. kormanyablak.hu).”

Seeking Clarification

The British Embassy said it, too, was “aware that vaccinated foreign, including U.K., nationals legally resident in Hungary have not been receiving their immunity certificate. We have been seeking clarification and advice from the Hungarian authorities, including the Ministry of Foreign Affairs and the Chief Medical Officer. We will continue to do so.”

The spokesperson added: “We have been informed that all people vaccinated in Hungary should receive their Immunity Certificates. Budapest Főváros Kormányhivatala has informed us that people who have yet to receive their certificate should make inquiries at their local government office (Kormányablak) either in person or online.

“If this does not resolve problems, they should contact the GP who arranged their vaccination and check whether

their personal and contact details were registered in the EESZT system (Elektronikus Egészségügyi Szolgáltatási Tér or Electronic Health Services Area).

We have been told that the lack of contact details in the EESZT system might cause delays in issuing immunity certificates, regardless of nationality.”

The U.S. Embassy said that it “routinely address concerns of the community with relevant government offices, such as asking for clarification on how U.S. citizens residing in Hungary would fit into Hungary’s vaccine rollout, including proof of immunization.”

It noted: “The Hungarian government on https://vakcinainfo.gov.hu has recommended that individuals having trouble with receiving their immunization card first verify that their vaccine has been registered. If the vaccine has been registered, but the immunization card has not been received, the instructions on the website are to report the problem through the portal, or at http://magyarorszag.hu.”

According to Gulyás, the problem is caused by a technical complication in the electronic healthcare system managing the registration of vaccinations and the issuance of immunity cards. Individuals registering for the vaccination must provide an ID card or passport number together with a local social security number (TAJ).

The Ministry of Interior, the Cabinet Office of the Prime Minister, the Prime Minister’s Office are jointly working on a solution to eliminate the problem and facilitate access to plastic cards, Gulyás said. He added that foreign citizens would also be able to pick their cards up personally at government offices; there will be no need to wait for them in the mail.

On May 14, the government also launched a mobile application that serves as a COVID immunity certificate. The app, available for Android and iOS, is operating in test mode at present, and it requires prior registration on the www. eeszt.gov.hu website.

Based on a QR code, the app tracks information on the date of all vaccinations (not just for the coronavirus), contains the name and TAJ number of its holder and specifies the disease the vaccination prevents.

The BBJ contacted several indoor venues to ask if they would accept the mobile application as proof of immunization. The biggest gyms and thermal spas already have a QR code reader system and said that visitors using only the smartphone app would be granted entry, but they should also bring their ID card or passport with them.

Some libraries told us that visitors using the app could enter the building, but others do not yet have protocols in place for this. Restaurants show a scattered picture, most waiting for more detailed information on relevant regulations.

Meanwhile, the Office of the Commissioner for Fundamental Rights has expressed concerns about the use of the vaccination cards, saying that it raises several constitutional questions.

Ombudsman Ákos Kozma has received more than 800 complaints during the last few days, which led him to submit a proposal to the Ministry of Interior and the Ministry of Human Capacities, which control of the Operative Board, the body responsible for handling the coronavirus epidemic in Hungary.

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Budapest Business Journal | May 21 – June 3, 2021

Business

DUIHK Expects Swift Economic Recovery From COVID

The members of the GermanHungarian Chamber of Industry and Commerce (DUIHK) and other foreign investors are expecting renewed economic activity this year, both for the economy as a whole and even more so for their own business, according to the chamber’s latest economic survey.

András Sávos member companies, as they support the Hungarian government’s growth forecast

of

4.3%

for the Hungarian economy this year.

According to the minister, the more than 2,800 German companies operating in Hungary, employing more than 200,000 people, have a significant role in this.

Virus Rebound

in the chamber’s survey. This commitment is underlined by the fact that Hungary was considered the most attractive investment location out of 20 potential destinations in the domestic study.

After the economic downturn in 2020, most companies expect economic activity to pick up again this year, for the economy as a whole and even more so for their own business. Almost one in two respondents expect their business situation to improve in the next 12 months, with only 15% expecting business to deteriorate.

According to the survey, the positive economic outlook is encouraging companies to expand employment and investment. For both indicators, around 40% of respondents expect a higher level than last year, while only one in 10 plan to cut jobs and one in six to reduce investment.

This year’s study by DUIHK specifically addressed the economic impact of the coronavirus. More than one-third András Sávos, president of the of companies said they have already DUIHK, said at the presentation of the returned to pre-coronavirus turnover survey that the global outbreak of the levels, which is expected to rise to more coronavirus virus in 2020 had caused than 50% by the end of the year. In an unprecedented setback for the comparison, around 40% of respondents international and Hungarian economies. expect to get back only in 2022 or later.

“We are starting from a weak base, but One of the long-term consequences there is hope that we can make up a of the crisis could be the transformation significant part of last year’s weakening of global production and supply chains.

Labor Concerns this year,” Sávos said.

According to the survey, one in two Compared to previous years, the As a result, far more companies are companies in Hungary and the region availability of skilled labor has planning to increase headcount and plans to expand their supplier base and improved somewhat, but one in two investment than are planning to cut back, replace some suppliers. managers are still dissatisfied with the according to the survey, he added.

In doing so, a significant proportion of He also noted that it was encouraging those surveyed would look for new suppliers, current situation. With the hoped-for economic recovery, labor shortages that despite the economic crisis caused mainly in the EU countries of Central could increase again this year, with by the pandemic, the improving trend and Eastern Europe; however, a large in business sentiment has continued in number of companies say they would also almost one in two respondents a number of areas, with the country’s look for new suppliers in Western Europe. identifying this as a serious risk.

On average, companies reported a performance above the regional average The vast majority of the companies 6% increase in wage costs this year. in several aspects and even placing it surveyed, some DUIHK says that this is more likely among the leaders on some. to represent the lower boundary of Assessing the results of the actual wage dynamics. Business study, Minister of Finance Mihály would reinvest in Hungary, the leaders’ satisfaction with the quality Varga welcomed the positive highest proportion yet measured of both the vocational training expectations of the chamber’s BENCE GAÁL

88%,

and higher education systems has increased. Despite this positive change, the vocational training system’s performance is still below expectations, especially those of manufacturing firms.

In 2021, the trend of a gradual improvement in the perception of the Hungarian economic policy framework continued. In public administration and tax administration, Hungary’s business ratings have caught up with the leading Baltic States, and satisfaction is higher than the regional average on several other issues, the chamber notes.

In other areas, however, the situation remains unsatisfactory, despite the improving trend. There is still more criticism than praise on transparency in public procurement and corruption, and the rating is also below the regional average.

The quality of infrastructure has been rated positively by half of the responding companies this year, the highest proportion to date. In this aspect, Hungary also ranks highly in a regional comparison.

“We are starting from a weak base, but there is hope that we can make up a significant part of last year’s weakening this year.”

In the aggregate of the 16 countries surveyed across the region by the German Chambers of Commerce (AHK), Estonia is again the most attractive investment target this year, ahead of the Czech Republic and Poland. Hungary was once more in the middle of the field in

th 10 spot

out of 20 destinations, although there were only minimal differences between scores in the top half.

DUIHK conducted its first Hungarian business survey in 1994.

This year, the study was carried out between March 12 and April 16, with 206 business leaders taking part. Since 2006, the survey has been carried out simultaneously in several countries from the region by AHK. In 2021, a total of 1,454 participants took part. The international survey is coordinated and analyzed by DUIHK in Budapest.

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Budapest Business Journal | May 21 – June 3, 2021

DIPLOMATICALLY SPEAKING: MASATO OTAKA, JAPANESE AMBASSADOR TO HUNGARY

Shared Fundamental Values Build ‘Close and Constructive’ Relationship Hungary and Japan have long-held formal diplomatic ties, going back a century and a half. Ambassador Masato Otaka talks to the Budapest Business Journal about the strength of this enduring bilateral relationship.

ROBIN MARSHALL

BBJ: When were bilateral links established between Hungary and Japan?

Masato Otaka: It goes back to 1869 when bilateral relations between Hungary and Japan began when what was then Austro-Hungary and Japan signed a Treaty of Friendship, Commerce, and Navigation. It was dramatically enhanced in 1989 when Japan extended support at the time of the regime change in Hungary. For more than a century and a half, the two countries have been enjoying a close and constructive relationship in various areas such as economy, politics, security, science and technology, as well as culture and education. 2019 marked the 150th anniversary of diplomatic relations between the two countries, which was colored by various cultural events and visits, including Princess Kako’s visit to Hungary and that of President János Áder and Prime Minister Viktor Orbán to Japan.

BBJ: What are the latest trade figures, and what are the trends?

MO: The bilateral trade volume reached EUR 2.1 billion in 2019. It has grown by 45% over five years (2014-2019), though in 2020, due to the coronavirus epidemic, our trade turnover has fallen to EUR 1.8 bln. I expect the figures to be improved soon.

BBJ: Everyone knows about Japan's automotive investments in Hungary. Are these future-proof investments? And what are other key sectors?

MO: Both the EU and Japan have announced and committed to achieving a carbon-neutral goal in 2050. In line with this target, environmentfriendly products are highly required nowadays. Japanese companies are very much aware of this and have enough technical knowledge to take advantage of recycling. We look for a circular economy, so Japanese companies seek

Business | 7

through the EU and Visegrád Four (V4) frameworks. Japan is the first country outside of the EU to hold regular talks with the V4 [the Czech Republic, Hungary, Poland, and Slovakia], and the “V4 plus” Japan cooperation is steadily evolving. The EU-Japan Economic Partnership Agreement, signed in 2018, has added a further dimension to our partnership. I look forward to further promoting the bilateral relationship throughout my mission in Hungary.

BBJ: How strong are the cultural links?

Masato Otaka, Japan's Ambassador to Hungary to contribute both to the target and to Hungary’s economy and society. As to recent investments, in April 2021, Seiren, a Japanese fiber manufacturing company, announced it would invest about EUR 42 million to establish a plant in Pécs. Its eco-friendly car upholstery must be one of the examples of a contribution to the circular economy.

As Japanese companies have historically invested in Hungary ahead of other Asian countries, the approximately 170 Japanese corporations operating here represent the most extensive presence among Asian countries. Six Japanese companies (Alpine, Bridgestone, Denso, Ibiden, Suzuki, and Zoltek) have strategic partnerships with the Hungarian government, the fifth-highest number by one country. Most Japanese companies, including these six, have maintained their employment levels in Hungary even during the pandemic. TDK, SEWS, Alpine, Denso, and Diamond Electric, for example, have even announced additional investments recently.

The food industry is another key sector.

In April 2021, a famous Japanese instant noodle maker, Nissin, announced its investment in an additional plant in Kecskemét. The noodles made from Hungarian wheat are exported to various European countries.

BBJ: What are the key Hungarian exports to Japan and Japanese exports to Hungary?

MO: Hungarian agricultural products such as foie gras, honey, and Tokaj wine, are popular among Japanese people. Nowadays, Hungary has also started to export sweet corn to Japan.

Since the confirmation of African Swine Fever (ASF) in wild boars in Hungary in April 2018, Japan has had to suspend pork imports from Hungary.

Still, the veterinary authorities of the

two countries have agreed on a safety arrangement, and I hope imports will resume. Before the suspension, Japan imported about JPY 10 bln (HUF 23 bln) worth of pork from Hungary in 2017, including Mangalica pork, which is well known as a high-quality foodstuff.

BBJ: How much money has been invested into Hungary by Japanese firms, and how many jobs created. What is the geographical spread across Hungary?

MO: The stock of FDI by Japanese companies is approximately EUR 2.8 bln, making Japan the eighth largest investor in Hungary. Japanese companies employ more than 30,000 people in the country.

Considering that exports largely uphold Hungary’s robust economy, Japanese companies are playing a full support role. In terms of the profit from export by foreign-owned companies in Hungary, Japan ranks third among all investing countries. In recent years, Japanese companies have established plants in different localities of Hungary. GS Yuasa has built a lithium-ion battery factory in Miskolc [186 km southwest of Budapest by road], and Seiren plans to set up its factory in Pécs [238 km south]. We are also very honored that Japanese companies are contributing to the economic development of local cities.

BBJ: How would you characterize the political relationship? What areas of disagreement are there?

MO: Hungary and Japan have built strategic partnerships in the economy, politics and security, science and technology, and culture and education. We share fundamental values and cooperate to tackle common international issues. We also look forward to strengthening policy dialogue and defense cooperation, announced at the leaders meeting in 2019. Japan also strengthens its ties with Hungary

MO: Cultural links between the two countries have been strong. For example, Ikebana (Japanese flower arrangement), Japanese martial arts, and Wadaiko (Japanese drums) are very popular in Hungary. On the 150th anniversary of bilateral links, we organized an Ikebana demonstration as an opening event and a Wadaiko concert as the closing event.

We were pleased to see the venues full of people. Besides these traditional Japanese cultures, our pop culture, such as anime cartoons and manga comics, is very popular amongst young Hungarian people.

Looking in the other direction, Ferenc Liszt is famous among the Japanese.

Many performances of his music are given in Japan, and approximately 30 to 40 Japanese students are currently studying at the Liszt Ferenc Academy of Music. Herend Porcelain and the Rubik Cube are also well recognized in Japan.

I should also mention that both the Japanese and the Hungarians like to go to hot springs to relax. Another interesting similarity is that we both love pickled vegetables. In this way, both countries have some common cultural aspects and respect for each other’s culture.

After a series of events during the 150th anniversary year, we feel that the people of both countries are even more culturally attached, and the close amicable relationship will be further developing.

BBJ: Could you give us any direct examples of where the embassy has successfully intervened on behalf of Japanese companies or the Japanese community?

MO: One of our embassy’s essential tasks is to improve the investment and business environment for Japanese companies in Hungary. While respecting their own management decisions, our embassy is always ready to talk and negotiate with the related ministries and local governments to provide the necessary support for them. This is particularly true during the COVID situation.

I believe it is important that as many Hungarian people as possible know the various attractive aspects of Japan, which would lead to the promotion of understanding of the Japanese community here and Japan itself. By using social media, we are introducing our culture and gastronomy. My Facebook account (Nagykövet OTAKA Masato), for instance, presents recipes for Bento, Japanese lunch boxes. One of the main concepts of this series is to use Hungarian ingredients. I would like to encourage Japanese- and Hungarian-language readers to take a look at my Facebook page.

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Budapest Business Journal | May 21 – June 3, 2021

All Shook up: The Activist Investors In their latest Corporate Finance Column for the Budapest Business Journal, Les Nemethy and Francois Lesegretain look at the role and impact of so-called activist investors.

The Corporate Finance Column assets; changing the capital structure; improving corporate governance and transparency; or cost-cutting.

One can see how a short-term bias might creep in, given that there might be a temptation to drive up stock price, to pump and dump, but then again, many shareholders have short-term objectives.

The difference is that activist investors are far more sophisticated and betterinformed than the average shareholder, and may have one or more seats on the board, hence a greater ability to influence the direction of a company.

Furthermore, they can mobilize the votes of passive shareholders.

Critics often accuse activist investors of burdening their targets with debt, cutting vital research and development budgets, blocking new investments and then making a quick exit as the consequences of their decisions blow up behind them.

But a study of 50 activist-held companies

Activist Funds Deployed Globally

80

From 2012 to 2018 (USD bln)

70 60 50 40 30 20 10 0 2012

No public company, no matter how large, is immune from possible attack from activist investors. Emmanuel Faber, CEO of Danone, for example, was ousted in March by two such groups: Bluebell Capital and Artisan Partners), as reported in theconversation.com.

Activist investors aim to shake things up. If their ideas are good, they can have the clout to change the course of a company in the right direction; conversely, they may threaten the long-term strategy of a company and destroy value. They typically manifest themselves when a company is underperforming.

In some companies, the power of management may be unchecked, to the

Percentage of Boards Approached

by Activist Investors in 2020 in Europe

63% 31% 3% None

3% 1-2

BBJ Infographics

3-4

5 or more Source: Skadden

2013

2014

2015

2016

2017

Source: Deloitte

BBJ Infographics

detriment of shareholders. In widely held public companies, the possible threat of activist investors coming on board acts as an important check on the power of management, for better or for worse.

These highly engaged investors are sometimes portrayed as being of a certain state of mind, always scouring for opportunities to improve value, which is why the topic is relevant even for the management and owners of private companies. We suggest that every CEO should have the ability to view his or her company like an outsider, looking at his or her actions and company performance through the lenses of independence and objectivity.

In this column we look at what an activist investor is, what trends can be seen in their activities, what types of decisions they typically drive within companies and some evidence as to their effectiveness.

An activist investor is “an individual or group that purchases large numbers of a public company’s shares and/or tries to obtain seats on a company’s board to effect a significant change within the company,” according to investopedia.com. These are typically hedge funds, private equity funds, or wealthy individuals.

As shown in the chart below, activist investors more than doubled the capital

12 mths to Q3 2018

deployed in their campaigns in six years, from approximately USD 25 billion in 2012

to

USD 67 bln

from

in 2018.

Interestingly, global capital deployed fell almost 40% from 2018 to 2019 and then stabilized in 2020, despite COVID19. In Q4 2020, 57 new campaigns were launched by investors (up 128% from Q3).

In Europe, despite a big drop in activist campaigns during the first months of the pandemic, there was a 21% year-on-year increase in campaign activity in 2020, lazard.com says.

All Targets

According to a survey done by law firm Skadden, only 3% of companies surveyed said their board had received no approach at all (either privately or publicly) from activists since the onset of the pandemic: So, what types of decisions do activist investors typically drive within companies? Basically, anything that has the potential to increase the valuation of companies.

This could include: appointing a more effective and competent management team; changing strategy, including acquisitions, or divesting non-core

2009-2014

by Whalewisdom, Bloomberg, and The Economist suggests that this may be a myth, and that activist investors don’t have such negative effects. The study shows surprising improvements in R&D and actual decreases in leverage.

In a nutshell, activist investors may not always be the parasites that Hollywood sometimes portrays them as.

When they invest in companies, their interests are usually aligned with other shareholders, and there are times when the desire to shake things up might be legitimate. Of course, as with French verbs, there are exceptions to every rule.

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm.

A former World Banker, he is author of Business Exit Planning (www.businessexitplanningbook.com) and a past president of the American Chamber of Commerce in Hungary.

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Top Healthcare Executives in Hungar y 2021 A behind-the-scenes look at some of the most influential Healthcare Executives in Hungary, their leadership, philosophies and successes.

Top Healtcare Executives in Hungary 2021 is a Budapest Business Journal publication Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at www.budapestbusinessjournal.com

• Provides an essential overview of how Hungary’s healthcare market operates.

• Get an insight into the most significant developments in 2020, and a look at what is in store for 2021.

• Get to know the key personalities in the Hungarian healthcare sector.

• Read personal accounts from the country’s top healthcare executives detailing how they got into the business and some of their proudest achievements, among other things.

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Budapest Business Journal | May 21 – June 3, 2021

Cybersecurity More Important Than Ever in Home Office Age

BENCE GAÁL

The study, compiled by market intelligence firm IDC, involved some 1,500 companies from both the SME and large enterprise categories, with 200 participants from Hungary. The other countries included in the survey were the Czech Republic, Greece, Poland, Romania, and Russia.

“The COVID-19 pandemic massively accelerated digital transformation,” said Mark Child, research manager at IDC’s European security group, adding that cybercriminals took advantage of this.

The rise of remote work resulted in more focused attention on cybersecurity issues. Hungarian companies identified protection against malware (65.5%), secure remote working (56%), and restricting employee access to only relevant applications and databases (51.5%) as the top three security priorities for the next

6-18 months.

“When people log in to work from home, they probably don’t realize they have their company’s security in their hands. They need tools and support to help them protect their digital identity and the company’s security,” noted Andrey Savchuk,

Cybersecurity Awareness

Photo by Gorodenkoff / Shutterstock.com

The coronavirus pandemic resulted in a skyrocketing of the popularity of teleworking and has, in turn, made cybersecurity a vital issue for businesses around the globe.

In Hungary and the CEE region in general, organizations recognize the need for improvements; however, there are still areas where more effort is needed, the Microsoft “2020 Central and Eastern Europe IT Cloud Security Survey” reveals.

head of enterprise security, compliance, and identity at Microsoft CEE. “Businesses must take a Zero Trust approach, which includes explicitly verifying every access and user’s identity; and limiting access to what they need here and now,” he added.

Access Control

There are a variety of access controls companies can use to make sure their systems remain protected.

In Hungary, the most common solutions in use include endpoint protection (75.5%), secure remote access, such as VDI and VPN (74.5%), and access management (64%).

of Hungarian respondents reported malware or ransomware attacks on their organization, and about 28.5% failed to meet privacy regulations such as GDPR. The third most common problem faced (24.5%) was outdated security processes and systems.

Addressing the problem of ransomware attacks, Child explained, “We also expect to see more attacks on organizations in Europe because […] the U.S. last year passed a law prohibiting the payment of ransoms and ransomware attacks because they view it as funding organized crime. The upshot of that is cyber attackers are refocusing their efforts on European organizations.”

In Hungary, approximately 44.5% of the surveyed companies had a comprehensive security strategy, while

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Another problem is the lack of comprehensive cybersecurity awareness programs. While 34.5% of Hungarian firms have a detailed awareness program, 43% conduct cybersecurity training on an ad-hoc basis. Some 14.5% of respondents said that they had no such programs at all.

“Having a patchwork of different tools and programs across a single organization can create frustration and reduce efficiency for workers. Effective security solutions will look to relieve pressure from the workforce, rather than relying on their compliance with requests for updates and log-ins on multiple different platforms,” Savchuk pointed out.

“We need people to have the same level of comfort and expectation around security controls as they do in their personal lives. Just as you wouldn’t leave your home unlocked, so you have a responsibility to understand and comply with the security measures put in place by your company,” he added.

The participating companies were also asked about the steps they thought were necessary to improve their cybersecurity. Among Hungarian companies,

61%

mentioned

training employees, 49.5% argued for increasing technical IT knowledge, and 45% answered that creating or expanding their cybersecurity strategy is the step to take.

34.5% said

Mark Child The survey also took a look at the most common security challenges faced by the companies in the past year. Slightly more than one-third

they had a partially developed security strategy. However, only a fraction of companies had a chief information security officer (CISO) in place to oversee cybersecurity.

Just 15% of firms in Hungary had a CISO; in 43% of cases, cybersecurity was overseen by a CIO or IT manager.

Even more troublingly, at 18.5% of companies, the person responsible for IT security was a CEO or general manager. In 9.5% of the cases, the company owner was the person responsible for such duties.

“Cybersecurity decision-making is not always being elevated to the highest levels of the organization, which is necessary if we want security to be prioritized and strategically implemented across all levels of the organization,” Savchuk argued.

Andrey Savchuk On the other hand, only 8.5% of companies said that they plan to move from on-premises to cloud security, the lowest among the six countries included in the survey.

In terms of budget, most Hungarian companies realized that skipping costs would negatively affect the future. Only 2% of respondents said that they would cut their cybersecurity budget in the next two years, while 65% planned to keep it stable. About a third of companies said they are planning to increase funding.

3

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Budapest Business Journal | May 21 – June 3, 2021

Special Report Automotive

Rising Commercial Sales Help Ford to Motor On

Attila Szabó, Ford managing director for the Czech Republic and Hungary, tells the Budapest Business Journal how the American automaker has weathered the COVID pandemic.

ZSÓFIA VÉGH

BBJ: The European auto market saw an 18% decline in 2020, according to the Economist Intelligence Unit, which expects a 5% increase in the field this year.

How did Ford Hungary do last year?

Attila Szabó: In the EU 20, the drop was closer to 20%, of which commercial vehicles accounted for 18% and passenger autos 22%. Since the commercial vehicle segment is as important as the passenger segment at Ford, this helped our sales somewhat. In Hungary, the entire car industry saw an 18% drop last year, of which passenger cars again had a slightly larger share. With 18,800 vehicles sold, Ford performed best in the Hungarian market, where overall sales stood at 150,000 in 2020. In line with our strategy, commercial vehicles (60%) took the lead, which equals 30,000 cars sold.

The market share of commercial autos has been on the rise in the past three to five years. In Europe, Ford’s share in this market was 14.6% in 2020. Here, too, we see a constant rise in sales and Ford has been a market leader for more than six years. It is an important part of our strategy to keep this position and improve our share at a European level. Electrification is also gaining more traction in our utility range: many of our vehicles are now also available in hybrid or electric versions.

BBJ: The pandemic didn’t seem to affect the rollout of new models; Ford released a lot last year.

ASz: The first wave hit us hard: our factories remained closed for a month, which meant the cash flow stopped, but suppliers had to be paid regardless. One area where we did not compromise was product development: our designers and

Attila Szabó engineers worked from home, and as a result, there was no rupture in the product rollout. The only problem here was homologation; this is done by external firms which were closed down, so here we faced some difficulties, but eventually, we could roll new models out. In the car industry, planning goes beyond one year; we usually plan at least two years ahead.

Therefore a few months of disruption will not stop the procedure. With dealerships closed in several countries we had to be creative about getting cars to clients, but the entire process was not disrupted.

The question here is how manufacturers can finance this period, how well-capitalized they are, and how they can cut costs. A lesson companies learned during the 2008 recession was always to have sufficient liquidity and cash available; had we not had enough reserves, we would have been more adversely affected during the second quarter. By the third quarter, we climbed back where we were when the pandemic began. This is an advantage of being a global firm; the recovery of the U.S. market helped us a lot.

BBJ: Ford raised its prices in this sensitive period when people’s finances were also less stable.

ASz: The weakening forint and the uncertainty surrounding it played a huge role in the price rise. I also closely follow the Czech market: even there, when the koruna bounced back, it remained stable instead of the forint, where we see a lot of ups and downs against not only the euro but also the dollar. The actual inflation rate is higher than what appears in official statistics, which also impacted our pricing.

Technology also makes autos more expensive. Ever more stringent safety and emission requirements by the European Union is another consideration we have to factor in. We aim to have a five-star EURO_NCAP rating in most of our models, which means building in a number of features that will add to our costs. Meeting emission requirements further increases the price, though installing a particulate filter in a diesel engine is not something the customers sense when they get in the car and for which they are willing to pay extra.

The same is true for electrification.

Out of the 150,000 cars Ford sold on the Hungarian market, plug-in hybrids and fully electric cars accounted for roughly 3,000 each. Less generous state subsidies and a narrower scope of allowances than in Western Europe, together with lagging infrastructure, explain why this market segment is growing more slowly in Hungary. Considering this, plug-in hybrids are better suited to this market and should be subsidized, as they could serve as a bridge until infrastructure and scale allow a greater uptake.

As a result of the above, a general model used by masses can easily have a HUF 10 million price tag.

BBJ: What effect will this have on this year’s car sales?

ASz: We expect to see a 5-10% increase this year, which is still lower than we had in 2019.

We don’t see a sharp rise in the commercial segment as enterprises are planning more cautiously. Some may replace older models simply because it is more cost effective to do so, but smaller companies are less likely to buy new cars this year.

Based on the cost of ownership, companies buying commercial vehicles are more likely to replace their existing fleet; we have offers that make even a three-year-old model worth changing.

The availability of different financing options can also boost sales. Ford Credit is an established payment system in Hungary to help dealers and customers.

We also tried a six-month deferred payment where you don’t have to pay in the first six months or an initial installment. Ford first introduced this option in the United Kingdom, where it proved to be very popular; here, however, clients were wary of choosing it. The system in Britain is different, though; there, it is not unusual for one to use Ford models throughout their entire life, where they keep changing models and pay the monthly fee. In our region, people are less open to different financing options, ownership is still prevalent , and there are other payment options. Operational leasing works only with a specific portion of the corporate segment, while in Denmark, for example, even SMEs use this option.

BBJ: What is the breakdown of different payment schemes in Hungary?

ASz: Among corporate clients, financing is typical, while among private users, it accounts for around 30%. Many still pay in cash (they may have set aside for it), rather than considering other options that could save them costs.

BBJ: Beyond sales, what other revenue streams, for example, partnership with car-sharing companies or new software, do you have?

ASz: In Hungary, the approach to these innovations is, again, somewhat different from the rest of Europe. Here, FordPass, a mobility app with connectivity services, is already available, and a subscriptionbased version will soon be launched as well. However, as with other innovations, we are at the beginning stages, and first, we have to convince our customers to install the app. The business case behind it is providing a lot of innovative commodity services to clients free, but for which, when we get to the point where electric cars become more widespread than now, we can start to charge. Anything people have to pay extra for takes longer to expand in this region, but this is how carmakers will generate revenues besides sales; through user-experience and related services.

This requires a lot of investment initially: to create and install the technology and to make users accept it and use it until you reach the point where they would miss it should it not be there.

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Suzuki Marks 30 Years in Hungary: Investment ‘Risk’ a Success Although at the time of the regime change it was a huge risk for an international enterprise to set up a company in Hungary, Suzuki Motor Corporation chose to make the first significant (HUF 16.3 billion) greenfield investment in Esztergom. With this, the company re-established Hungarian car manufacturing after a 50-year hiatus. Over the past 30 years, the group’s philosophy has not changed: to create safe, cost-effective, and neat products that make people’s lives easier.

Special Report | 11 and 2010), Wagon R+, Hungary’s first minivan (2000), Ignis (2003), SX4 (2004), Splash (2008), SX4 S-CROSS (2013), and the most popular Vitara (2015). In 2020 the 3.5 millionth Suzuki was completed in Esztergom, and development does not stop; new challenges must be responded to.

A New Era Dawns

the task and the challenge that lay in it,” recalls production director Gyula Novák.

“At the beginning, there were quite a few Japanese colleagues in Esztergom, and they tried to pass on their knowledge, explained and illustrated everything with drawings and diagrams, even processes with great thoroughness,” he says.

“Their principle was that if you can simplify a measure to a drawing, it is sure to be understandable to everyone. We could feel on the system that it was much faster, it had much more capacity, and was much more mature than anyone was used to; Suzuki’s was leading technology in Hungary at that time,” Novák adds.

Magyar Suzuki adopted all its technical specifications and best practices from Japan. However, the operational processes and rules had to be developed by the Hungarians. Today the 30-year-old company is contributing to the livelihoods of more than 10,000 people, including 2,800 employees, many suppliers, partners, and dealers.

In the 1990s, Hungary was transitioning from a socialist economy to a marketbased one. The country did not have foreign exchange reserves, and the unemployment rate has increased dramatically. Suzuki Motor Corporation spent years getting to know Hungary.

The now leaving chairman and CEO Osamu Suzuki visited the country several times and singled out the easily accessible Esztergom area close to Budapest to construct the plant.

This investment sent a strong message to other foreign investors: the country was safe 1,000 Cars per Year in and an ideal destination in which to invest.

The technical director of bus maker Ikarus 1992, 700 per day Today was asked to be the CEO of Auto Concern “The Esztergom plant has been engaged (the predecessor of Magyar Suzuki), set up in full-scale car production from the very beginning, covering all processes of car to support the company’s foundation.

The leading suppliers of the later company manufacturing: pressing, welding, and painting of steel sheets, then assembly of were the founders of the Auto Concern. vehicles and quality inspection of finished cars,” explains Zsuzsanna Bonnár-Csonka, Hungarian and Japanese head of corporate communications.

Mentalities Meet “Moreover, since April 2019, the Although many skilled plant workers were Hungarian plant has been the parent looking for jobs in the early 1990s, it was not company’s European-based supply easy to find a suitably qualified workforce. center for spare parts and accessories, In addition, the Japanese envisioned a and its leading automotive center in completely different style of work with Central Europe,” she says. high-speed and precise implementation When the factory opened, local but always preceded by time-consuming suppliers were commissioned to produce and thorough planning and a thoughtful, particular parts, mostly pressed metal or long decision-making process. die-cast made plastic parts, not needing “It was hard at that time to imagine how unique improvement. Nowadays, more the work would go; we were excited about complex functional parts also arrive from

them, and they are actively involved in the development of prototypes.

The plant started in 1992 with the production of the first-generation Suzuki Swift. A new car was completed on average every three days, and 1,000 vehicles rolled off the production line in a year. Today, approximately 700 new models are assembled daily by the staff and robots in two shifts. Suzuki’s hoped for success did not lag in Hungary.

Entering the market with the splendid value-for-money first-generation Swift, representing a “more Western” auto compared to the contemporary Trabants and Ladas, new car purchases became available to the masses. The Swift would become the people’s car. Export operations followed in 1994, and today Suzuki models are exported to 123 countries on five continents.

While all cars were assembled and polished by hand in the early years, and there were 4-6 robots in the welding plant, today 770 robots are aiding, currently in the production of hybrid Vitara and SX4 S-CROSS models. The iconic models made in Hungary over the years are the three generations of Swifts (1992, 2005,

In the spirit of sustainable production and operation, the development of new models and upgrades is continuous at Suzuki, based on market trends, needs, and the regulatory environment. A significant step in December 2019 was the beginning of serial production of hybrid vehicles for the Hungarian and EU markets, bringing new technology and work processes.

Significant modifications have taken place while a fresh protocol has been developed for the safe transport, storage, transfer, and installation of new components. Today, the company offers a full range of hybrid alternatives and, in addition to raising quality to the highest possible level, it will continue focusing on the environmentally-conscious renewal of models and manufacturing methods.

Not only serial production but also experimental development of prototypes is taking place in Esztergom.

Transferring the so-called design proto phase of the hybrid model development introduced in 2019 to the Hungarian production site allowed Magyar Suzuki Corporation to develop and produce quality products in a shorter time.

The main driving force and key to the industry’s success is continuous development, whether in the optimization of processes, costs, series, or manufacturing. One such local decision was putting more emphasis on the SUV category on the Old Continent instead of small cars, in line with European needs. Nowadays, Suzuki customers are more interested in highend models, while each series has also made significant steps to safer, more environmentally conscious driving.

“In the short- to medium-term, the proportion of electric cars will increase, but hybrid versions with internal combustion engines will remain. A number of new, viable technologies are sure to emerge, and it will be possible to choose from several types of powered cars, just like today, when petrol, diesel, hybrid and purely electric cars are available on the market,” says sales director Róbert Krisztián.

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Special Report

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Budapest Business Journal | May 21 – June 3, 2021

Autonomous Cars Taking Over the Wheel Step by Step U.S. animated sitcom “The Jetsons” first aired on September 23, 1962, and envisaged a future where cars would fly.

While that may be a far cry from where we find ourselves at the beginning of the 21st century, there is a significant buzz around self-driving cars, and a big part of R&D in the field takes place in Hungary. Industry insiders tell the Budapest Business Journal how far we are from driverless vehicles we are.

CHRISTIAN KESZTHELYI

The Zalazone test track in Zalaegerszeg is unique not only in Europe but also globally. Beyond its traditional test track features, such as driving and breaking stability, the facility has an immense research and development infrastructure for self-driving vehicle technologies.

Zoltán Hamar Some parts of the test track are already in operation, albeit implementation and construction works are ongoing. The project, for which the foundation stone was laid on May 19, 2017, is expected to be completed by the end of this year.

“The track is the result of the Hungarian government realizing real industry demand for such a facility.

Foreign automotive manufacturers present in Hungary had been

forced to take their spare parts and demands so it can adjust to those, technologies abroad to test them,” introducing new services. says Zoltán Hamar, managing director The development scale for of Zalazone, tells the BBJ. autonomous driving spans from “With Zalazone, locally developed and zero to five. Today, self-driving produced automotive technologies can cars are at stage two, which means be tested in the country.” Hamar says the there are some functions where project has been a genuine political and the vehicle can take over, but the economic cooperation. responsibility is still on the human Zalazone envisages establishing driver. For this reason, level two is a full-range validation facility for often referred to as assisted driving. the vehicles and communication Research, however, is already at a technologies of the future, enabling stage beyond that. multi-level testing opportunities from prototypes right up through serial product development. Considering autonomous driving, Zalazone is already ahead of the curve.

“In the short term, the test track is going to reach full completion, including all the functions that had been planned, by the end of 2021. Currently, operation and implementation of the construction works take place simultaneously,” Hamar explains.

László Kishonti The most recent development is a dedicated smart city section, where an urban environment is being built, Human Intervention complete with building facades, “Level three driving will mean that to “teach” autonomous cars how to the vehicle takes over both control navigate downtown areas. In the and responsibility from the driver. longer term, Zalazone’s management Today, the technology is largely will keep an eye out for new industry

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Thyssenkrupp Planning for a Successful Year in Hungary Thyssenkrupp Components Technology Hungary Kft. managing director Marc de Bastos Eckstein reflects on how COVID has impacted the automotive industry and the German-owned company’s plans for bouncing back.

The wide-spread Hungarian operation makes electromechanical power steering and engin components in Jászfényszaru (65 km northeast of the capital by road), has a stabilizers and coils manufacturing plant in Debrecen (220 km east), a drivetrainassembly plant and steel service center in Győr (121 km northwest), and a specialist electronics and electromechanics R&D competence center in Budapest.

BBJ: In the second half of last year, the COVID-19 epidemic was causing severe difficulties for Thyssenkrupp, as with many others, yet the group stated that there was no reason to be frustrated and that it had a positive outlook. How do you see the situation of the global automotive industry?

Marc de Bastos Eckstein: Although the epidemic continues to cause difficulties, forcing the automotive industry to adapt to the challenges at an incredible pace, and even though things are not going as well as before the epidemic, demand is still good. Production suffers here and there from more minor interruptions, but the shortage of mircochips could really

endanger the industry; nevertheless, it is getting better. The automotive industry is still extremely robust and has excellent potential in Hungary. In addition, through its decisions, the Government of Hungary also shows that the state does not hesitate when unexpected situations arise that require action to be taken.

Thyssenkrupp is in an optimal position in the sense that the interruption of global supply systems and the worldwide shortage of semiconductors affecting the automotive industry has caused no disruption in our Hungarian plants. With a bit of luck, 2021 could even be a good business year. Given the circumstances, this would be a huge success.

BBJ: What are the consequences of the pandemic, what should be changed in the supply chain?

MBE: The pandemic has shown that the supply chain should be modified and some suppliers should be closer to the OEMs in Europe: we expect that and are working on moving more suppliers to Europe, and especially to Hungary, in the future.

Marc de Bastos Eckstein BBJ: What are you working on now?

MBE: We are doing quite well because we did not have to lay off any staff.

Production is running smoothly in all our factories across Hungary; moreover, our competence center in Budapest is also performing well; we have many new projects. It is a significant achievement indeed that our Budapest center has opened an office in the city of Veszprém.

More than 20 colleagues are currently working there, but the staff members will soon reach 80. Today we have more than 1,000 employees in Budapest. In addition to electromechanical power steering and steer-by-wire developments (using only an electronic instead of a mechanical connection), the development of vehicle

motion control has also started in Budapest, which implements computerbased instructions within the vehicle as part of the self-driving systems.

Another important achievement is that, following Budapest University of Technology and Economics, the University of Óbuda, and the University of Debrecen, we have also signed a cooperation agreement with the Pannon University of Veszprém. This includes support for educational development and courses related to automotive systems, and a specific clause including this field in masters’ dissertations. Thyssenkrupp also provides students with job opportunities to include them in actual research and development tasks.

On the other hand, however, we still have to be patient about the construction of our factory in Pécs in 2021. We are very much looking forward to a stable market in order to implement this project.

BBJ: How can you plan for the long run given circumstances like COVID-19?

MBE: We try to get an insight into the future: I personally, and Thyssenkrupp as company, support innovations both in-house and out. We have our own specialists but we are supporting startups in Hungary too.

We have been developing and manufacturing in Hungary for the last 20 years and have invested about HUF 50 billion here so far. It is worth continuing this tradition.

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Budapest Business Journal | May 21 – June 3, 2021

József Kovács Level four driving will give back control to the human driver in a minority of situations while reaching level five would require no human intervention anymore.

When will we reach level five? That is anybody’s guess. “Industry forecasts largely range from 10 to 20 years, and in some cases 50. It is uncertain when we will reach level five,” Hamar says. Nevertheless, the legislative environment should mature to allow level three in few years only.

“There is no self-driving car in the strict sense of the word in Hungary or anywhere in the world,” László Kishonti, CEO and founder of AImotive Hungary, tells the BBJ. His company is working on automated driving technologies: developing self-driving software, proprietary simulation tools, neural network acceleration hardware IP, and building an ecosystem to aid the deployment of automated driving.

Kishonti warns that marketing slogans that claim “full self-driving” functions are describing only level two.

At present, most of the features available are advanced driverassistance systems or ADAS. These include adaptive cruise control, collision avoidance systems, lane-keep assist, among others.

“As the name suggests, the primary function of these is to assist the driver,” Kishonti says. “ADAS functions are already widespread in Hungary and around the world. We expect that we will have to wait at least a decade for full selfdriving, but features that take over in some traffic situations from drivers, such as highway travel or parking, will appear in Hungary within a few years,” he adds.

Márton Zsótér For a car to autonomously navigate its surroundings smoothly, it needs to communicate with the vehicles around, as József Kovács, CEO and co-founder of Commsignia, explains.

“The technology allowing this is called vehicle-to-everything (V2X). The base of it is short-range, low-latency, and high-reliability connectivity on the 5.9 GHz band. The core idea is for the vehicles to share information. The roadside infrastructure can also send information to nearby cars,” he says.

Commsignia, founded in Budapest in 2012, develops V2X solutions for the global market, both for automotive and smart city projects. One of its largest deployments covers 150+ intersections in Las Vegas, sharing traffic light status information digitally, which helps a selfdriving shuttle maneuver.

Public Fear

How do people feel about driverless cars roaming the roads? “The situation in Hungary is complex. According to a recent KMPG study, people are afraid. How safe are these vehicles? Who is responsible for an accident? Can digital solutions make the right decisions in emergencies? What will happen to jobs? The fear of the unknown is present in the market,” Károly Kovács, the professional leader of GreenTech and MOBIL exhibitions, tells the BBJ.

Károly Kovács Kovács, whose GreenTech conference returns to Zalaegerszeg’s Zalazone on September 23-24, says other challenges lie ahead. These include a preference for car ownership, compared to the ridesharing that could be one of the early uses for autonomous vehicles; cars following preset routes, allowing riders to share their commute.

For now, rudimentary self-driving cars are novel and “sexy” for early adopters, Márton Zsótér, management consultant to the CEO at Thyssenkrupp, says.

“The basics and different pathways for autonomous driving technologies are laid; however, to see a boom in this field, consolidation and set up of synchronized industry standards will be inevitable,” Zsótér says.

Currently, the analog environment (i.e. road signs and markings) is paired with the emerging digital technologies, making the situation complex and implementing various technologies convoluted. Eventually, the infrastructure elements must be also digitized for safety reasons.

“In Hungary the organic deployment of new solutions seems challenging, as the average age of the domestic car fleet is now close to 15 years. That means, we are around 15 years behind when it comes to the mass adoption of state-ofthe-art technologies. However, in some areas such as urban logistics, carsharing, etc. the technological revolution might come sooner,” Zsótér concludes.

INSIDE VIEW

Automotive Sector Within the Scope of Planned NIS II Cybersecurity Rules Eszter Sieber-Fazakas L.L.M.

dr. Ildikó Angeli L.L.M.

Attorney (admitted in Hungary and Germany)

Attorney

Noerr and Partners Law Firm

Noerr and Partners Law Firm

The current EU cybersecurity directive (Directive on Security of Network and Information Systems, or NIS I) has been revised by the Commission, as outlined in the directive itself, to make “Europe fit for the digital age.”

As part of that process, a consultation was initiated in mid-2020 on the review of the NIS Directive. The outcome of this was a new legislative proposal on cybersecurity (NIS II) issued at the end of 2020. As part of the review, the impact of NIS II was also assessed and received a positive opinion from the Regulatory Scrutiny Board (RSB).

Scope, Entry into Force

The proposed NIS II Directive brings new sectors within its scope and differentiates between operators of (i) essential and (ii) important services.

Automotive manufacturers (OEMs and suppliers), as operators of important service providers, are certainly within the scope of NIS II, as long as they are not micro- or small enterprises; this size is not common among automakers.

Automotive manufacturers may also qualify as operators of essential services if they run Intelligent Transport Systems.

This means systems in which information and communication technologies are applied in road transport, including infrastructure, vehicles and users, and in traffic management and mobility management, as well as for interfaces with other modes of transportation.

Once the NIS II Directive comes into force, the member states must transpose it into national law within 18 months. The date from which the corresponding national laws must be applied is not outlined in the proposal for the directive.

The NIS II ensures minimum harmonization, i.e., EU member states may adopt provisions guaranteeing a higher level of cybersecurity.

for operators of important services.

In the latter case, the competent authorities will apply ex-post supervisory measures, while in the case of the former, authorization has to be obtained upfront. Further, in the case of operators of essential services, the authorities have broader powers when enforcing their decisions.

The proposed directive takes a risk management perspective. Therefore, it specifies a list to be taken into account by all service providers within the directive’s scope. This includes risk analysis and information system security policies, incident handling, business continuity and crisis management, supply chain security, security of network and information systems, policies and procedures to assess the effectiveness of cybersecurity risk management measures, and the use of cryptography and encryption. It also includes precise rules on incident handling.

NIS II aims to strengthen cybersecurity in the supply chain at a European level. In this regard, the member states, the European Commission, and the European Union Agency for Cybersecurity (ENISA) will carry out a coordinated risk assessment of essential information and communication technologies.

The national authorities will have more stringent supervisory rules. The enforcement requirements will also be stricter, and the directive aims to harmonize sanction regimes in the EU member states.

Regarding sanctions, there is the option of imposing fines up to a maximum of at least EUR 10 million or up to 2% of the total worldwide annual turnover of the undertaking in the preceding financial year, whichever is higher.

The role of the cooperation group will also be strengthened by increasing information sharing between member states. A new organ of the European Union, an EU registry, will be introduced and operated by ENISA.

Main Changes

The NIS II Directive introduces two regulatory regimes; one for operators of essential services and another

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available to reach this level; however, the legal and legislative environment is not set, yet,” Hamar says.

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Budapest Business Journal | May 21 – June 3, 2021

Audi, Suzuki Motor on Despite Chip Shortage The global semiconductor supply shortage has not affected production at two of Hungary’s most established OEMs, Magyar Suzuki and Audi Hungaria, which tell the Budapest Business Journal they continue to operate, albeit under strict protective measures.

ZSÓFIA VÉGH

It hardly needs an explanation as to why the pandemic has so severely hit the auto industry. Motor vehicle production in 2020 dropped to 78 million vehicles from 92 million in 2019, or by around 16%, according to data from the International Organization of the Motor Vehicle Manufacturers and international news wire Reuters.

In the European Union, 10.8 million cars were produced, compared to 14.1 million in the year before the pandemic struck, a drop of 23%. The Swedish, Belgian, and Romanian car industries proved to be the most epidemic-resistant, with lower production capacity and a minimal decrease in volume.

With a 17.5% drop, Hungary was in the midrange, alongside Slovakia (-12%), Italy (-13.2%), and the Czech Republic (-19.3%). According to data by credit insurance company Euler Hermes, Germany, the market Hungary is most closely tied to, saw a 24% decrease.

Production at Magyar Suzuki Zrt. decreased by approximately 30% in 2020 due to a complete closure at the beginning of the first wave and the restrictive measures introduced in Hungary and abroad that followed, the company says.

Once it could be safely managed, the factory at Esztergom (50 km northwest of Budapest by road) reopened. “The manufacturing and work processes have not changed in the past year because of the coronavirus epidemic,” Zsuzsanna Bonnár-Csonka, head of communication at Magyar Suzuki, tells the BBJ. “Only the strict and complex health regulations and rules introduced to control the epidemic caused some changes,” she explains. Beyond mandatory mask-wearing, hand disinfection, and social distancing, workers may enter the factory area only via a painted, designated route.

In production areas, where keeping a safe distance is more difficult to ensure, the old workstations were dismantled, shield separators were installed, and face shields were also introduced.

Limited Access constantly analyzing the situation, keeping The company increased the number of close contact with our suppliers, logistics busses it runs to prevent overcrowding. partners, and other manufacturing sites of the Suzuki banned business trips and barred group. We expect the next months to remain partners and visitors from visiting the factory turbulent in terms of semiconductor supply.” for a period. At present, foreign travel is only possible with special management approval Significant Challenge Bonnár-Csonka, of Suzuki, says: and only in the most justified cases.

“The global chip and semiconductor Suzuki says it has continued shortage is a significant challenge for developments related to cost reductions automotive electronics suppliers and car and the optimization of operations.

Partners can now visit the factory by prior manufacturing companies, including Magyar Suzuki. We are constantly agreement, but foreigners can only enter consulting with our suppliers on this with two recent negative PCR tests. This issue; as a result, we have not experienced May, the company set up a vaccination any disruption at our company so far.” point on the premises for employees. The jabs are voluntary and are ensured by a private healthcare provider.

Audi Hungaria Zrt. also recently starting the vaccination of its employees on its premises. Alongside the more than 120 preemptive measures it has introduced, that has helped the German manufacturer navigate the three waves of the pandemic in Hungary, the company says.

“We have learned a lot during the pandemic. Thanks to our joint and coordinated effort, we have become stronger; the high production volume from last year also proves that,” Audi Hungaria tells the BBJ. In 2020, more than 1.6 million powertrains and more than 155,000 cars left the factory complex in Győr, 120 km Zsuzsanna Bonnár-Csonka west of Budapest. That ensured Audi Hungaria a turnover of EUR 7.518 billion.

Both Magyar Suzuki and Audi For both OMEs, futureproofing and Hungaria admitted the dwindling global digitalization have remained on the supply of semiconductors requires books. “We will continue to strive to monitoring, though for now, neither has digitize our production as much as faced particular problems.

“At present, both powertrain and vehicle possible,” Bonnár-Csonka says.

“Our GINOP consortium project production goes according to plan,” the [part of the EU-funded Economic Audi press department confirms. “We are

Development and Innovation Operative Program], which started in 2016, also includes several Industry 4.0 development elements.” In addition, specialists are constantly working on exploring new opportunities to increase competitiveness. The clear expectation is that it will place the Japanese carmaker on a solid footing.

“We are currently monitoring and analyzing the market situation in which, despite the advent of the vaccines, we still must deal with several uncertainties,” Bonnár-Csonka points out. “The market environment is changing extremely fast, and we need to adapt flexibly. However, if the virus situation no longer has a significant impact on the automotive market, we believe that we can approach the level of 2019 this year or reach it in 2022,” she says.

Audi Hungaria’s press department says the parent company maintained its future-oriented stance through the last fiscal year with EUR 171 million in investments, taking the cumulative total to EUR 11.7 bln since establishment.

“With our latest investment we further improve our competitiveness as, besides producing powertrains and cars, we also offer world-class services for the whole VW Group. One of the flagships of these is our tool factory that we are expanding by 6,300 sqm meters, creating 30% more capacity for exclusive series production where we manufacture all kinds of body components for 40,000 sports models of the Volkswagen Group annually, including Audi RS models, Audi R8, the new Audi e-tron GT, Lamborghini, and Bentley models,” the company says.

It also provided a one-off payment of HUF 350,000 gross to staff to thank them for their work during the pandemic under challenging circumstances.

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Budapest Business Journal | May 21 – June 3, 2021

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Bridgestone Continues to Leave its Mark on Road to Success Melinda Topolcsik, Bridgestone’s top representative in Hungary, talks to the Budapest Business Journal about how continuous development at the firm’s tire factory in Tatabánya has seen it grow into one of the biggest employers in its region. The unit recently capped that success when it won the Supplier of the Year 2021 award.

Bridgestone Tatabánya started operations in 2006 and has become one of the largest tire producers in Hungary.

Since its establishment, the company has more than doubled its workforce: in 2008, when production commenced, there were 361 people; today, there are approximately 1,200 employees.

“This exceptional success is a testimony to the perseverance, dedication, and proficiency of many departments and numerous colleagues,” says Melinda Topolcsik, managing director at Bridgestone Tatabánya Manufacturing Ltd. and president and general manager at Bridgestone EMIA. “In our factory, we have a very closeknit community where we not only work together but also for each other. I believe that our continuous technological and organizational activities enable us to achieve such exceptional results.”

BBJ: How did the factory earn this latest award?

Melinda Topolcsik: This title is an exceptional professional recognition for the company. Based on opinions and recommendations of car manufacturers and car factories, a jury of renowned professional journalists found the performance of Bridgestone Tatabánya to be outstanding. Numerous steps have led to this professional recognition, from introducing BIRD X contactless technology through the first major automotive delivery to our digital manufacturing technology. This success also reflects the satisfaction of our partners: as a result of the hard work and continuous technological developments, our plant is now a supplier for BMW, Audi, Volkswagen Group, and Mercedes.

Special Report | 15 BBJ: Do you have any concerns about Hungary’s ability to continue to supply the kind of workforce you need?

MT: We have made considerable efforts to increase the company’s attractiveness for job seekers in the region. Our colleagues receive monetary and professional recognition, which has helped to strengthen the company’s reputation. I am confident that this guarantees that the labor shortage will not be an issue for us in the future either.

“Through continuous developments, the Hungarian unit is now one of Hungary’s most significant tire manufacturers as well as being one of the most state-of-theart plants within the group.”

BBJ: As a female managing director, do you see yourself as a role model within the company and perhaps for Hungary in general? How many other women occupy senior positions at Bridgestone Tatabánya?

MT: More than 1,200 employees are working at Bridgestone Tatabánya, including approximately 140 women.

These colleagues hold positions in administration and in many other areas that were previously perceived to be male-dominated. Among the senior management, our HR manager and the brand marketing manager, who oversees the factory’s marketing activities, and the finance manager are all women. We all can be role models if we work hard for our common goals.

Melinda Topolcsik BBJ: How have the business and the factory developed in recent years?

MT: The factory has become one of the largest employers in Komárom-Esztergom county. Through continuous developments, the Hungarian unit is now one of Hungary’s most significant tire manufacturers, as well as being one of the most state-of-the-art plants within the group. We continuously strive to establish business relationships with local companies: the supplier network of Bridgestone Tatabánya currently consists of about 750 predominantly Hungarian small- and medium-sized enterprises. In recent years, Industry 4.0 has brought automation, robotics, and artificial intelligence to the forefront.

At Bridgestone, we believe that creating and offering a neat, technocentric work environment with appropriate financial rewards and opportunities for individual career development to our current and future employees will continue to ensure our success.

BBJ: Has Bridgestone Tatabánya benefited from the shortening supply chain trends that emerged during the pandemic, or could it do so in the future?

MT: No doubt we are affected by the difficulties of the situation that has developed over the past year.

For companies as large as Bridgestone, it is difficult to change the length of the supply chain: the production of rubber is tied to specific locations due to the climate, and the impact on the production of parts is relatively small. In order to secure its supply chain more and strive for a higher degree of predictability, Bridgestone Group creates its strategy at the regional level.

BBJ: Can you tell us about any other developments in Hungary?

MT: We are always looking for every opportunity to develop. The Hungarian factory was the first European location where state-of-the-art AI machine “examination” was put into operation, which further improved our productivity.

Continuous improvements will not stop in 2021 either: within the framework of the Hungarian Government’s Subsidy Scheme to Improve Competitiveness, yet another tire production line will be put into operation at the factory.

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‘Beauty, Performance, and Pedigree’: the Kincsem Hyper GT

our talent and resources? Due to the digital industrial revolution, rules from the last century will simply not apply anymore,” he predicts.

New technology is lowering the barriers to entry, and digital facilities are accessible across borders, Bak argues.

Twin-targets

A Swiss-HungarianU.K. project to create the ultimate sports car of tomorrow has reached back into Hungary’s history to draw on perhaps the most famous name connected with horsepower. ÉVA KASZAP

Before creating its new luxury EV brand, the legacy of its equine namesake the owners of Swiss-U.K. automaker by having a series run limited to just Bak Motors AG did some interviews with potential customers, asking them what their dream car would be. The luxury vehicles. answer many came up with was a Bak Motors describes itself as “the combination of the instant torque and world’s first fully digital car company.” acceleration of an e-motor with the The venture was founded in 2018 by evocative high-revolution scream of Hungarian entrepreneur Bak, Swiss a V10 internal combustion engine, lawyer Stefan Peller, and Swisscompany founder Tibor Bak tells Hungarian businessman Attila Karaszi. the Budapest Business Journal in an “I am a car and Formula 1 enthusiast exclusive interview. and entrepreneur,” Bak tells the BBJ. Kincsem Hyper GT promises to “I am a typical pioneer; I am only deliver a beautifully designed carboninterested in programs that nobody else monocoque chassis driven by a hybrid has done before.” powertrain combining electric motors with a small petrol engine, possibly in a Off-planet?

V10 layout.

When Bak and Karaszi started negotiations The new brand has been named in to fund a company that would combine the tribute to the record-setting Hungarian most advanced F1 virtual development racehorse Kincsem, meaning “my capabilities with the latest Swiss digital treasure” in English. The world-famous finance to re-engineer the European car thoroughbred mare won all of her 54 industry, “most businessmen said we are flat races at the end of the 19th century, not living on this planet,” he recalls. competing in Germany, Austria, France, The one exception was Peller. “Stefan and the United Kingdom. is also a car enthusiast and, as he knows According to the company, how aircraft development works, he the Kincsem Hyper GT will honor

54

certainly saw potential in our idea.

Together we have set up a world-class British senior management team. Most of the people worked previously at McLaren Group in senior positions,” Bak says.

The Kincsem Hyper GT will be designed by Ian Callum CBE, described

by Bak Motors as one of the most respected and celebrated British car designers. Callum was previously design director for Jaguar, where he was responsible for models including the I-Pace, F-Type, XK, and XF. Bak says the decision that Kincsem should be reborn as a luxury brand stands on two main pillars.

“The first is what Kincsem represents. She proved that nothing is impossible. She was a mare (unusual in horse racing, both then and now), and her achievements are still unbeaten. We are creating products which are unbeatable as well in terms of beauty, performance, and pedigree,” he explains.

“Kincsem products must be at the top of the automotive, fashion, and tech world. This is the reason why our approach is different from other original equipment manufacturers (OEMs). We are choosing the best of the best to create a Kincsem product.”

He says the second pillar is more historical. “As Count István Széchenyi, the politician and writer known to many as ‘the Greatest Hungarian,’ brought racehorse culture to Hungary and technology from the U.K. at the end of the

th 19 century,

Kincsem and his trainer, Róbert Hesp. Image

by Emil Adam (circa 1877) / Wikipedia.org

we are bringing automotive design and development capability to Hungary to support the first Hungarian brand.”

He points out that while there are several foreign OEMs in Hungary and a very well-developed supply chain, there is no Hungarian car brand.

“Why? We have some of the most talented engineers in the world, and we can only support foreign car brands with

“Europe’s culture is much more colorful than is currently represented in the European car industry. We need more Swiss, French, and Polish EV brands in the future, and Bak Motors is planning to support those entrants with its U.K. design and development partners and Swiss finance facilities,” he says.

The Kincsem brand will focus on two major target groups. The first is the so-called ultra-high-net-worth individuals (UHNWIs), who are often car, F1, and horse racing lovers. The second group is women entrepreneurs, who can relate their own story to Kincsem, as they are successful in business and know how to overcome their male competitors.

As a luxury brand, Kincsem will present fashion products in the future, Bak says.

He projects that some 40% of UHNWIs in the United States will be women by 2025.

The company says it has partnered with U.K. companies in the Formula 1 technology cluster and is planning to utilize a revolutionary chassis production method that allows it to decrease its capital expenditure

by

80%.

Initially, there will be two vehicles, the GT and a luxury sports utility vehicle (SUV). The GT will be hand-built in Britain, while the plan is to build the Hyper SUV in Hungary. The company says it will relocate an F1-level virtual development platform to Hungary. That will enable the design and development of the car, alongside Hungarian suppliers, making the vehicle a Hungarian product.

“I am a car and Formula 1 enthusiast and entrepreneur.

I am a typical pioneer; I am only interested in programs that nobody else has done before.”

Design and engineering have passed two stages, and the firm says it is ready to present the 60% ready product to early customers via Virtual Reality (VR). It claims the revolutionary new simulation platform it uses allows it to design and test 95% of the whole car in VR, cutting the development time by some 50-80%.

The company says it is comfortable with its planned 2025 market entry deadline.

The second brand the company is developing is Helvetia, a Swiss-made product based on the same carbonaluminum hybrid chassis used in the Kincsem SUV. Everything else will be different in the Helvetia, however, and it will utilize Swiss suppliers. It will be positioned as a more affordable premium car with a production of 10,000-plus vehicles per year.

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Special Report | 17

Hungary ‘Well Placed’ to Become an Automotive Innovation Hub

ROBIN MARSHALL

BBJ: It is well known that automotive has been one of the motors (pun intended) of Hungary’s industry. What weight does it hold currently?

HIPA: The Hungarian automotive sector accounts for 4-5% of total GDP, and it is responsible for nearly one-third of the processing industry’s output value, with a EUR 26.2 billion production value. The industry’s relevance can also be measured by employment figures as, with almost 186,000 full-time employees, it accounts for 4.1% of the total employment. Ongoing and recently executed domestic investments by the industry are expected to contribute further to the sector’s importance.

BBJ: How much FDI has been invested over the years, from which countries, and how many jobs have been created?

HIPA: Between 2014-2020, the volume of automotive FDI amounted to EUR 8.965 billion via 160 automotive projects managed by HIPA. Considering the jobcreation effect, 36,600 new jobs can be linked directly to such investments.

Looking at a breakdown based on the country of origin of the investments, Germany is the largest investor in that period in terms of FDI volume (EUR 5.6 bln) and newly created positions (19,300).

Through FDI volume, South Korea (EUR 648 million) takes second place, followed

by India (EUR 638 mln) and Japan (EUR 549 mln), and a significant stock is related to the United States (EUR 278 mln). It is notable that, in terms of newly created jobs, the ranking changes as the USA secures second place with 2,400 new positions, India becomes third with 2,100, closely followed by Japan (2,090).

Graphic by web_monster / Shutterstock.com

The Budapest Business Journal discusses the ongoing importance of the automotive sector to the local economy with the Hungarian Investment Promotion Agency.

The future is increasingly tied to sustainability and digitalization, HIPA says.

Even under normal circumstances, establishing a new collaboration with just one new supplier could take months.

BBJ: Recent years have seen significant investments in e-mobility. Is this trend continuing? Have other examples of future-proofing been seen in the automotive sector in Hungary?

HIPA: Hungary is in a beneficial place through taking advantage of two interacting processes. While tightening regulations, market demand, and environmental considerations are forcing the automotive sector into electromobility, the country targets climate neutrality by 2050 as one of the five EU countries that have set this ambition in law. As a result, we have seen a continuously growing investment volume in electromobility, leading to the situation that, in 2020, our country became the world’s 10th-largest battery exporter. As the automotive industry’s future is linked together with e-mobility and digitalization, we focus on related new trends, such as autonomous driving and further software-driven innovations.

BBJ: Are you working in any “unchartered waters” in trying to find countries or companies that have not previously invested in automotive in Hungary?

HIPA: We are working to create a complete and competitive value chain to secure the long-term success of the Hungarian automotive industry. On these grounds, HIPA may also proactively approach those corporates whose presence in Hungary could make the investment environment even more attractive and increase the proportion of “Invented in Hungary” type investments. For this reason, in the last three years, we gave special attention to the battery industry, resulting in 31 projects with a value of EUR 6.1 bln investment and creating more than 10,000 new jobs.

BBJ: Greenfield investments are important and eye-catching, but the involvement of local businesses is just as vital in the long term. What can HIPA do to help Hungarian SMEs move up the value supply chain?

HIPA: One of the main philosophies behind FDI promotion is to enable

local SMEs to become competitive enough to join the supply chain of large international investors. HIPA supports this intention, and in the framework of our supplier service activities, we organize training and B2B events in close cooperation with large companies and professional associations. The capabilities of the local businesses can be equally important during the site selection process of prospective investors, as they analyze local value chains; for that reason, we continuously monitor Hungarian SMEs and involve them in development programs.

BBJ: Do you have any direct examples of the perceived need to shorten supply lines in the wake of the pandemic helping Hungarian SMEs?

HIPA: The evolution of current supply chains was mainly driven by financial considerations, as companies could assume a stable supply independently from geographical distances. The pandemic changed the evaluation of risk factors, pushing companies to re-consider their sourcing strategies.

According to our experience, the idea of shortening current supply chains is being considered by most corporations sourcing inter-continentally. Hungarian SMEs may profit from this kind of change in the upcoming years. However, the conversion of supply chains will not happen from one day to the next.

BBJ: As the vaccine program rolls on and businesses begin to return to something like normal, do you have any concerns about maintaining labor supply once the “additional” workforce that appeared in the past year goes back abroad or returns to hospitality?

HIPA: As we see, there is still enough potential in the Hungarian labor market. We aim to reach five million employed people.

Structurally, we have reserves in the inactive part of the population (the activity rate in Hungary is still 6-8 percentage points lower than in some of our regional peers), as well as among the unemployed. We also observe significant regional differences in the labor market, which means that we have the opportunity to guide investors and investments to those areas where we have considerable labor reserves.

“We have seen a continuously growing investment volume in electromobility, leading to the situation that, in 2020, our country became the world’s 10th-largest battery exporter.”

BBJ: Finally, what do you think will be the next great advance in the Hungarian automotive industry R&D. Hydrogen fuels, lighter batteries, truly autonomous autos, or something else?

HIPA: We live in one of the most exciting eras for the automotive sector as sustainability and digitalization became the driving forces of change. This means we are facing an incredible amount of innovations every year. But the automotive industry is demandbased; thus, it is hard to predict which promising endeavor will be the next big game-changer. Hungary is well placed to lead this new ecosystem and become an innovation hub alongside our investor-friendly business environment. We already have sector-specific fundamentals like ZalaZone, the region’s largest automotive proving ground, or the existing value chain for battery-related inventions.

Graphic by IRINA SHI / Shutterstock.com

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Budapest Business Journal | May 21 – June 3, 2021

Special Report

News///in brief Automotive

Audi Hungária in HUF 3.8 bln Expansion of Győr Tool Plant Audi Hungária plans a HUF 3.8 billion expansion at its tool plant in Győr (120 km northwest of Budapest), Minister of Foreign Affairs and Trade Péter Szijjártó said on May 4, according to daily Magyar Nemzet (Hungarian Nation). The government is supporting the investment, which will preserve 700 jobs, with a HUF 1.2 bln grant.

Audi Hungária chairman Alfons Dintner acknowledged the government’s support for the investment and added that construction had already started. By the summer of 2022, he said another 3,800 sqm of production area and 2,500 sqm of warehouse space would be added at Győr. The investment would expand capacity, improve quality, and allow faster turnaround for switching tasks, Dintner said.

Used Auto Imports Fall 10% The number of used autos imported into Hungary fell 10% year-on-year to 40,727 in January-April this year, listings site joautok.hu (Good Cars) said, citing

figures compiled by DataHouse. In April alone, used car imports climbed 29% from a year earlier to 9,756, joautok.hu explained, noting that April 2020 was the first full month when the pandemicrelated restrictions were in effect, so turnover dropped 36% in one month. The site augurs annual used auto imports of 130,000-135,000 for this year, a fraction over last year’s 130,000.

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Budapest Business Journal | May 21 – June 3, 2021

base also produces systems for selfdriving and electric vehicles. Minister for Innovation and Technology László Palkovics said Continental is a trusted partner of the government. A product of their cooperation is an artificial intelligence center Continental set up three years earlier in the capital that now has a staff of close to 100, he added.

Gov’t to Subsidize EV Purchases for Taxi Drivers Hungary’s government will soon call a tender for taxi drivers to subsidize the purchase of electric vehicles,

German-owned automotive industry supplier Continental Automotive Hungary marked the production of its 50 millionth braking control electronic component at its base in Budapest on May 11, writes autopro.hu. Managing director Robert Keszte said achieving the 50 million mark is an acknowledgment of the world-class work of the company’s employees. The braking control components, which the base has been producing since 2001, account for about half of all output. Keszte noted that the

State Secretary Tamás Schanda has said, according to portfolio.hu. The government is earmarking HUF 3 billion to cover 45% of the costs of EVs worth up to HUF 15 million. Zoltán Metál, who heads the National Tax Association, acknowledged targeted support taxi drivers had received from the government during the pandemic in the form of tax exemptions and a grace period for meeting vehicle age requirements.

Schanda noted that the government had decided to call the tender at the request of taxi associations and the Budapest chapter of the governing Fidesz-Christian Democratic People’s Party alliance.

Automotive Sector Output up 28% in March

Continental Makes 50 millionth Brake Component

The output of Hungary’s automotive sector, which accounts for the most significant share of manufacturing in the country, rose 28.1% year-on-year in March, after Photo by Craveleo / Shutterstock.com

18 | 3

pandemic lockdowns cut output in the base period, according to a second reading of data released by the Central Statistical Office (KSH) on May 12. Growth in the sector, which accounted for 28% of total manufacturing output in March, followed a 6.6% decline in February, as a global microchip shortage weighed. KSH confirmed that headline industrial output rose 16.5% year-on-year in March, accelerating from a 1.9% increase in February. Adjusted for workday effects, output was up 16.2%.

PRESENTED CONTENT

Hungarian Mini- and Midibuses: Smaller Investment, Effective Operation for a Livable Environment BBJ: Five years ago, the company introduced its proprietary HUNNOID bus range that, thanks to its bi-articulated solution, captured the industry’s attention. What are the advantages of using these buses?

Pál Lovász The history of KF Service Solutions Kft., founded by Pál Lovász and five others, has been linked to the Hungarian transport sector for 20 years. Not so long ago, the company operated as one of the most extensive bus repair and rental service providers for the Volán group. Nowadays, KF Service Solutions’ portfolio contains three companies connected to the public bus passenger transport market and the vehicle manufacturing and sales market.

Activities cover the operation, rental, sale, and repair of buses and also the exclusive representation of the ISUZU brand in Hungary, among other things.

The company also converts unique minibuses based on Mercedes and Renault chassis, and in 2016 it started to develop the HUNNOID bus range, best-known for its bi-articulated system that helps reduce the unit costs of public bus transport services by 30-40%.

Pál Lovász: HUNNOID is one of our company’s success stories, and it is also an example of how much knowledge and experience is accumulated in maintenance workshops. Developments that offer a solution for existing, practical problems are bound to be successful. The bi-articulated system ensures cheaper operation and lower emissions if the necessary capacities are fundamentally reconsidered, and midi- and minibuses become more widely used. Let me explain it to you. In Hungary, about 30% of the population uses public transport, and most of them take the bus. They do so at different times and locations and with varying levels of utilization. In the West, the ratio of midi- and minibuses in urban and interurban public transport and tourism is 20%, while the share of the same bus types in Hungary is less than 1%. However, based on our experience, the operational costs of these buses are 30-40% lower than those of traditional models, and they also present lower noise pollution and environmental pressures.

This is where HUNNOID’s offer should be considered. While the capacity of an urban bus is around 70

people, we could increase the seating of our midibuses to 50 people by using the bi-articulated system; at the same time, fuel consumption remained less than half of that of regular buses.

Midi- and minibuses entail smaller investments, and thanks to their low axle load, they are allowed in certain city areas, for example, on old and narrow downtown streets, that are not accessible with large buses.

BBJ Why, then, has the solution offered by midi- and minibuses not become widespread in Hungary?

PL: We are hopeful that this only applies to the past when innovative solutions facilitating the reconsideration of capacity needs and their fulfillment were not yet available. That is why we have invested and will continue to invest a great deal of energy into development and why we are planning to start

production in Ózd, 155 km northeast of Budapest, near the border with Slovakia.

Currently, scheduled urban and interurban public transportation is not liberalized. Large transport companies are, in a way, confined by old technological solutions, and were not able to take into account more innovative and practical solutions. Our company is flexible, and reacts quickly: now, when due to the coronavirus pandemic it is important to operate more buses on the same routes, so that passengers can maintain a safe distance from each other, we can make even 200 buses available for transport companies like Volán or BKK. Do you plan to introduce your bi-articulated buses to the international market?

PL: We have already received some inquiries concerning the patented bi-articulated solution from large multinational OEMs (Original Equipment Manufacturers). In 2024, we would like to enter the international market not only with the bi-articulated HUNNOID bus but with a broader range of buses.

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Budapest Business Journal | May 21 – June 3, 2021

Special Report | 19

Car Importers Ranked by total net revenue (HUF mln) in 2020

FInanCIng

RepaIR

leasIng

assIstanCe

seCond-Hand CaR tRade

Fleet management

HybRId

dIesel, gas

eleCtRIC

119,098

✓

–

–

–

–

–

–

1991

Suzuki

Suzuki

–

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

atsumi masato – –

2500 Esztergom, Schweidel J. utca 52.

– –

poRsCHe HungaRIa keReskedelmI kFt.

403,065 (2019)

A

✓

–

✓

–

–

✓

–

1990

Audi, Volkswagen, Skoda

Audi, Volkswagen, Skoda, Seat

Audi, Volkswagen, Skoda

– (100)

balázs németh, peter gstattner – –

1139 Budapest, Fáy utca 27.

(1) 451-5100 prsajto@porsche.hu

toyota CentRal euRope kFt.

216,742 (2019)

A

✓

–

–

–

–

–

–

1990

Toyota, Lexus

Toyota, Lexus

–

– Toyota Motor Europe NVSA (100)

Jacek pawlak – –

2040 Budaörs, Budapark Keleti 4.

(23) 885-101 infohu@toyota-ce.com

FoRd közép- és keleteuRópaI éRtékesítő kFt.

132,027 (2019)

23,560 (2019)

✓

✓

✓

✓

✓

–

✓

2000

Ford

Ford

Ford

– Ford Motor Company (100)

attila szabó Will Periam Viktor Rákosi

2000 Szentendre, Galamb József utca 3.

(1) 777-7555 inform@ford.com

meRCedes-benz HungáRIa keReskedelmI kFt.

119,800

4,501

✓

–

–

–

✓

–

–

2004

MercedesBenz

MercedesBenz

Mercedes-EQ

– Mercedes-Benz AG (100)

Reinhard münster Joachim Wolf Bence Horváth

1133 Budapest, Váci út 96–98.

(70) 436-1100 internet-hu@daimler.com

FCa CentRal and easteRn euRope kFt.

108,471 (2019)

A

✓

–

–

–

–

–

–

–

Alfa Romei, Fiat, Jeep, Fiat Professional

–

– FCA Italy S.P.A. (100)

andrew terence Higgins – –

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

poRsCHe InteR auto HungaRIa kFt.

90,372

A

✓

✓

✓

✓

✓

✓

✓

1993

Bentley, Porsche

Bentley, Porsche

Porsche

– Porsche Holding GmbH (100)

szabolcs nagy Tamás Tótvári Péter Árvay

1139 Budapest, Fáy utca 27.

(1) 451-5500 info@porschepest.hu

8

Renault HungáRIa kFt.

82,000

18,233

✓

–

✓

–

–

✓

–

1991

Renault

Renault, Dacia

Renault, Dacia

– (100)

tamás Wachtler – Gabriella Kelemen-Tűz

1138 Budapest, Váci út 140.

(1) 358-6000 ugyfel.kapcsolat@ renault.hu

9

Wae CsopoRt(1)

43,957

4,008

✓

–

–

–

–

–

–

1991

Jaguar, Land Rover, Opel

Jaguar, Land Rover, Isuzu, Ssangyong, Opel

Jaguar, Opel

AutoWallis Nyrt. (100) –

andrew prest Roland Czeilinger –

2040 Budaörs, Szabadság utca 117/C (1) 451-4851 info@wae.hu

10

kIa HungaRy kFt.

38,007 (2019)

A

✓

–

–

–

–

–

–

1995

Kia

Kia

Kia

– KIA Austria GmbH (100)

norbert lászló nagy, kim youngrae – –

1117 Budapest, Budafoki út 56.

(1) 324-2000 info@kiamotors.hu

Company WebsIte

yeaR establIsHed

spaRe paRts supply

604,899

Rank

no. oF veHICles sold In 2020

CaR bRands

total net Revenue In 2020 (HuF mln)

seRvICes

oWneRsHIp (%) HungaRIan non-HungaRIan

top loCal exeCutIve CFo maRketIng dIReCtoR

addRess pHone emaIl

magyaR suzukI zRt. www.suzuki.hu 1

2

www.porschehungaria.hu

3

www.toyota.hu, www.lexus.hu

4

www.ford.com

5

www.mercedes-benz.hu

6

www.fiat.hu

7

www.porscheinterauto.hu

www.renault.hu, www.dacia.hu

www.wae.hu

www.kia.com

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Special Report

www.bbj.hu

Budapest Business Journal | May 21 – June 3, 2021

FInanCIng

RepaIR

leasIng

assIstanCe

seCond-Hand CaR tRade

Fleet management

HybRId

dIesel, gas

eleCtRIC

A

✓

✓

✓

✓

✓

✓

✓

1927

Volvo

Volvo

–

– Volvo Personvagnar Aktiebolag (100)

viktor david Illés, zoltán tringer – –

1172 Budapest, Cinkotai út 34.

(1) 238-8100 huinfo@volvocars.com

28,482

4,101

✓

✓

✓

✓

✓

✓

–

1993

Peugeot, DS Automobiles

Peugeot, DS Automobiles

Peugeot, DS Automobiles

Frey Automobil Holding Kft. (100) –

györgy balkányi, zsófia bálint kovácsné Péter Lugosi –

1194 Budapest, André Citroen utca 1.

(1) 279-5555 kapcsolat@ p-automobil-import.hu

HyundaI HoldIng HungaRy kFt.

28,269

4,355

–

–

–

–

–

–

–

2007

Hyundai

Hyundai

Hyundai

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

pál kovács Péter Tajthy Ibolya Ördög

1186 Budapest, Cziffra György utca 15.

(1) 887-5700 info@hyundai.hu

14

C automobIl ImpoRt kFt.

18,913

3,169

✓

✓

✓

✓

✓

✓

–

1994

Citroën

Citroën

Citroën

Frey Automobil Holding Kft. (100) –

györgy balkányi Péter Lugosi Nóra Hajdu

1194 Budapest, André Citroën utca 1.

(1) 348-4848 kapcsolat@ c-automobilimport.hu

15

mazda motoR HungaRy kFt.

18,722 (2019)

A

✓

–

–

–

–

–

–

1992

Mazda

Mazda

–

– Mazda Motors Logistics Europe NV (100)

tibor együd Erika Káldi Eszter Burovinc

1117 Budapest, Infopark sétány 1.

Building I (1) 464-5000 mazda@mazda.hu

6,357 (2019)

A

✓

–

–

–

–

–

–

2004

A

Mitsubishi

A

Emil Frey Automobil Holding Kft. (100) –

gábor mátrai, Heinz schneiter – –

1149 Budapest, Mogyoródi út 34–40.

(1) 422-3910 gabor.matrai@ mitsubishimotors.hu

11

Company WebsIte

volvo HungáRIa keReskedelmI és szolgáltató kFt.

yeaR establIsHed

spaRe paRts supply

36,739 (2019)

Rank

no. oF veHICles sold In 2020

CaR bRands

total net Revenue In 2020 (HuF mln)

seRvICes

www.volvocars.com/hu

12

13

p automobIl ImpoRt kFt. www.peugeot.hu www.dsautomobiles.hu

www.hyundai.hu

www.citroen.hu

www.mazda.hu

oWneRsHIp (%) HungaRIan non-HungaRIan

top loCal exeCutIve CFo maRketIng dIReCtoR

addRess pHone emaIl

16

mm ImpoRt kFt.

17

gRand automotIve CentRal euRope kFt.

41,170

A

✓

✓

✓

✓

✓

–

–

2019

Nissan

Nissan

Nissan

Grand Automotive Kft. (100) –

viktor gyula molnár Zoltán Magyari Gergely Kisfalvi

1124 Budapest, Csörsz utca 49–51.

(80) 333-888 ugyfelszolgalat@ nissan.hu

18

gablInI pRemIum kFt.

1,524 (2019)

A

✓

✓

✓

✓

✓

✓

✓

2007

Infiniti

Infiniti

–

(100) –

attila gábor Csurgai – –

1141 Budapest, Nótárius utca 5–7.

(1) 799-2250 infiniti@gablini.hu

19

emIl FRey ImpoRt kFt.

1,198 (2019)

92

✓

–

–

–

✓

–

–

1993

Subaru

Subaru

–

– Emil Frey AG (100)

gábor mátrai – –

1149 Budapest, Mogyoródi út 34–40.

(1) 470-9010 info@subaru.hu

BMW, Mini

BMW I

– BMW Vertriebs GmbH (100)

anna Rita tonini, maciej Rober galant, neil domonic Fiorentinos – –

2220 Vecsés, Lőrinci út 59.

(29) 555-100 ugyfelszolgalat@bmw.hu

Honda

Honda

– (100)

Iwama shigeki Jarmila Pavova Dagmar Zinner

2040 Budaörs, Puskás Tivadar út 1.

(23) 506-406 info@honda.hu

www.mitsubishi.hu

www.nissan.hu

NR

NR

www.infiniti.hu

www.subaru.hu

bmW HungaRy kFt. www.bmw.hu

Honda motoR euRope lImIted magyaRoRszágI FIóktelepe

NA

A

✓

✓

✓

✓

✓

✓

–

2004

BMW I Performance, Mini

A

A

✓

✓

–

–

–

–

–

1993

Honda

www.honda.hu

A = would not disclose, NR = not ranked, NA = not appliacable

This list was compiled from responses to questionnaires received by May 19, 2021 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

The list is based on companies' voluntary data submissions. 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

notes: (1) Aggregate data of WAE Kft. and WAE CEE Kft.

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Budapest Business Journal | May 21 – June 3, 2021

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put a halt to everything all over again.

Luckily, the band had time to debut the album in two shows in Budapest before everything was locked down.

Isn’t Easy

How the Coronavirus is Affecting Hungarian Band Carson Coma Those of us who enjoy experiencing music live have had a hard year, and the immediate future doesn’t look too bright either. If it’s tough for us music fans, think what it must be like for the artists themselves.

“It certainly isn’t easy to live without concerts, which are the best part of being in a band and playing music, but fortunately we were able to keep working in the background. We rehearsed, wrote new music, made new videos, and so on. As a band that was on its way up before the virus, we’re highly motivated to keep going.”

DAVID HOLZER

European tours by big name bands and festivals such as Sziget, the enormous event which usually happens every August and features an eclectic mix of international and local artists, have been canceled for another year. The Budapest music scene, normally vibrant, has gone silent.

The biggest bands will be financially buoyant enough to survive until 2022 when live music is cautiously predicted to start up again. They’re the ones who make money from Spotify and live streaming online events or have a back catalog that carries on selling.

But what about the fledgling groups just starting, or those who were poised to take the next step when the virus hit?

Curious about how Hungarian artists had been affected, I reached out to music management agency Gold Record, which has relationships with several of the country’s most interesting bands.

One of these is Carson Coma.

Carson Coma is Zsombor Bóna, Péter Gaál, Barnabás Héra, Attila Jónás, Bálint Kun, and Giorgio Fekete.

They began playing together in early 2018. Since then, the band has released two albums (“Corduroy Club” and “Lesz, Ami Lesz”) and several singles. They have played some of the most significant venues in Budapest (including Akvárium Klub, A38, Dürer Kert, and Budapest Park) and in clubs and at festivals throughout the country.

The band’s last two concerts before the virus put paid to live music here were sold-out nights at A38, the hip venue on a ship moored on the Buda side of the city near the Petöfi bridge.

Being unable to play live has been a blow to the band. As Fekete says, “It certainly isn’t easy to live without concerts, which are the best part of being in a band and playing music, but fortunately we were able to keep working in the background.

We rehearsed, wrote new music, made new videos, and so on. As a band that was on its way up before the virus, we’re highly motivated to keep going.”

Carson Coma is keen to return to the stage as soon as it’s safe to do so.

Fekete supports measures that include masks in venues and appropriate social distancing, anything that makes live music possible again.

Clever and Catchy

I don’t know enough Hungarian to know what Carson Coma is singing about, but the music is clever, catchy, and eclectic.

Drawing on a range of influences that embrace everything from disco and funk to indie-sounding pop, it at times sounds, to this somewhat long in the tooth listener, at least, very like a sunny, cheerful 1980s pop band. I’m not sure if that’s intentional or me hearing things.

With around 10,000 followers on Facebook and almost 800,000 plays of their most popular song on Spotify, “Én még sohasem” (I Never Have), Carson Coma is clearly reasonably popular.

I asked vocalist Giorgio Fekete how a year of being unable to play live had affected the band.

“Before the first lockdown, we’d just sold out two nights at A38 and, with

20 to 30 concerts scheduled for summer 2020, we were looking at our first real festival season,” Fekete told me. “We were on our way to becoming fully professional.”

Hungarian regulations did make it possible for the band to play to smaller concerts, mainly outdoors, to audiences that didn’t exceed 500 people a few times between July and October 2020. The majority of festivals didn’t happen.

The second wave of the virus at the end of October 2020 put paid to Carson Coma’s nationwide club tour. By then, the band had capitalized on the lack of live performances earlier in the year by focusing on finishing their second album “Lesz, Ami Lesz” (roughly, “What Will be, Will Be”); admirably philosophical considering the circumstances.

“Lesz, Ami Lesz” was released just before the second wave of the virus

All over Europe, the music industry has been asking hard questions of the governments that benefit from the revenue generated by bands.

The economy of Budapest is highly dependent on tourism, and a healthy music scene attracts music fans from boomers on down who spend money in music venues. Part of the appeal of Sziget is the fact you can discover excellent Hungarian bands in the smaller tents away from the main stage.

But what of the future?

“I believe that, admittedly in different ways, the pandemic has had a major impact on all of us in the Hungarian music scene. It has affected the financial health of the bigger bands and their crew. It’s threatened the growth of many promising younger bands. The existence of several festivals and concert venues in smaller Hungarian cities that were already experiencing financial challenges is endangered,” Fekete says.

Despite this, he is optimistic. “I hope that, in the long run, clubs and concert venues in Hungarian cities will be able to reopen their doors. I also expect the trauma all of us who love music have experienced to result in a greater degree of cooperation between different members of the Hungarian music scene.”

As a fan who explored Budapest and other cities partly by finding out-of-theway venues and going to festivals, I hope that the Hungarian government will support the country’s music scene.

22 | 4

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Budapest Business Journal | May 21 – June 3, 2021

Bijou Budapest Wine Tasting in the New Normal As Hungary continues to reopen, the wine tasting scene is creeping back to life, with smaller events popping up around town. On the evening of May 6, I was delighted to find two bijou tastings to go to within a short hop of one another.

ROBERT SMYTH

Every Thursday, Tábla Natúr Borbár és Bolt (Natural Wine Bar and Shop), at Dohány utca 29 in District VII, offers a flight of five wines from the “Szofi by nature” selection, put together by owner Zsófi Kékedi.

The flight of five I tried cost HUF 3,500 for 0.5 dl of each and featured two and a half Hungarian wines; more on that later. As a foreigner who had received the first COVID vaccination but not the immunization card (see our story dealing with this on page five), my only option was to sit out on the tiny terrace, which was pleasant enough as the rain had stopped for the day.

Natural wine, which is usually made from organically or biodynamically grown grapes (as all the wines featured in this article were), is a sometimes confusing and polarizing concept. Its detractors dismiss it due to its assumption that “conventional” wines all undergo too high a level of intervention when, in fact, many of the best wines do not.

Others would say interventions in the winemaking process were invented for a reason and make the wine what it is; something clean and stable, as well as more complex and layered than simple fermented fruit juice.

Advocates speak of purity and articulating the terroir in the truest sense. Tokaj winemaker Dorka Homoky told the Budapest Business Journal that she sees a minimalist natural approach as the best way to make wine that conveys the essence of the grape’s place of growth.

Homoky’s Dongó Furmint 2019, which comes from the Tokaj town of Tállya (221 km northeast of Budapest by road), is from grapes picked at the end of September and selected by hand, then spontaneously fermented in the tank; no surprises thus far.

On the Lees or Not?

What makes this wine distinctive is that, after the full-bunch pressing (which requires perfectly ripened bunches to avoid green flavors from the stems), half of the fermented wine was kept in the tank and not racked.

This meant it was kept “on the lees,” in other words, the sediment left over after fermentation was left with the wine. It is usual to draw the liquid off these “gross lees” to avoid the wine being spoiled with off-flavors as it interacts with it.

Aging the wine after racking on its “fine lees” is often considered beneficial.

However, Homoky said that the quality of the juice from the full-bunch pressing was so good that it didn’t leave much sediment and was effectively like fine lees. The other half of the wine went into new oak for two months. The two parts were then blended and bottled with the lees. It was neither filtered nor fined.

This wine oozed pear, pineapple, and grapefruit juice on the nose and palate, and was zesty (with focused acidity) and creamy simultaneously, with a nice hint of oak helping bring a touch more weight. It was very pure and tasty and certainly captured plenty of the primary notes of the Furmint grape variety. Perhaps more juicy than vinous, but very enjoyable all the same.

It’s a good idea to give the wine a gentle shake before opening to distribute the lees.

It was bottled with a tiny amount of 10-15 grams of sulfur per liter. This naturally occurring chemical has been added to wine for centuries to keep it fresh by preventing it from oxidizing prematurely, but minimizing or even eradicating sulfur is central to the natural wine approach.

From Szent György hegy in the Badacsony wine region, next to Lake Balaton, the Szászi winery decided to dispense with sulfur altogether for the first time in its Zeus Narancbor 2020.

This is an orange wine, the now ultratrendy but, in fact, ancient style whereby white grapes are fermented on their skins as red wines are, instead of being pressed before fermentation starts, as in the case with most white.

This wine was fermented spontaneously for 16 days on the skins, then aged in stainless steel tanks for half a year, and was left unfiltered and unfined. Many orange wines can become bitter because of prolonged contact with the skins. Still, there was no sign of that here, just a pleasant tanginess to the tannins, along with exciting notes of Eastern spices, peach, apricot, sweet pipe tobacco and ginger.

Mercurial Merlot

The aforementioned half-Hungarian wine was a mercurial Merlot from Rheinhessen in Germany, Bianka und Daniel Schmitt’s Piros ’19. The name reveals a Hungarian connection, which turns out to be Bianka, who is Hungarian.

Over at the Tasting Table Shop & Cellar at Bródy Sándor utca 9 & 22, the Taste Hungary team has launched the Bródy Borműhely, a pop-up wine bar. It will explore different winerelated themes every Thursday at its newly renovated cellar. For now, nonimmunization cardholders can sit on benches outside (an application for a terrace has been submitted).

May 6 featured the wines of the Bussay Cellar from the lesservisited Zala wine region, located in Csörnyeföld (246 km southwest of Budapest, beyond Lake Balaton), nestled very close to the Croatian and Slovenian borders, where the River Mura moderates the climate.

The late László Bussay, a noted figure in the post-transition development of Hungarian wine and who also served as a doctor in villages in Zala County, established the winery. The wines are now made by his eldest daughter, Dóra, in tandem with her husband, the highly talented Somló vintner Tamás Kis, who also makes his own wines under the name of Somló Vándor.

Bussay Charmes Pinot Noir 2017 comes from a hillside of deep clay overlooking the River Mura. It was fermented in open vats, then aged for a year in old barrels. It comes from a clone with cherry, red fruit compote, and earthy aromas and flavors, and a nice pinch of spiciness that gives a local touch to this otherwise varietally pure and rather Burgundian Pinot Noir.

It is light- to medium-bodied with restrained tannins, but deep in flavor, and has good length. Pinot Noir was the first “black” grape to be planted by the family. This wine was 24th in the “Top 30” reds list the British-based “Decanter” magazine put together for its recently published guide to Hungarian wine.

Bussay’s delightfully light and playful Csókaszőlő, a once almost extinct but now resurgent indigenous black grape, was 26th on the same list.

www.bbj.hu

Budapest Business Journal | May 21 – June 3, 2021

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Socialite | 23

Summer in the City: the Margaret Island Festival With the COVID pandemic gradually easing, summer events such as the Margaret Island Festival are expected to return this year. The Budapest Business Journal quizzed Teodóra Bán, managing director of Margitszigeti Theater Nonprofit Ltd., about what is in store for 2021.

GERGELY SEBESTYÉN

BBJ: What can we expect at the Margaret Island Festival this year? To what extent does the current state of COVID-related measures affect the interest of the public?

Teodóra Bán: The Margaret Island Theater has always been ready to fully comply with the measures in force, as this is one of the conditions for us to stay healthy, for the artists to come to the theater to work, and for the audience to enjoy the performance safely.

BBJ: What kind of income do you expect financially? How profitable do you think the event will be?

TB: We do not expect a profit for cultural events. Of course, ticket revenue contributes significantly to the economic equilibrium of operations, and although we cannot accurately predict this in advance, we consider the interest to be appropriate.

BBJ: Having looked at this year’s program, it is clear there are some illustrious foreign and Hungarian performers among the guests. How difficult was it to organize the event when we still can’t breathe easily after COVID? TB: The artists are longing to be on the stage, and thanks to the domestic and international reputation and position of the Margaret Island Theater, foreign performers are just as keen to come as our permanent theater partners: the Opera House, traditional theaters, and large symphony ensembles.

Our operation is long-standing, the management of the theater is sincere and safety conscious, and we always strive to achieve the highest quality productions.

This guarantees that both domestic and international performers are willing to come here, even in such circumstances.

regulations do not currently require the wearing of a mask; however, we would be happy if people did so. We provide equipment for hand disinfection and we also pay attention to the admission process. We start the bus and theatrical boat trip service much earlier, two hours before the start of the performance, thus ensuring that the audience is not forced to wait in big crowds at the last minute.

The auditorium will be opened earlier so guests can book a seat. Backstage, a certificate of protection is not obligatory, but it is mandatory to wear a mask, perform hand disinfection and maintain social distancing. The theater will take the utmost care of this.

Teodóra Bán BBJ: The marking slogan says: “The festival represents a unique value in the life of the city; its wide genre palette offers real cultural attractions for all ages throughout the summer.”

Still, if you had to narrow things down, which concerts do you expect to draw the biggest audiences?

TB: Of course, there are favorites and seemingly more serious interest in certain performances, such as Carmen Burana, with the National Philharmonic, the Sergei Polunyin performance, the Mozart film concert, and the Verdi gala, but light music performers also enjoy their opportunities. Spending habits are divided between pop music and the “heavier” genres. Tickets for pop music concerts do not often sell out early; instead, they usually go in the last few days. Classical music and theater performances, on the other hand, sell out much earlier, probably in part so people can get better seats.

At the Margaret Island Theater, we want to stage this year’s season in the name of diversity, both in terms of age and genre. We want to satisfy better the need and hunger of those waiting to go to the theater and community cultural venues. As we have expanded our offering, we expect a much wider audience this year as well.

BBJ: Such a festival involves many guests, and litter can burden the environment. How will this be offset on Margaret Island?

TB: This is an vital issue for us, as environmental awareness has always been a major consideration in this highly protected and outstanding environment. According to the old saying, Margaret Island is the “fairy garden” of the capital. The theater has been integrated into this setting for almost 90 years, so we need to pay the maximum attention to our environment.

I have to say that the artists and the audience who come to us are very conscious and disciplined. We have created every opportunity for them to collect the garbage from the products they consume selectively.

BBJ: What epidemiological precautions have been taken? For example, I think audience members will need a vaccination card to attend the event?

TB: We have to operate separate COVID protocols for the artists in the auditorium and backstage, in other words, the operating area, and for the audience.

Theatergoers can enter with a vaccination card, and we are prepared to check this properly. Within the theater, the

BBJ: To what extent can you think that this long-lasting event can help the country’s cultural life to flourish?

TB: It is vital to have cultural events, services, and experiences in the community space as these, in addition to educating the student or the viewer, provide meaningful, valuable recreation.

The theater has been 90-95% full in previous years; this year we do not expect such volume. But we are very confident that with the lessening of COVID obligations and the improvement of the epidemic situation, more people will choose Margaret Island’s beautiful big theater and performances.

MARGITSZIGETI SZABADTÉRI SZÍNHÁZ

Rád vár a nyár! – júniustól szeptemberig 40 előadás = 40 este = 40 élmény

Bizet: Carmen - opera

Verdi ünnep - operagála

Hervé Koubi - balett

Nemzeti Összetartozás Napja - emlékest

Hegedűs a háztetőn - musical

Mozart 230

Kabaré - musical

filmzene koncert

Carmina Burana & Mozart zongoraverseny Szergej Polunyin Raszputyin - táncdráma Lucas & Arthur Jussen & NFZ - koncert Online jegyvásárlás és további információk:

Puskás - musical

Tel: 06 / 1 229-1492 | E-mail: jegy@margitszigetiszinhaz.hu

www.margitszigetiszinhaz .hu A Margitszigeti Színház Nonprofit Kft. az Emberi Erőforrások Minisztériuma és Budapest Főváros Önkormányzata közös fenntartásában működik.

/margitszigetiszinhaz

/szabadter

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