Budapest Business Journal 3212

Production set to Pass the 1 mln Mark Soon

The slowdown in electric vehicle sales is temporary, and stakeholders are ready to embrace competition. However, collaboration among the entire local automotive ecosystem will be needed for long-term success.  10

Automotive in CEE Regional Conference

The Automotive Business in CEE Regional Conference 2024, held in Budapest, provided attendees with a comprehensive overview of the current trends and challenges facing this vital industry across Central and Eastern Europe.  12

AmCham Marks 35 Years in Hungary

The American Chamber of Commerce in Hungary celebrated its 35th anniversary at a gala event, welcoming more than 400 guests: AmCham members and partners from top investors and government leaders, U.S. Embassy reps, think tanks and academia.  21

Magyar Movies

Best Supporting Actor Role?

Inflation in Hungary on the Rise Again

Although prices fell by 0.1% in May from April, the 12-month inflation index rose to 4%. This means that the annual price index grew for the second month. Analysts expect further upward movement in the following months.  3

Csaba Káel, Government Commissioner for Developing the Hungarian Film Industry, talks about this countryʼs remarkable success in the global movie market industry, backed by generous state support.  20

Craft Conference Celebrates 10th Anniversary

The 10th anniversary of Central Europe’s largest professional IT event, was held at the Hungarian Railway Museum:, exploring the future of AI engineering, productivity enhancements, and industry trends .  9

EDITOR-IN-CHIEF: Robin Marshall

EDITORIAL CONTRIBUTORS: Luca Albert, Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Gary J. Morrell, Nicholas Pongratz, Gergő Rácz.

LISTS: BBJ Research (research@bbj.hu)

NEWS AND PRESS RELEASES: Should be submitted in English to news@bbj.hu

COVER PHOTO: Márton Pesthy; LAYOUT: Zsolt Pataki

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THE EDITOR SAYS

IN PRAISE OF SUMMER SUNDOWNERS

BBJ-PARTNERS

Why Support the BBJ?

• Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

• Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together.

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It’s been a busy few days, what with AmCham and GE Hungary celebrating their joint 35th anniversary (see page 21), the European Parliament and Hungarian municipality elections (page six), and the headlong rush toward the Hungarian presidency of the Council of the European Union, which starts on July 1. And among all that, we held our latest Budapest Business Journal Boardroom Meeting in the morning and BBJ Business Mixer on the evening of the same day (page 22). For those of you who don’t know, the Boardroom Meeting grew out of our Expat CEO of the Year Gala as a means of keeping in touch with leading members of the business and diplomatic community in Budapest on a more regular basis and providing a value-added platform through which to share knowledge, news and views. A vital part of what makes it work has been our roundtable discussions of current events examined from a commerce point of view.

This time, our guest speakers were the Belgian Ambassador to Hungary Jeroen Vergeylen, making his debut, and Tamás Lőcsei, country managing partner for PwC Hungary. Our discussion was framed by those elections, that Presidency of the Council of the EU, and, of course, the latest macroeconomic outlooks. Issues covered included how the EP elections might influence power dynamics in Hungary and the EU, whether Péter Magyar and his Tisza party are likely to be a lasting force in Hungarian politics, and some of the fallout from the election, such as French President

Emmanuel Macron’s decision to call a snap general election, and its potential economic impact.

Other topics included highlights of the Belgian presidency, the likely priorities of the Hungarian presidency, and Belgian-Hungarian relations ahead of the handover. On the Hungarian macroeconomic front, we touched on inflation and GDP growth this year and next, as well as whether growing real wages might benefit or threaten the economy.

It really is a privilege for me to moderate these conversations, picking the brains of some very knowledgeable people, and I learned a lot on Tuesday morning, but my BBJ highlight of the week was undoubtedly our Summer Sundowner at the Marriott’s Liz & Chain rooftop bar. The Business Mixers have been building nicely since we made a more conscious effort, post-COVID, to bring back something that had always been a BBJ hallmark. We are getting to that stage where we are very close to needing to limit numbers. Guests want to return because they know the venues are great, the tombola prizes are enticing, and the mix of people is intriguing. They are, as I like to say at these events, a place to meet old friends, meet new acquaintances, and do some business. I know all three were happening on Tuesday evening, and personally, I can’t wait for the next event. I hope I’ll get to see you there.

Robin Marshall Editor-in-chief

THEN & NOW

In the black-and-white photo from the Fortepan public archive, a woman carrying her child casts her vote at a polling station in Nyáregyháza primary school (54 km southeast of Budapest by road) during what passed for national general (parliamentary and local council) elections in 1971. In the present-day picture from the state news agency MTI, a man posts his vote in a ballot box in the European Parliament and municipal elections at a polling station in the Erzsébetváros Bilingual Primary and Secondary School in the capital’s District VII on June 9, 2024.

Photo by István Péterffy / Fortepan

Photo by Zoltán Balogh / MTI

1News • macroscope

Inflation in Hungary on the Rise Again

Although prices fell by 0.1% in May from April, the 12-month inflation index rose to 4%. This means that the annual price index grew for the second month. Analysts expect further upward movement in the following months.

Industrial Production in Hungary, 2002-2024 (January-April)

Source:

In May, consumer prices were 4% higher on average in May 2024 than a year earlier. Compared to April, prices decreased by 0.1% on average, according to the latest figures released by the Central Statistical Office (KSH). In April, the annual inflation was 3.7%.

On a year-on-year basis, a price increase of 1% was recorded for food, within which there was a 29.6% rise for sugar, chocolate and cocoa was up 9.8%, fruit and vegetable juices rose by 9.5%, buffet products were up 8.8%, with rises of 8.6% for pork, 8.1% for meals at restaurants and 5.6% for non-alcoholic beverages.

There was better news within the product group: egg prices decreased by 22%, the cost of flour by 19.6%, that of milk products by 11.6%, pasta product prices by 10.6%, the prices of milk and bread by 9% each, cheese by 7.4% and poultry meat prices by 6%.

Services became 9.5% more expensive, and Alcoholic beverages and tobacco prices rose by 3.5%, within which tobacco went up by 3.8%. The price of pharmaceutical products grew by 6.4%, while electricity, gas and other fuels became 2.4% cheaper. Motor fuels, however, became 9.2% more expensive.

Consumer prices decreased by 0.1% on average compared to the previous month. The highest price increase of 0.9% was measured for services, while electricity, gas and other fuels fell by 0.9%. Consumers had to pay 1.7% less for natural and manufactured gas. Motor fuel prices fell by 4.4%.

Low Tide in March

The 12-month inflation data reached its lowest point in March at 3.6%. However, according to the Portfolio analyst survey, the 4% annual pace in May is a good

figure, even compared to the fact that analysts expected an average 12-month monetary deterioration of 4.2% for May. On a monthly basis, prices last decreased in December last year, when the KSH measured a 0.3% one-month price decrease.

“As for the monthly price changes, overall food prices increased minimally compared to April, but at the same time, ‘core’ food products continue to show a decrease and mainly the prices of service-related segments (such as catering, buffet products, and home delivery) pulled the index positive,” Erste Bank analyst János Nagy said.

He added that the 0.9% monthly services price increase was still remarkable. In addition to wage dynamics, repricing with retrospective inflation was again the most significant factor here.

Nagy said the main inflation index reached the edge of the

tolerance band of the National Bank of Hungary (MNB) in May. In the short term, the biggest question is how much room there is for further price increases in the second half of the year after an 18-month recessionary period.

Erste expects inflation to be over 4% in the next few months. For the year as a whole, he predicts fluctuating annual inflation figures of 4-5% without a definite trend. According to Nagy, the disinflation process could start again next year and inflation return to the central bank’s target band then.

Disinflation Broken

“The disinflation process was already broken in April, and the annual inflation index could also be expected to rise in May. By the end of the year, inflation will be substantially higher than the May level, but it seems less likely that the inflation index will rise above 5% by the end of the year,” MBH Bank’s senior analyst Márta Balog-Béki said.

According to her, the increase in the price of services will slow in the coming months, as it is less and less justifiable to use last year’s inflation as the basis for pricing decisions. Balog-Béki believes the stable and sustainable achievement of the central bank’s inflation target of 3%

can be expected in 2025 at the earliest, but even then, the average annual inflation may exceed 3%.

Naturally enough, the MNB also monitors inflation processes closely. MNB deputy governor Barnabás Virág told a recent central bank conference in Budapest, “We cannot sit back because of inflation in the service sector and high wage dynamics; inflation may rise in the coming months, so this justifies a patient and cautious monetary policy even more.”

Despite the rising trend, Minister for National Economy Márton Nagy claimed in a press release that, due to the government’s targeted measures, such as mandatory sales and online price monitoring, inflation has collapsed and remained at a low level due to price competition generated by government actions.

Among the May data, it is noteworthy that, within the food product group, the

price of eggs decreased by 22%, that of flour by 19.6%, dairy products by 11.6%, and dry pasta by 10.6% compared to the same period of last year. Nagy also noted that household energy prices fell by 2.4% on a year-on-year basis, within which the cost of piped gas dropped by 4.7% and electricity prices by 2.9%.

The drop in basic foodstuff and household energy is a major help for Hungarian families, the press release of the Ministry for National Economy says.

Battling industry

Hungarian industry continued its battles in April. While the volume of industrial production grew in April by 6.4% year-on-year, based on working-day adjusted data, production declined by 2.4%. Compared to the crude data, the significant difference is due to the fact that there were three more working days in April 2024 than in April 2023, KSH noted. However, production also declined on a monthly basis: according to seasonally and working-day adjusted data, industrial output was 0.7% lower than in March 2024. However, it is important to note that industrial production in Germany, considered Hungary’s most important trade partner, also shrank in April: production was 3.9% lower than last year.

ZSÓFIA CZIFRA

Hungarian State Completes Majority Purchase of Budapest Airport Real Estate Matters

The purchase by the state of an 80% stake in Budapest Airport

Zrt., the operator of Budapest Ferenc Liszt International Airport, has been positively welcomed by analysts in the tourism and hospitality industries. The Hungarian state is now back in the position of majority ownership after 20 years and following a two-year negotiation period.

With a purchase price of EUR 3.1 billion, this is regarded as a record transaction of its type in the Central and Eastern European region in the view of many commentators. Buying back was extremely complex, while selling it had been easy, according to the government. The hotel and hospitality sector is once again regarded as an attractive development and investment option. Hungary is seen as a popular tourist destination, with guest nights for Budapest rising towards the record highs of pre-pandemic levels.

“Notably, in 2023, the RevPAR [revenue per available room] in Budapest was higher than in Prague. According to forecasts, passenger traffic at Ferenc Liszt International Airport will return to pre-pandemic levels in 2024,” comments Robert Székely, hospitality and leisure expert at the consultancy Newmark HTL.

“The city is ranked among the top conference destinations, has a rich history, stunning architecture, and unparalleled cultural attractions. It has also consistently demonstrated its ability to host successful largescale sporting events and is home to one of the largest summer festivals. With these strong fundamentals, the sentiment about Budapest’s tourism outlook is very positive,” he says.

Investment Market Remains Slow in H1

“The investment market is quiet as investors adopt a wait-andsee position; nobody wants to take a risk and justify an investment deal to a board or colleagues. A fall in interest rates could mark a turnaround in the markets,” comments Benjamin PerezEllischewitz, principal at Avison Young Hungary.

Avison Young estimates Hungary yields at 6% for prime office, with prime industrial at 7% and retail (essentially strip malls with tenants with long leases) at 7%. Further yield movement is anticipated.

With investment activity for the first half of 2024 limited to around EUR 150 million, Perez-Ellischewitz anticipates a total investment value for the year to be up to

EUR 400 mln. Several large deals under negotiation could slip into 2025.

“The market bottleneck is, as always, liquidity, the lack and cost of debt, the cautiousness and the fears on the global macro-economic and political fronts. I think that vendors’ expectations and valuation levels in Hungary are becoming more realistic,” Perez-Ellischewitz says.

“This is a plus, compared to some other locations, and will help restart the market cycle as soon as debt is coming back. More robust investment volumes will only come at the end of the year when market sentiment should improve more broadly and debt markets should re-open,” he concludes.

Meanwhile, investment activity is picking up in Poland, where Skanska has sold the Leed “Platinum” and Well-

A biweekly look at real estate issues in Hungary and the region

“The largest impact on tourism in Budapest could come from the state’s purchase of Ferenc Liszt International Airport. This acquisition could lead to infrastructural redevelopments at the airport, as well as the longawaited railway connection between the airport and the city center.”

says. “This acquisition could lead to infrastructural redevelopments at the airport, as well as the long-awaited railway connection between the airport and the city center,” he notes.

With regard to infrastructure projects, the expansion and improvement of Budapest Airport and ongoing developments in the Castle District will improve the attractiveness of the tourism sector in Hungary.

Over the long term, Budapest is likely to see sustained growth due to continuous investments in tourism infrastructure, increasing international connectivity, and the city’s strategic marketing initiatives, says Attila Radvánszki, director of the hospitality consultants Horwath HTL Hungary. Altogether, approximately 3,000 hotel rooms are in the pipeline for the next five years from more than 22 hotel projects.

“The largest impact on tourism in Budapest could come from the state’s purchase of Ferenc Liszt International Airport,” Székely

accredited Studio B office building in Warsaw to Stena Real Estate, part of the privately-owned Swedish Stena Group. This is the third transaction between the two parties in CEE.

“The transaction of the Studio B project stands as a testimony to the interest in high-quality and sustainable real estate products in fast-paced, vibrant locations. This is proof of a positive shift in demand in the investment market,” comments Katarzyna Zawodna-Bijoch, president and CEO at Skanska’s commercial development business unit in CEE.

Studio B is part of an office complex designed by Danish Arrow Architects and Polish Grupa 5 Architekci. It has 17,600 sqm of sustainable and innovative space. The office space was already fully leased before it gained its occupancy permit.

“Meanwhile, hotel supply development is continuing: hotel brands such as Kimpton, St. Regis, Radisson Collection, voco, Vignette Collection, Moxy, Mandarin Oriental, So, and Swissotel – just to name a few – are entering the market, resulting in a differentiated supply,” Székely adds.

Futureal

Sells 2 Buildings at Lipowy Office Park

Futureal Investment Partners, a member of the Futureal Group, and 1 Asset Management, an investment management company backed by the developer Hanner, have announced a transaction involving the division and sale of two buildings at Lipowy Office Park in Warsaw.

The buyer, CEE Student Housing Fund, managed by 1 Asset Management, intends to convert the property into a modern co-living and purpose-built student accommodation (PBSA) for students and young professionals.

“This is a fine example of a redevelopment project, where the previous 21,000 sqm of office space will be repurposed into a modern rental living area with over 650 units, and will certainly rejuvenate the surrounding area. There is an immense scarcity of affordable and modern housing in Warsaw due to an existing undersupply and a constantly growing demand from the youth,” said Matas Mockeliunas, a fund partner from 1 Asset Management. The deal reflects the growing attractiveness of the residential real estate sector for investors. It is an emerging sector in CEE, although it is yet to be established in Hungary.

GARY J. MORRELL

Photo by BUD Zrt.

Ukraine

Could B9 Become B8 Over Hungary’s Actions on Ukraine, Russia? Roundup Crisis

Prime Minister Viktor Orbán claimed a victory for “advocates for peace” following the European Parliament elections held in Hungary on Sunday, June 9, in which the FideszKDNP (Christian Democrat) alliance won 44.6% of the vote. The PM had touted the election as a “chance” to stop the war during an interview with Kossuth Rádió two days before the election on Friday, June 7.

Due to what he perceived as “war psychosis” in Europe, Orbán had warned of an “advance towards conflict at a faster pace,” adding that it had come “very close” to the “point of no return.” Following Sunday’s results, Orbán said that the EP elections had been an opportunity to slow the “drift toward war. If we see it this way, then we got what we wanted,” he added.

“Hungary’s addiction to Russian energy is dangerous and unnecessary,” Pressman said. “Minister Szijjártó is right: energy diversification is not a matter of ideology but physics. The laws of physics in Hungary are no different from the laws of physics in any of Hungary’s EU partners who have chosen to reduce their dependence on Putin,” the U.S. diplomat added.

“The Hungarian government says it is on the side of peace, but it is actually on the side of war led by Putin,” Pressman claimed.

In this file photo, released by the Press Office of the Prime Minister, Viktor Orbán (left) is interviewed by Zsolt Törőcsik on “Good Morning, Hungary!” at the Óbuda studio of Kossuth Rádió.

Orbán pointed out that support for “pro-peace” parties had been so great in France that it persuaded President Emmanuel Macron to dissolve the National Assembly and call for snap elections scheduled for June 30 and July 7. Macron’s Renaissance party had garnered just half of the share of the vote secured by Marine Le Pen’s right-wing populist party, National Rally (RN), in the EP elections.

In light of his diminished mandate at home, Macron hopes to coalesce other moderate parties into a “republican front” against the burgeoning RN with the two-round election. Gleefully, Orbán reflected that a “transatlantic peace coalition” could take shape if Donald Trump returns to the White House in November.

“Now we’re waiting for President Donald Trump to bring victory in the United States in the second half, and then there will be peace,” Orbán added.

Driven by the country’s “absolute position on the side of peace,” Minister of Foreign Affairs and Trade Péter Szijjártó said at the St. Petersburg International Economic Forum on June 6 that Hungary would

in Brief News

Scope Affirms Hungary’s ‘BBB’ Rating

Scope Ratings completed a biannual monitoring review for Hungary on June 7. The periodic review resulted in no rating action. Scope rated Hungary “BBB” with a stable outlook. Scope said the rating is supported by robust growth, bolstered by substantial foreign investments and significant European Union funding, and by the structure of Hungary’s external and public

liabilities and an improved external position, enhancing the country’s resilience to external shocks.

CEU Closing Hungarian University Entity

Central European University (CEU) informed its former students that the university council will initiate the revocation of the CEU’s license, according to a post on its Facebook page. “CEU has not accepted students into its Hungarian-

participate at a foreign ministerial level in a Ukraine peace summit due to be hosted by Switzerland on June 15.

He added that the Hungarian government regretted that both warring parties would not be present at the conference, as Russia would not be attending.

“We believe that if everyone were at the negotiating table, real results could be expected,” the foreign minister said.

Russian Energy Ties

Szijjártó had attended the economic forum in St. Petersburg to affirm energy ties with the Kremlin. Hungary remained satisfied with its cooperation with Russia on gas supplies and had no plans to curtail purchasing gas from Moscow despite external pressure, the minister said. He added that the issue of energy supply had been “taken hostage by political and ideological debates,” while Hungary viewed the matter as a “purely practical one,” a function of mathematics and physics. This perspective drew critical remarks from the U.S. Ambassador to Hungary, David Pressman.

accredited degree programs for several years, and the last students enrolled in such programs will graduate in July 2024. Therefore, CEU does not meet the conditions of a university in Budapest, and as such, our Board of Trustees has decided to initiate the closing of our Hungarian university entity, Közép-európai Egyetem, at the end of the academic year,” the post stated. It also mentioned that the Orbán government’s efforts to expel the university from Budapest have succeeded, as CEU will cease its higher education activities in Hungary. However, the research institutes in Budapest will remain, and non-degree programs will be maintained.

Similarly frustrated with Hungary’s continued cultivation of close ties to Russia and reluctance to provide support to Ukraine, the Bucharest Nine (B9), a group of European countries on the eastern edge of NATO, said that it had discussed the possibility of excluding Hungary from future meetings.

The discussions on excluding Budapest are “very serious,” said one B9 diplomat, adding, “We are likely meeting in this format for the last time.” President Tamás Sulyok chose not to attend the recent meeting in Riga on June 11

(Hungary was represented by its ambassador to Latvia), which Latvian President Edgars Rinkevics said allowed the group a “more coordinated approach” towards supporting Ukraine. That said, the summit ended without a joint declaration of the nine countries for the first time since the format was established in 2015, Rinkevics’ office added. Instead, a statement was issued in the name of the presidents of Latvia, Romania, and Poland, who jointly hosted the Riga gathering. The group currently includes Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia, all former members of the Soviet Union or the Warsaw Pact and now NATO and EU states.

Hungary’s EU Presidency to Draft new European Competitiveness Pact

Hungary’s presidency of the Council of the European Union will draft a new European competitiveness pact, Minister of EU Affairs János Bóka said at a conference in Budapest on June 6, according to hirado. hu. Bóka said an informal meeting of the council in Hungary slated for November could affirm the pact and designate the direction for the EU in the coming five-year institutional cycle. Hungary will organize 230 events during its halfyear EU presidency, which starts on July 1. The detailed program will be announced on June 18.

NICHOLAS PONGRATZ

Photo by Zoltán

Orbán Claims’ Double Election Victory,’ Magyar

Prime Minister Viktor Orbán declared victory for his Fidesz-led coalition in “the two elections held today” in his speech following the counting of votes in Sunday’s ballots for representatives in the European Parliament (EP) and Hungarian municipalities.

With a record 2.04 million votes, some 200,000 more than in the previous 2019 EP election, Fidesz won 11 of Hungary’s 21 seats in the Brussels parliament. And an unprecedented voter turnout just short of 60% enabled Orbán to boast that Hungarian democracy is alive and well despite what he termed “a wartime situation.”

However, despite these successes, the Fidesz vote share was 45% of the total, down from 52.6% in 2019, and the new Fidesz MEP contingent is two short of the 13 achieved in the previous cycle.

This aspect of the news (inevitably played down by state media) is the result of the unprecedented emergence of former Fidesz insider Péter Magyar and his Tisza (Respect and Freedom) Party, a combination that achieved just short of 30%

of the vote to garner seven MEP seats.

“Today is the Orbán government’s Waterloo, the beginning of the end […] Tonight, many have regained their faith in the possibility of building a different kind of Hungary, which is not based on division and lies, but on peace, unity and love,” the ex-husband of former Minister of Justice Judit Varga declared.

Becomes Principal Opposition Leader The results of

can organize and manage a party machine or find the money to finance the overheads needed to sustain a large party’s activities is unclear.

“At this point, we have absolutely no idea,” because there is no evidence as to whether Magyar possesses these qualities, the analyst argues. “I think this is why it’s practically impossible to tell what to expect from him because these sort of political skills are going to be the ones that are decisive,” he says.

Karácsony Fights off Intense Vitézy Attack to Retain Budapest. For Now

Regardless of his questionable analogies regarding Napoleonic history, Magyar’s whirlwind success, coming from a virtually unknown Fidesz bureaucrat to claim leadership of the opposition in just four months of feverish nationwide campaigning, cost the traditional Hungarian opposition parties dearly.

Support Slashed

The Democratic Coalition-SocialistsDialogue alliance, which earlier had hopes of winning at least four seats this year, saw its support slashed, garnering just 8% of the vote and gaining only two seats in Brussels (down from five in 2019).

The Momentum Movement, whose two female MEPs had proved remarkably active in the past five years, also saw support collapse as the Magyar campaign developed, leaving the liberal party short of the 5% threshold in the final votes.

Likewise, the alternative Two-Tailed Dog Party, which held real hopes of winning an MEP seat as late as early June, achieved just 3.6%

of the vote, while both the JobbikConservatives (with one MEP in 2019) and the green LMP (Politics can be Different) virtually sank without trace.

This left only Our Homeland on the EP score sheet, its 6.7% share of the vote yielding the radical-right party one MEP.

“I believe that there is really a new political era that has begun in Hungary on Sunday,” Zoltán Ranschburg, senior analyst at the Republikon Institute, told foreign media on June 11.

“The sort of dichotomy between Fidesz and the left-wing opposition, which is more or less circulating around the person of Ferenc Gyurcsany, and the Democratic Coalition being the sun of this microsolar system of this opposition, that’s practically over,” he added.

Extraordinary Result

For Magyar to begin from nowhere and reach nearly 30% of the EP vote in such a short period, with no real party or formal support, and having to overcome a massive Fidesz smear campaign en route, was nothing short of extraordinary, Ranschburg said.

“This is the best result that a single opposition party has achieved against Fidesz in the 21st century. I mean, this is really a big, big thing,” he added.

Naturally, the question now is whether Magyar can build on his platform to pose a serious threat to the Orbán administration in the 2026

general elections. A 30% slice of the vote is impressive but insufficient to defeat the incumbent government, barring some political catastrophe, and the wave of euphoria among his supporters cannot alone carry him to victory during the next two years.

“This sort of momentum, I think, is not going to last very long,” opines Ranschburg. While Magyar has energy and charisma, whether he

In what proved to be the most exciting battle in the entire election mix, incumbent Gergely Karácsony fought back to overturn a significant deficit in the early vote count to defeat challenger Dávid Vitézy for the position of Lord Mayor of Budapest by the thinnest of margins. At the final count, Karácsony, a Dialogue-Green party member within the Democratic Coalitionled alliance, polled 47.53% of the vote, with Vitezy on 47.49%, trailing by a mere 324 votes in a total count of 807,000. The turnout was 60.51%.

The late withdrawal of Alexandra Szentkirályi, the Fidesz candidate for the post, spiced up the contest with the former government spokeswoman urging her supporters to vote for Vitézy. He had once served as the head of the Budapest Transport Office in the former Fidesz Mayor István Tarlós. This resulted in election administrators crossing out Szentkirályi’s name by hand on 1.4 million ballot papers and has given Vitézy grounds to call for a recount. Pointing to 24,592 invalid votes, he claimed that the tiny margin of victory justified a recount on fundamental democratic principles. According to Hungarian electoral law, a recount can only be justified on grounds of specific voter fraud and not merely on the closeness of the vote.

On Wednesday, June 12, as this edition of the Budapest Business Journal went to press, Vitézy personally delivered his appeal to the Budapest Election Office. The body automatically forwards the appeal to the National Election Committee, which has three days to decide on a recount.

Péter Magyar

Photo by csikiphoto

2 Business

Delta 1 Esports Café: Hungary’s

Latest Esports Hub Opens

Budapest has inaugurated its latest electronic gaming venue, the Delta 1 Esports Café. The hub offers a comprehensive environment for amateur and professional esports enthusiasts alike, including coaches, player management, mentorship programs, and training camps. It also provides AI training courses. Its mission is to nurture talent and support individuals aiming to grow and succeed in the field.

for esports in the region, attracting both local and international attention.

The Delta 1 Esports Café includes sections for PC, PlayStation, and virtual reality gaming, VIP rooms, and spaces suitable for team boot camp training within its

Esports has seen significant growth in Hungary over the past few years, with increasing participation and recognition nationally and internationally. The country has produced several notable esports players who have competed globally.

Hungarian esports organizations and events are gaining momentum, and there is a growing community of gamers and enthusiasts. This burgeoning industry is supported by various initiatives to foster talent and provide resources for aspiring esports professionals.

The establishment of dedicated esports facilities and training programs has contributed to the professionalization of the sport in Hungary. The government and private sector are also investing in esports, recognizing its potential for economic growth and youth engagement. As a result, Hungary is becoming an emerging hub

square meters. It also features a dedicated classroom for educational purposes. What sets the venue apart is its comprehensive support system, offering dedicated coaches for various games, career management services, and professional mentoring covering legal, financial, and competitive aspects.

Elite Club

“We felt there was a need for an elite esports club where the next generation of esports players could seek advice, expertise, and support,” Attila Jakab, founder and CEO of Delta 1 Esports Café, said at the opening.

“Here, they can meet coaches and teams, and integrate into the scene. Our mission is to elevate local talent who will further enhance the reputation of esports as players, streamers, or commentators,” Jakab added. “Delta 1 aims to initiate dialogues on important topics such as mental health, gamer culture, and strengthening women’s presence in esports,” he continued.

The founders emphasize the importance of local expertise development, drawing on their

significant experience teaching esports fundamentals as a standalone subject at Óbuda University. Delta 1 also collaborates closely with the Hungarian Esports Federation (Hunesz).

“At the Hungarian Esports Federation, we work to promote and support the growth of esports nationwide. A key pillar of our work is connecting and supporting local esports communities.

Delta 1 is a prime example of the strength found in local esports initiatives. We believe such endeavors offer opportunities for talents to flourish,” stated Balázs György Biró, secretary general of Hunesz.

The Delta 1 Esports Café is located at Lechner Ödön Fasor 1 and is open

to all enthusiasts. The hub also offers unique group local area network (LAN) experiences. Visitors can bring teams of 3-5 people to enjoy uninterrupted gaming sessions in exclusive bootcamp rooms equipped with the latest hardware. These sessions can include additional features such as pizza and beverages, making for a complete gaming day. Furthermore, the café can provide coaches for enhanced esports training, contributing to a professional and immersive gaming experience.

Educational Background

Delta 1’s founders are not new to the academic aspect of esports, with established programs at Óbuda University. This expertise is now channeled into Delta 1, aiming to support the community’s gaming and educational needs. The collaboration with Hunesz further strengthens the initiative, providing a robust framework for developing esports in Hungary. Jakab highlighted the café’s broader mission beyond just gaming.

“We want to address crucial issues like mental health and the representation of women in esports. By creating an inclusive environment, we hope to foster a positive and supportive community for all players,” he said.

In an interview, Jakab discussed the potential number of esports players in Hungary and their proportion among regular gamers. He noted that, while exact figures are unavailable, only about 1%

of gamers

become professional esports players. Jakab also elaborated on the significant earnings of professional esports players abroad, highlighting that they receive comprehensive preparation, including training, nutrition from dedicated chefs, and participation in physical exercise regimes.

The Delta 1 Esports Café is, therefore, not just a gaming venue but a comprehensive support system for aspiring esports professionals. It aims to bridge the gap between amateur and professional levels by offering targeted training and development programs. With a focus on mental health and community support, Delta 1 says it is setting a new standard in the esports industry.

Attila Jakab, founder and CEO of Delta 1 Esports Café, outside the venue.

Startup Genome, Hungarian Innovation Agency Feature Startup Ecosystem

The 2024 Global Startup Ecosystem Report (GSER) by Startup Genome and the Global Entrepreneurship Network was launched on June 10 at the start of London Tech Week. The Hungarian Innovation Agency teamed up with the report’s creators to give insight into Budapest’s entrepreneurial ecosystem.

BENCE GAÁL

The report analyzes data from more than 4.5 million companies across 300-plus entrepreneurial innovation ecosystems. It aims to provide new insights and deep knowledge about

worldwide startup trends and features a ranking of the Top 40 global ecosystems, emerging ecosystems, and an expanded regional ranking.

Budapest performed remarkably well, according to GSER, with the city’s ecosystem experiencing 41% growth (USD 2.4 billion) in ecosystem value in the period between July 1, 2021, and Dec. 31, 2023, when compared with the period between July 1, 2019, and Dec. 31, 2021. Ecosystem value measures economic impact, which is calculated as the value of exits and startup valuations, Startup Genome explains.

The report highlights the Hungarian Innovation Agency, a subsidiary of the National Research, Development,

News Company

Liberty Dunaújváros Shuts Down Coke Ovens

Hungarian steelmaker Liberty Dunaújváros has started shutting down its two coke ovens, Indian owner Liberty Steel said on June 10. The coke ovens, which are inefficient and difficult to maintain, are being shut down as Liberty Dunaújváros prepares to make the switch to green steel. Liberty Steel noted that it had recently signed a contract with China’s CISDI Engineering on the delivery of an electric arc furnace that would cut carbon emissions by around 80%. In the meantime, Liberty Dunaújváros is working to ensure employees affected by the measure are retrained and transferred to other areas within the company. Liberty Steel acquired the assets of troubled steelmaker Dunaferr for about HUF 20 billion in a liquidation procedure in the summer of 2023.

Szállás Group Acquires 80% Stake in Litoralulromanesc

Szállás Group, which owns booking site operators in Hungary as well as Croatia, the Czech Republic, Poland, and Romania, has acquired an 80% stake in the operator of Romania’s litoralulromanesc.ro for EUR 16.8 million, the company said in a press release on June 11. Last year, travelers booked accommodation worth more than EUR 45 mln on Litoralulromanesc, which focuses on hotels and resorts along the Black Sea Coast, the Szállás Group said. The acquisition dovetails with the earlier purchase of Romanian online travel agency travelminit.ro, which had bookings of EUR 30 mln in 2023, it added. The Szállás Group was acquired by Polish media company Wirtualna Polska  for EUR 82 mln in 2022.

regulatory obstacles faced by startups and investors, ensure early-stage financing, and increase the international visibility of the ecosystem,” says Deputy State Secretary László Bódis of the Ministry for Innovation and Culture.

J.F. Gauthier, founder & CEO of Startup Genome, adds, “Budapest’s startups, investors, and ecosystem leaders are innovating at an accelerated rate, producing an impressive 41%

growth in ecosystem value. We are thrilled to work with the Hungarian Innovation Agency to foster economic growth through entrepreneurial innovation.”

and Innovation Office (NKFIH), which advances innovation by aiding businesses in development and global market entry. The 2023 edition of the Startup Factory program, launched by NKFIH, offered a total budget of USD 15.9 million for technology incubators. Projects can receive between USD 415,000 and USD 2.5 mln for 24-42 months to develop earlystage startups, foster innovation, commercialize technology-based products, and secure further funding.

Increasing Visibility

“The Hungarian Innovation Agency works closely with key players in the startup ecosystem to break down the

Hungarian Richter to Acquire Belgian Peer Mithra Assets

Hungarian pharmaceutical company Gedeon Richter announced that it has agreed to purchase certain assets from Belgian peer Mithra Pharmaceuticals, state news agency MTI reports. Richter said that the transaction included acquiring 100% of Estetra Srl and Neuralis SA and some assets of Mithra R&D. The enterprise value implied by the transaction is EUR 175 million, including assumed net debt. The transaction aims to acquire exclusive rights of Estetrol, a unique, native estrogen developed by Mithra, for multiple indications and several synthetic approaches, as well as worldwide rights attached to the linked product and product candidates.

EC Blocks State Aid for GKN Investment in Hungary

The European Commission said it found Hungary’s plans to grant EUR 43.8 million in state aid for a vehicle parts plant in the underdeveloped north of the country were not in line with European Union rules on June 11. “Hungary failed

GSER is driven by a consortium of representatives from more than 40 countries and looks at the current state of startup activity and related investment, providing insights and guidance to public and private leaders on how to foster thriving startup communities, Startup Genome tells the Budapest Business Journal

The full report is available at startupgenome.com/gser2024

to prove that the aid was decisive for the beneficiary to locate its investment in Hungary,” the EC said. It explained that available evidence showed that GKN Automotive Hungary had already decided to invest in Hungary without considering the state support. As the state aid had no real “incentive effect,” the EC said it was incompatible with state aid rules and could not be granted.

Motherson Group Expanding Bases for EUR 33 mln

Indian automotive industry supplier Motherson Group (SMG) will plow EUR 33 million into capacity expansions at its bases in Győr (120 km northwest of Budapest), Mosonmagyaróvár (165 km northwest), Mosonszolnok (170 km northwest) and Túrkeve (155 km southeast), Minister of Foreign Affairs and Trade Péter Szijjártó said, according to origo.hu. The government is supporting the investment, which will focus on supplying the factories of BMW and Mercedes, with EUR 6.6 mln, Szijjártó said. He added that SMG, which employs more than 3,000 people locally, decided to invest in Hungary based on its favorable experiences.

Craft Conference Celebrates 10th Anniversary with Leading Tech Giants

The 10th anniversary of the Craft Conference, Central Europe’s largest professional IT event, was held at the Hungarian Railway Museum in Budapest on May 30-31. Discussions included the future of artificial intelligence engineering, productivity enhancements through AI tools, and industry trends amidst economic challenges. The Pragmatic Engineer Gergely Orosz headlined the event.

Spotify, Microsoft, OpenAI, and eBay. Since its inception in 2014, the conference has welcomed over 15,000 participants, with more than 2,000 attending last year alone.

Relaxed but Inspiring

The organizers attribute the event’s success to its relaxed yet inspiring atmosphere, offering valuable insights for novice and seasoned developers alike, as well as business leaders and managers.

“We have become the go-to developer event in the region,” said co-founder Médea Baccifava.

With a new generation of developers often lacking knowledge that was commonplace 10-20 years ago, Craft offered sessions to bridge this gap. The event also covered new industry advancements and their effective integration into existing tech stacks. Soft skills were emphasized as essential for coders, who need to solve increasingly complex problems daily. Craft provided guidance on embarking on self-improvement to elevate one’s career.

70 Speakers

The Craft Conference, which began in 2014, was the brainchild of Medea Baccifava and Gergely Hodicska, intending to create a hub for tech enthusiasts to learn and network. Initially a small local event, it quickly grew into an international symposium, becoming a staple in the tech industry calendar.

The conference’s unique venues, like this year’s Hungarian Railway Museum, offer a blend of historical ambiance and modern innovation. The event stands out for its diverse topics, from foundational software development to cutting-edge AI technologies, ensuring it remains at the forefront of tech innovation.

This year Budapest hosted the 10th anniversary of the summit, which has become Central Europe’s largest IT professional event. Known for its significant contributions to software development discussions, the Craft Conference attracted thousands of professionals from around the world.

The 2024 event featured keynote speakers from major tech companies, including Google, Tesla,

“The community loves Craft because it showcases the diverse directions the industry is heading. Attendees leave with practical tips and thought-provoking ideas, making it a unique networking opportunity.”

Craft Conference extends far beyond typical conference rooms, resembling a festival where technology, knowledge, networking, and entertainment converge. The unique venue of the Hungarian Railway Museum provides a historical backdrop, with participants navigating through old train carriages and even taking rides on mini trains during breaks.

While the setting is captivating, the focus remains on pivotal trends in software development, especially the role of artificial intelligence.

Speakers discussed transforming developer tasks, the potential of AI engineering as a future profession, and enhancing productivity with digital labor. This topic is particularly crucial as many companies face reduced development budgets, making productivity a key factor.

The conference also revisited foundational topics to aid junior and novice professionals in honing their skills.

The 10th Craft Conference featured 70 speakers across seven stages, including Mark Thompson from Google, Kelly Shortridge from Fastly, Randy Shoup from eBay, and Samantha Coffman from Spotify. However, one of the biggest highlights was Orosz, the author behind the toprated tech newsletter The Pragmatic

Engineer, which he bills as the number one paid-for technology newsletter on Substack. It has more than half a million subscribers, and Orosz has 250,000 followers on one of the major social media platforms.

This year, Orosz offered a unique opportunity for attendees to meet him and get signed copies of his book “The Software Engineer’s Guidebook.”

“From the perspective of the presenters, they return to Craft because the audience is very open, curious, and eager to learn and ask questions. Active discussions take place even between presentations,” said Károly Varga, the head of event organizer CraftHub.

“We have become the go-to developer event in the region. The community loves Craft because it showcases the diverse directions the industry is heading. Attendees leave with practical tips and thought-provoking ideas, making it a unique networking opportunity.”

“We aimed to invite inspiring speakers with global experience who can provide a comprehensive overview of current happenings in the IT industry. It’s an interesting time; while the market seems to be in a wait-and-see mode, the field has also split,” Varga explained.

“Despite economic challenges, many companies are prospering and growing, while others face tougher conditions, focusing on retaining their best-performing employees and supporting them with new technologies and training,” he added.

The Craft Conference continues to serve as a vital platform for professional development in the tech industry by emphasizing the importance of foundational knowledge, current trends, and networking opportunities.

GERGELY HERPAI

The event featured a broad cross-section of speakers.

Many top tech firms had booths at the conference.

3 Special Report

Automotive

Hungary’s Automobile Production Set to Surpass the One Million Mark Soon

The slowdown in electric vehicle sales is temporary, and stakeholders are ready to embrace competition. However, collaboration among the entire local automotive ecosystem is needed for long-term success in the wake of the transition, experts concluded at the flagship automotive event of the Hungarian Investment Promotion Agency.

output of the domestic automotive industry could increase from the current

500,000

to one million units, a capacity that only five countries in Europe are currently capable of delivering. He added that this is partly because of the connectivity approach, a vital element of the Hungarian investment promotion strategy, which will make the industry more resilient in the long term.

Sigrid de Vries, general director of the European Automobile Manufacturers’ Association (ACEA), agreed with Joó’s to-do list, noting that customers need more affordable autos and that European automotive can only thrive if more collaboration exists.

“Against the backdrop of geopolitical tensions and political uncertainty due to elections all over the world, it is also essential to stay flexible,” Jens Bühler, CEO of Mercedes-Benz Manufacturing Hungary Kft., said.

As showcased by a series of examples, the “Local for locals” principle is widely followed when sourcing material. The OEMs’ overall impression of local suppliers is positive, although there is still a need to take their operations to the next level in digitization, among other things.

Easing Burdens

Issuing digital invoices is still an issue, for example. On the other hand, automakers could use help, particularly in easing administrative burdens such as the duplication of reporting obligations, Olívia Mesics, managing director of Opel Szentgotthárd Ltd., part of Stellantis, noted.

Attila Vári, partner at IFUA Horváth & Partners Ltd., stressed that Hungary stands a chance to profit from the automotive transition away from fossil fuels if it assumes the role of being an integration hub, hosting flagship players from all around the world and further develops its strong position in R&D, mainly in EV and advanced driver-assistance systems (ADAS) ecosystem building.

The Hipa Automotive Conference 2024 gathered the most renowned representatives of the sector to discuss the latest trends. For example, the industry hasn’t been recovering consistently in the wake of the COVID-induced economic slowdown.

According to the latest survey by the International Organization of Motor Vehicle Manufacturers (OICA), the French, Polish and American car manufacturers reached production volumes in 2023 of around 60-70% of 2019 levels, while the Japanese or Czechs managed 85-98%. By contrast, Hungary’s performance last year was already above pre-pandemic levels.

“All this would not have been possible without strong automotive hubs such as Esztergom, Szentgotthárd, Győr and Kecskemét,” said Hipa CEO István Joó in his opening keynote speech.

Thanks to the developments of recent years, the annual production

Electrification has created a new competitive environment where Asian players have had a head start, but this will only force European companies to produce better vehicles. Above all, the battery range must be further extended and production costs reduced.

“But to make a real breakthrough, we need to work a lot not only on the quality of vehicles but also on the development of the electromobility infrastructure for which the European Union must also allocate additional resources. Most of all, the charging point network needs to be expanded, and the conditions for related subsidies need to be eased,” Joó pointed out.

2025 Bounce-back

The temporary slowdown in demand for electric vehicles is also partly due to this lack of charging infrastructure, but experts expect a strong bounceback by 2025.

“The success of the automotive industry sends a very clear message to manufacturers and investors that keeping production in Hungary is an economically rational choice,” concluded the Hipa CEO.

“To make a real breakthrough, we need to work a lot not only on the quality of vehicles but also on the development of the electromobility infrastructure for which the European Union must also allocate additional resources. Most of all, the charging point network needs to be expanded, and the conditions for related subsidies need to be eased.”

Top executives of Hungary-based OEMs also expressed their readiness to embrace competition that “pushes them to make better products.” The importance of training was emphasized as the sector needs to be made more attractive for the young. The existing dual education system, imported from Germany, could provide an excellent basis to reach that goal.

“Innovation in Hungary is driven by FDI,” Hipa deputy CEO Rita Szép-Tüske said. She highlighted that the agency’s extensive R&D incentive scheme offers plenty of opportunities for investors to benefit. Since 2017, HIPA has guided 33 projects worth EUR 500 million, two-thirds of which were linked to automotive.

Although the number of researchers in Hungary doubled between 2010 and 2021, nobody can sit back and relax. As István Szászi, representative of the Bosch Group in Hungary and the Adriatic region, pointed out, the availability of talent alone won’t cut it; all those involved need to understand all aspects of the business to prevail.

“Business models are changing all the time, which requires stakeholders to remain flexible,” he said. This includes suppliers that should embrace a whole new mindset by turning their B2B approach into B2C by incorporating client feedback into their development plans.

“Players from the industry, research and academia are ‘gently forced’ by incentives to work together. This collaboration may not bear fruit right away, but with time, great things are bound to happen as we learn to create value,” Zsolt Szalay, head of department at the Budapest University of Technology and Economics, concluded.

The OEM roundtable discussion at the Hipa Automotive Conference 2024

‘In

Automotive Projects, Only Change is Permanent.’

Two of the leading architects and project managers from Óbuda Group talk exclusively with the Budapest Business Journal about what sets the firm apart in serving the automotive field.

If you are a highly competent Hungarian architectural and engineering firm looking to cash in on the international FDI wave sweeping Hungary right now, the number one attribute is probably not only your technical expertise, but the ability to communicate and navigate cultural differences.

“I tell my colleagues the key to success in a project is communication because it’s really not enough that you just know the language, and that is what makes a difference,” explains Sándor Benkei, technical director of Óbuda Group’s project management firm. “If I say ‘design concept,’ it means something different in Germany than in Poland, for example. And if you don’t have experience with foreign clients, then it will be challenging working with them,” he adds.

It is a sentiment that the architectural studio’s managing director, Géza Germán, fully endorses. The two men have the better part of six decades of experience between them, including time spent abroad and working for foreign companies.

“We are very open-minded and have international experience in all aspects of a real estate project. You are talking with two engineers capable of adapting to any situation. I think this is our strongest point in the market,” says Germán.

Put another way, they have seen a lot of different international approaches to architectural engineering problems. That knowledge is stored away, ready to be called upon, but they have also distilled it into one fundamental lesson.

“If a client is bringing some very special solution that does not fit the European requirements, we do not say ‘No.’ We offer solutions for how they can adapt the new technology, system or equipment to Hungary and European norms,” Germán explains.

“Already with European and American partners, a lot of adaptability and attention was needed, but with Asia, it is different again,” Benkei agrees.

Understanding the Mindset

“We Europeans have to learn. We need to understand a different mindset. That’s why we hold regular events with international clients, where we try to show

how to do it better based on the experience of previous investments,” he says.

“My favorite example is how the Chinese [visually] count to 10 on one hand. When we show ‘two’ [with thumb and index finger], it means ‘eight’ to a [mainland] Chinese person. Such misunderstandings must be dealt with somehow,” Benkei adds.

The two experts recall when Hungary began to open up and the first wave of Japanese and, most especially, German automotive OEMs started to arrive.

Germán called it a “golden time” when new technologies, knowledge, and culture were imported into the country. Some may see today’s wave of Chinese and Korean investors as offering an easy repeat run; after all, the fundamentals of a factory are still four walls and a roof.

But the Hungary of 1989 and 2024 aren’t just separated by time (“Do you remember before

1990?

You could choose from five different models of car, and that was it!”), but also by technology. The insulation and cladding on those four walls must meet completely different standards. The buildings’ roof will probably need to accommodate solar panels. And today’s buildings, their construction and surroundings face increasing ESG regulation.

That would be true for pretty much any factory, of course. What separates the automotive industry from most others is the scope of tasks expected to be completed on one site.

“They have to stamp the body, then they have the welding shop, the paint shop, the bumper shop where they make molded plastic, and after that they have assembly. These five shops all have different types of machines

and technologies. So, if we are designing a car manufacturing plant, this is a very complex project,” says Germán. It doesn’t stop there. Depending on location, there could be a requirement for rail, road or river connections, even a private landing strip, plus logistics facilities, health and safety sections that may include fire-fighting facilities or a medical clinic, and so on.

“We

are very open-minded and have international experience in all aspects of a project. You are talking about two engineers capable of adapting to any situation. I think this is our strongest point in the market.”

With the original wave of combustion engine-powered cars being replaced with EVs, Benkei makes the point that automotive plants are expected to evolve much more than standard industrial units.

The Only Constant

“I was visiting the Pick factory in Szeged not so long ago. The whole value of the brand is that it has been made in the same way for 100 years,” he says. “In automotive projects, only change is permanent.”

He gives a recent example. When the car body shell is brought to the chassis section for the two to be “married up,” it is transported via an overhead conveyor belt. The shell is lowered over

the chassis, the two attached, and the combined unit is lifted back up and moved on to the next stage. The same system was used with conventionally powered cars, but today’s EVs have the battery already in place in the chassis.

“Because of this battery, which is

200-300 kgs, the load on the conveyors was so significantly changed that we had to put additional support and stiffening in the roof; we virtually had to rebuild the roof,” Benkei explains.

The extra weight of those batteries is not their only drawback. “Range anxiety,” the worry about how far you can go on a single charge, remains a genuine concern for some, and the relatively high inflation environment has led many would-be buyers to postpone new vehicle purchases.

Germán says that improvements will come. German manufacturers are still keen on driving innovation, if you will pardon the pun, while Chinese manufacturers seem pretty happy to add new technologies almost as soon as they appear.

“Personally, I am very much looking forward to the arrival of the Hydrogen Fuel Cell Electric Vehicles (FCEV). If the issue of safe storage is resolved, then I think it could lead to an interesting competition against EVs with the rapid transformation of charging networks,” Germán says.

“It’s like the battle between Betamax and VHS tapes,” he adds.

One thing is certain: whichever technology wins out, Óbuda Group will be ready to help design, consult, manage and supervise the realization of the factories that will help make it happen, wherever they are based and whoever the investor.

ROBIN MARSHALL

Géza Germán

Sándor Benkei

Automotive in CEE Regional Conference 2024: Navigating the Future of the Industry

The Automotive Business in CEE Regional Conference 2024, held in Budapest, provided attendees with a comprehensive overview of the current trends and challenges facing this vital industry across Central and Eastern Europe.

The conference highlighted the increasing presence of Chinese car manufacturers in the region, the electrification of the automotive sector, and the evolving sales models, all of which have significant implications for the Hungarian market and beyond.

Zsolt Müllner, Chairman of the Board of AutoWallis Group, opened the conference with a presentation on the automotive market’s challenges and prospects in Hungary and the CEE region. He noted that many industry trends are progressing more slowly than anticipated, with significant changes occurring behind the scenes, particularly in infrastructure.

“The emergence of competing powertrain technologies is a critical trend. However, the adoption of electric vehicles is slower than expected, with less than 40%

of new car sales in our region involving electrification,” Müllner said. He attributed this to the underdeveloped charging infrastructure in Eastern Europe despite recent government measures supporting electrification.

Müllner also emphasized the growing influence of Chinese automakers in Europe, noting frequent announcements of new market entries or factories.

“The competition will intensify, affecting EV prices. Major markets will protect their manufacturers, as seen with significant tariffs on Chinese vehicles in the U.S.,” he warned. Müllner added that an omnichannel sales approach, combining online and showroom experiences, is becoming essential, with the direct sales model shifting the dealer’s role to a commission-based system.

Diversify and Expand

Gábor Ormosy, CEO of AutoWallis Group, highlighted the company’s strategic focus on diversification and expansion.

“Our revenue from foreign markets consistently constitutes 60% of our total, with significant growth opportunities through acquiring new brands and expanding our market coverage,” he said.

Petr Knap, a senior advisor at EY Consulting, discussed the rapid changes in the industry, including the rise of new manufacturers and the increasing footprint of Chinese automakers.

“Sustainable value creation requires strong, cooperative partnerships and a customer-centric approach,” he asserted.

The first panel discussion explored the restructuring of the import and dealership systems. Tibor Együd, managing director of Mazda Motor Hungary, pointed out that consumer demands drive market dynamics, necessitating a multichannel sales model and expanded financing options.

Richard László, country director of Toyota Central Europe – Hungary, highlighted the shift in corporate fleet demands towards sustainability, which influences the market significantly.

Andrew John Prest, international business development vice president at AutoWallis Group, noted a generational shift in driving habits.

“Young people are obtaining their licenses later, typically in their

mid-20s,

reflecting broader changes in consumer behavior,” he said.

The conference also delved into the impact of digital transformation on the automotive industry. Zmak Kreso, vice president of product development at omnichannel market platform Infobip, highlighted the importance of data-driven marketing and the rise of communication via mobile apps.

“AI-driven customer service, including chatbots, and the use of messaging apps like Messenger, Viber, and WhatsApp, are revolutionizing how we engage with customers,” he noted.

Péter Antal, retail division director at AutoWallis Group, discussed the implications of the agent-based sales model versus traditional dealership models.

“The choice between [retail] models largely depends on the manufacturer, with German premium brands leading the way towards the agent model,” he argued.

ESG Significance

The significance of environmental, social, and governance (ESG) considerations in fleet management was another key topic. Péter Farkas, managing director of Nelson Flotta, emphasized the importance of sustainability in customer services and aligning European ESG standards with global practices.

Deputy State Secretary for Economic Development Bence Gerlaki of the Ministry of National Economy provided a global perspective on electric mobility trends. He highlighted the fluctuating market conditions, noting a drop in EV sales at the beginning of 2024, which later stabilized.

“China is leading in EV sales, while Germany anticipates a 14% drop

due to the end of subsidies,” he said. Gerlaki stressed the importance of competitive electric vehicle production in Hungary and outlined governmental support programs to enhance EV competitiveness, including subsidies for new and used EVs, private and public investment in charging infrastructure and standardizing battery conditions and market values.

Zoltán Vígh, CEO of Jedlik Ányos Cluster, discussed the integration of

energy and mobility sectors and the need for extensive network development to support charging infrastructure. He highlighted the demand for fast chargers on public networks and the need for a comprehensive development plan involving multiple industries.

“The emergence of competing powertrain technologies is a critical trend. However, the adoption of electric vehicles is slower than expected, with less than 40% of new car sales in our region involving electrification.”

The conference concluded with discussions on sustainable urban mobility. Orsolya Hartyányi, managing director of Wolt Hungary, emphasized the goal of reducing delivery times while addressing sustainability by increasing bicycle deliveries.

Gergely Kofrán, head of mobility Strategy at Budapest Transport Center, stressed the importance of multifunctional public spaces and efficient organization of mobility services to cater to growing demands.

Péter Ujváry, managing director of Avis Hungary, envisioned a platform that plans and recommends transportation modes based on personal preferences. He noted that carsharing and rental services complement each other, addressing different needs.

GERGELY HERPAI

Roundtable on the market in Hungary and CEE, from left: Moderator Petr Knap (EY); Tibor Együd (Mazda); Richard László (Toyota); Norber Nagy (Kia); Andrew John Prest (AutWallis); and Tamás Wachtler (Porsche Hungaria).

Continental Veszprém Plant Manager Looks to Transform Challenges Into Opportunities

Starting as a trainee at Continental in 2008, András Mészáros has risen through the ranks and become the plant manager in Veszprém this year. He talks with the Budapest Business Journal about his career path, industry challenges, sustainability, and more.

BBJ: Can you share your journey within Continental, from your initial role in 2008 to your current position? What were some key milestones along the way?

András Mészáros: I am an electrical engineer who studied at the Technical University of Budapest. In 2008, during my studies, I applied for a trainee position in surface mounting technology at Continental. Fortunately, I was hired fulltime after a year, and eventually, I led the team until 2014. Later, I transitioned to electrification technologies, working on serial development, and then becoming a “focus factory” manager. It was a valuable experience to work with highly mature, well-organized production processes for brake control units while also being involved in evolving hybrid control units for new electric and hybrid vehicles. My career has been marked by continuous change and new tasks, albeit all at the same place. In 2016, I shifted to steering control unit production as head of the focus factory, which later expanded to include software-heavy telematic control, display, and high-performance computer production, often utilizing full automation. After more than a decade of working in Budapest, I had the opportunity to expand my responsibilities further as the European operations manager for a business area, overseeing 11 additional locations. This experience provided crucial insights into various products, production lines, and technologies, as well as exposure to different plants and teams, which was essential to understanding our business. This role eventually led me to my current position as plant manager in Veszprém.

BBJ: What specific goals and plans do you have for the Veszprém factory in your new role? What are you aiming to achieve with your team here?

AM: The European industry is facing significant competitiveness challenges. We can improve efficiency, speed, and quality by leveraging an innovative and resilient team. Numerous digital

and AI-based tools are currently available, and more are being developed, so we need to identify the most suitable ones for our plant. Our primary objective is to become a globally competitive and innovative location.

On the other hand, last year, we continued to develop the attractiveness of our location from the R&D perspective. We highlighted with several campaigns for software developers that Continental is in a truly unique position in the region: we are not only an employer in the city of Veszprém, but anyone in the Balaton region can join us for a thrilling career and great atmosphere. I want to keep building this image and showcase that we are more than a simple manufacturing location. We are a 360-degree site as we work on innovative ideas with our R&D teams, test these ideas and other solutions on our own test track, and manufacture state-of-the-art automotive parts.

BBJ: The European automotive industry has faced significant challenges in recent years. How do you plan to address these and ensure that the Veszprém plant remains competitive and innovative?

AM: I am an engineer, and I believe that engineers are best suited to understand which tools are the most appropriate for the problems we encounter. I strive to lead by example and actively seek to understand the purpose of different tools. I am also eager to be innovative, collaborate with colleagues in addressing challenges, and bring in fresh ideas from sources such as other plants, colleagues, and articles. Having the right mindset is crucial in fostering a highly innovative environment. If a perfect existing digital tool is available, I would advocate using it. This, in itself, is a form of innovation for our plant. We don’t always need to create everything from scratch. Sometimes, adopting an existing tool to solve a problem within our plant’s specific environment efficiently is also a form of innovation.

BBJ: Can you elaborate on the role of the Veszprém plant in developing and producing high-tech, future-proof products? How does this align with Continental’s overall strategic goals?

AM: Plant Veszprém employs several hundred development engineers who work on sensors and brake control units, which have been critical competencies for decades and are required in every newly sold car. However, our development processes and speed must evolve with the same mindset, being open to change, striving for innovation, and choosing the most effective solutions. Our focus is on efficiency when pursuing innovation rather than doing it for the sake of fun.

BBJ: With ESG and CSR aspects gaining importance in the industry, what steps are you taking to ensure the sustainable operation of the plant and the satisfaction of its employees?

AM: We have a roadmap to become a gold-labeled green plant by purchasing 100% renewable electricity and actively working to reduce and recycle our waste in production and supply chain processes. I work with my team to look to the future, considering options like solar or wind energy or energy storage solutions. For example, if solar energy is the solution, perhaps optimizing for lower levels of sunlight in the winter would be beneficial in 5-10 years. Keeping up with the latest trends and solutions will help us make good decisions for our sustainability. We also make a conscious effort to plant trees wherever possible. Regarding well-being and CSR, we recently organized a Quality and Health Days initiative, consisting of more than 50 presentations over three weeks. Additionally, we actively support sports and theater and identify areas where we can have the most significant impact on our society. I have taught four courses at the university and am involved in partnerships with schools and universities.

Being future-proof isn’t just about having an excellent product and highly digitalized R&D and production. We also need to understand our complete waste and CO2 footprint and take measures to minimize it. Furthermore, we prioritize the well-being of our employees by providing regular checkups, promoting healthier diets, and demonstrating care for future generations. We also aim to be a responsible player in the local community.

BENCE GAÁL

András Mészáros, Continental Veszprém plant manager.

EV Market and Hungary: Fancy a Roller-Coaster Ride? Automotive Matters

With demand for EVs dropping, market players need to adapt. This is bad news for the Hungarian economy, with its existing high exposure, which will only grow thanks to the gradual completion of a series of newly announced investments.

When Chinese President Xi Jinping visited Hungary earlier in May, pundits assumed that one of the announcements would concern opening a Great Wall Motors (GWM) e-car plant. Several outlets had aired the news before the meeting, and the fact that Minister of Foreign Affairs and Trade Péter Szijjártó had visited the company’s HQ just reinforced rumors. The deal would have fit nicely into the Hungarian government’s pro-China policy that propelled the Asian powerhouse to “investor no. 1” status for the second time last year. However, nothing was announced on that front during the presidential visit. Indeed, the 16 agreements made between the two governments concerned automotive on just one account, namely cooperation regarding the establishment of charging infrastructure. In the period since the visit, GWM decided to shut its site in Munich, scale back its expansion plans on the continent and serve the European market straight from home. That turn of events is understandable from GWE’s perspective. Partly because of the phase-out of subsidies in Germany, demand for EVs has dropped in Europe. New market conditions call for flexible measures. Automotive on the global level has undoubtedly seen better days. Sales in 2023 were still below pre-pandemic levels, and Q1 this year saw a decline. April figures gave more reason to cheer: data by the European Automobile

A monthly look at automotive issues in Hungary and the region

Manufacturers’ Association (ACEA) showed sales up 14%. Yet, overall projections for the year are nothing more than in the cautiously optimistic range.

Trend Reversal

“For the time being, the sector in Hungary shows a mixed picture from a risk perspective: overall recovery is expected this year, but a trend reversal is likely only in the second half,” says a recent analysis of Hungary by Allianz Trade.

Such fluctuations are bad news for the Hungarian economy due to its already high automotive exposure, which is only set to grow once a series of announced investments are completed. Between 2016 and 2023, the Hungarian Investment Promotion Agency closed 55 battery-related deals worth EUR 19.6 billion.

As Raiffeisen Bank’s senior analyst Zoltán Török told online news portal HVG 360, earlier automotive and battery projects already make up around one-half of the entire processing industry. Vehicle production volume further accounts for

26.9% of manufacturing production. The current EV gloom is already impacting players in the Hungarian market. SK On, a Korean giant that had recently opened a new battery plant in Iváncsa (50 km south of Budapest by road), fired over 600 employees because of sluggish demand. In fact, battery manufacturing in Hungary was down nearly 20% in March, year-on-year.

Things could get even more complicated if global trade restrictions are ramped up. The European Commission announced last fall that it would launch an investigation into heavy state subsidies of Chinese EV makers.

“For the time being, the sector in Hungary shows a mixed picture from a risk perspective: overall recovery is expected this year, but a trend reversal is likely only in the second half.”

As EC President Ursula von der Leyen put it in her State of the Union speech back in September, global markets were being “flooded” with cheap Chinese electric cars. The probe, initiated under French pressure for a more robust European industrial stance, is now in full swing, and Brussels could impose tariffs “before the summer break,” according to Politico.

Opposed to Tariffs

Not everyone shares this saberrattling sentiment. Hungary, for one, opposes tariffs. Minister of National Economy Márton Nagy warned earlier at the Conservative Political Action Conference (CPAC) in Budapest that such protectionist measures ran counter to competition and could start a deglobalization trend. Germany is

also against the move, while ACEA’s recommendation package calls for safeguarding competitiveness by securing a global level-playing field. The association further stresses the need to rethink the regulatory framework by embracing a more holistic approach, putting business considerations first. It remains to be seen how things will play out, given the United States approach. In May, the Biden administration raised additional tariffs on some Chinese products from 25% (in place since the Trump presidency) to up to

in the case of electric vehicles.

A potential second Trump term promises even harsher measures.

“Hungary is interested in a strong, competitive automotive industry. Imposing tariffs can’t be a solution,” Deputy State Secretary Bence Gerlaki of the Ministry of National Economy noted at a conference lately.

He also presented the government’s road map to enhance EV competitiveness. An incentivizing scheme is needed to push EV purchases, private and public investments to set up charging points should be subsidized, and a market for battery swapping and recycling needs to be created. An EU-level subsidy scheme would also be welcome to grant a competitive edge to European manufacturers. In fact, one of the objectives of the upcoming Hungarian EU presidency will be to find allies that support the idea of that subsidy scheme.

The EV market needs recharging.

Navigating Automotive Financing Trends in Uncertain Times

As the automotive industry faces unpredictable changes, Ádám Záhonyi, head of automotive relations at MBH Bank, discusses the critical trends and challenges ahead, explaining how MBH Bank is leveraging its extensive branch network and industry expertise to support manufacturers, suppliers, and consumers in navigating this dynamic landscape.

for every stage of vehicle production, from manufacturing to sales, ensuring a smooth process for all involved.

BENCE GAÁL

BBJ: What are the key trends you foresee in the automotive industry over the next few years, and how is MBH Bank preparing to address these trends?

Ádám Záhonyi: The future trends in the automotive industry are becoming increasingly unpredictable due to fluctuating consumer demand. Despite the EU’s decision to phase out internal combustion engines by 2035, the transition to electromobility is not progressing as quickly as anticipated. Major car manufacturers are focusing on improving battery technology to attract new customers and make EVs more appealing. Chinese car manufacturers have a competitive advantage in this technological shift and are entering the European market, creating intense competition. Prices for new cars are unlikely to return to levels seen in the past, leading to a greater need for financing options for both new and used vehicles. MBH Bank Group is dedicated to providing financial support to various players in the automotive industry, including manufacturers, suppliers, importers, dealers, and consumers. As the pace of change accelerates, having a knowledgeable financial partner is crucial for success in the industry.

MBH Bank Group can provide financing

BBJ: How does MBH Bank support SMEs within the automotive sector, and what unique challenges do these businesses face?

ÁZ: With its more than 400 branches, MBH Bank is considered the bank with the largest branch coverage in Hungary, and it is a significant advantage for us that 40% of automotive companies with revenues exceeding HUF 1 billion have a relationship with MBH Bank. Additionally, Euroleasing is the market leader in the leasing market, allowing us to be informed firsthand and at an early stage about the needs of customers and the challenges they face. In the context of the price competition observed in the sector, increasing efficiency is the key to survival. Efficiency should not only focus on production or investments but also on utilizing reserves in working capital financing. Our bank offers several opportunities for this, ranging from supported loans to rationalizing working capital and trade finance solutions.

BBJ: Can you elaborate on the knowledge center operated with Euroleasing and how it leverages synergies to cover the entire automotive value chain?

ÁZ: The knowledge center operated with Euroleasing serves as a hub for gathering and disseminating information related to the automotive value chain. By leveraging synergies with Euroleasing, the knowledge center

these initiatives successfully attracted private individuals back to the new car market. The first four months of the year saw nearly 14,000 new passenger car registrations by individuals, accounting for approximately one-third of total registrations. This marked an impressive growth of over 30% compared to the previous year, while the number of corporate customers remained stable. Despite these positive trends, it is worth noting that prior to the disruptions caused by COVID and regional conflicts, private individuals held a market share of around 40%, indicating further growth potential in this segment.

BBJ: Could you explain the typical structure of a car loan for an average individual in Hungary in 2024?

is able to provide valuable insights and expertise to all stakeholders in the automotive industry, from manufacturers and suppliers to dealers and consumers. This collaboration allows for a more holistic approach to understanding and optimizing the entire automotive value chain. The knowledge center works closely with Euroleasing to identify trends, challenges, and opportunities within the industry, and develops customized solutions to address them. By combining their resources and expertise, Euroleasing and the knowledge center are able to offer comprehensive support to businesses at every stage of the automotive value chain, from financing and leasing options to market analysis and strategic planning.

BBJ: Let’s talk about car loans for individuals. What are the latest trends?

ÁZ: Following a significant increase in car stocks at manufacturers and importers in the latter half of 2023, numerous marketing campaigns were launched this year to drive sales. While these offered attractive discounts, potential buyers faced challenges due to prevailing interest rates. Some customers sought financing but were deterred by high interest rates of 10% or more. Others held investments, particularly in high-yield treasury bonds, and were reluctant to divest. In response, many importers collaborated with leasing partners to provide subsidized financing options, making the decisionmaking process easier for consumers. With interest rates below 5% and coupled with substantial price reductions,

ÁZ: From a business perspective, the substantial number of customers at Euroleasing leads us to believe that our market share aligns closely with industry averages. Specifically, when considering Euroleasing, the typical private individual seeking financing for a new car applies for HUF 5.7 mln over a 57-month period for a vehicle priced at HUF 10.6 mln. The extended repayment period is directly influenced by the interest-subsidized financing campaigns, as the favorable interest rates encourage individuals to opt for longer-term financing solutions. While the initial down payment tends to be quite high, reflecting a preference among many customers to minimize the financed amount, there are also legal constraints, such as the income burden indicator, which restricts the maximum monthly payment to a percentage of the individual’s net income.

BBJ: Do you think that we need new loan constructions to make the new car market more accessible to people while also boosting sales?

ÁZ: The legal constraint mentioned earlier represents just one of the challenges individuals face when considering leasing a new car. In the traditional financing model, many people find it financially unattainable to repay the full price of a vehicle valued at over HUF 10 mln, along with accrued interest, within a five-year period. Additionally, factors such as insurance, maintenance, fuel, or electricity costs further compound the financial burden. In this context, open-end financial leasing emerges as a viable solution. This leasing approach incorporates a residual value at the end of the agreed-upon term, allowing the lessee the flexibility to either purchase the vehicle, designate a third party for acquisition, or return the car to the lessor. Moreover, there is an option to extend the lease contract instead of terminating it. The inclusion of a residual value makes the monthly payments more manageable for a broader segment of the population. Compared to long-term rentals, open-end financial leasing offers several advantages, including exemptions from company car taxes, reduced VAT and local tax obligations, and the opportunity to purchase the vehicle at a predetermined fixed price at the end of the lease term, distinguishing it as a unique benefit of this leasing arrangement.

Ádám Záhonyi

162 Shell Recharge EV Charging Points in Tesco Stores

The Shell Recharge electric charging network in Tesco supermarket car parks is now available at 30 hypermarkets, the two companies have announced.

In March this year, Shell Recharge EV chargers began operating at the first six Tesco stores, offering motorists convenient charging while they shop. Since then, the network has expanded to 24 additional locations, with charging stations now available at hypermarkets in Csongrád-Csanád, Jász-NagykunSzolnok, Komárom-Esztergom, Pest and Veszprém counties, and one store each in Békés, Győr-Moson-Sopron and Vas counties. The two companies have set a target of nationwide coverage by the end of this year.

The posts, which provide both standard and fast charging, have

a capacity of between 11 and 100 kW and allow six vehicles to be charged simultaneously from three charging points in most hypermarkets, bringing the current network to 162 charging points.

The standard AC (alternating current) chargers are ideal for longer parking periods, while the DC (direct current) chargers offer faster charging for those in a hurry, Shell says.

“I am proud that we have been working consciously for years to reduce

our environmental impact. Nothing proves this better than the fact that since the 2016/17 financial year, we have reduced our carbon emissions by 63% and cut the amount of food waste generated by our operations by 70% in the last seven years,” says Zsolt Pálinkás, CEO of Tesco Hungary.

More Sustainable “Through our certificates, we’ve been using renewable electricity in our stores since 2020, and we recently installed solar arrays on the roofs of 25 of our stores, which also support more sustainable operations.

Szolnok Upgrades E-fleet With E.ON’s Help

Electric cars are no longer the future but the present, as demonstrated by Szolnok, where a more than sevenyear-long cooperation between the E.ON Hungária Group and the municipality has been building what the parties call a green energy city of the future.

An essential part of this is the e-fleet of 30 small commercial vehicles and cars that E.ON operates in the city, tailored to the municipality’s needs. The combined mileage of those cars has now reached one million kilometers.

The carbon-neutral fleet has saved an estimated 120 tonnes of greenhouse gas emissions, reducing the environmental impact and lowering fuel costs for the municipality and taxpayers. Experience in Szolnok (111 km southeast of Budapest by road) shows that annual savings can be as high as HUF 1 million per car if EVs are charged “in-house,” E.ON says.

The oldest units of the Szolnok city e-fleet, inaugurated in 2017, have just

been replaced with three new BYD Dolphin electric cars, which have a range of 427 km

and a battery capacity of 60.4 kWh.

“The first energy community was built in our city, one of the largest solar parks in Hungary is located here, and the largest energy storage facility is also being built here, which shows how committed we are to greening,” said Mayor of Szolnok Ferenc Szalay.

“The launch of the e-fleet and the implementation of the charging infrastructure have served as a positive example throughout the city, and the number of e-cars used by businesses and the private sector has also increased spectacularly in recent years,” he added.

Public Charging Points

In addition to maintaining the city’s e-fleet, E.ON is also responsible for building part of the city’s EV charging network. It operates 12 charging points at five charging stations, which will be expanded by another five. This will bring the total number of public charging points for electric cars to 22. To date, the charging points have supplied Szolnok’s electric vehicles with around 145 MWh of green energy from renewable sources.

“Sustainability is a key strategic objective that permeates our entire operations. While we are significantly reducing the

Our partnership with Shell Hungary will help us become carbon neutral in our own operations by 2035 and achieve net zero emissions in our supply chain by 2050, in line with the UN target of keeping global warming below 1.5 degrees Celsius,” he adds.

Sarolta Vecsey, head of mobility business, Shell Hungary Zrt., also welcomed the expansion.

“In line with our energy transition goals as set out in the Shell Powering Progress strategy, we are committed to offering our customers as many low-carbon solutions as possible.

One of these is to become a world leader in operating our own electric car charging network,” she notes.

“With the Shell Recharge charging network, which we are growing through our partnership with Tesco, we are taking a big step in this direction and will provide convenient and fast charging for our customers and Tesco shoppers with nationwide coverage by the end of the year,” she adds.

The partnership between Tesco and Shell extends beyond sustainability efforts to retail.

In December 2019, the companies opened the first Tesco mini shop at the Shell filling station on Haller utca, in Budapest’s District IX, and the number is growing yearly. Today, visitors can choose from a wide range of Tesco products at 63 locations nationwide, and the network will be expanded with more outlets in the near future.

carbon footprint of our operations year on year, moving towards our full carbon neutrality target, we are also helping our partners achieve their own emission reduction targets,” said Zsolt Jamniczky, deputy CEO of the E.ON Hungária Group.

“If you want to know what the future will look like, you need to visit Szolnok: the advanced, smart and sustainable solutions we are using here are shaping what the new energy world, based on clean solutions, will look like in a decade or two,” he claimed.

The municipality and E.ON have been cooperating for many years. The Szolnok Intelligent Urban Energy Model (Szivem) project, based on sustainable energy, was the first energy community established in the country. Its solar power plants supply clean energy to public institutions, kindergartens, medical clinics and residential buildings in the city, storing energy even when the sun is not shining.

The aforementioned electric charging network is powered by solar panels on the roofs of car parks. Nine solar power plants at six sites contribute to the city’s energy needs.

E.ON says it offers its customers a range of solutions to build a sustainable future. With the e-flotilla service, it not only provides electric cars on demand but also takes care of the entire operation, including the construction and operation of charging points.

Zsolt Jamniczky of E.ON and Szolnok Mayor Ferenc Szalay.

Hungarians Spend 5 Hours a Week on Average in Their Autos

Hungarian auto owners use their vehicles for barely five hours a week, as revealed by a survey conducted by Magyar Suzuki between April 29 and May 5. The study found cars were predominantly used for commuting and shopping.

and for what purposes and surveyed 2,010 respondents over the age of 18.

More than 70% of the respondents said they use their car daily, but looking at the weekly averages, it’s clear they don’t spend much time behind the wheel. Almost

According to data from the Hungarian Central Statistical Office (KSH), at the end of 2023, there were about 4.2 million passenger autos in circulation in Hungary, meaning that nearly one in every two Hungarians owned a car. KSH said the number of passenger vehicles has doubled in Hungary in almost two decades.

Recognizing this trend, Magyar Suzuki aimed to find out how we use our cars in everyday life

of the survey participants spend barely five hours in their vehicle; 38% spend just 10 hours a week.

Such statistics might raise the question of whether owning an auto is even necessary. Yet more than half of the respondents think it is the best solution for commuting, and one in four finds it the simplest for shopping too. Almost

one in 10 respondents say they use the car for practically everything, including visiting family and friends, traveling within Hungary or abroad, ferrying children around, and leisure activities. The distance to travel is the primary factor for nearly half of the drivers when choosing their auto over public transport. However, one-quarter of drivers say they would give up their own vehicle if other transport options were simpler and more practical.

No Cost Cutting on Cars

While the cost of living crisis has made people more conscious about monthly expenses (or at the very least sensible that we ought to be), some costs are still

considered essential for a family’s daily life, regardless of the economic environment. Two-thirds of the surveyed drivers said they are not influenced by financial constraints when using their auto; they might save elsewhere but wouldn’t give up their car.

Only one-third of drivers said they would stop using their car if they had to get by on less money. One-quarter of drivers refuel at least once a month, and most do so twice on average.

Among the items commonly found inside the average auto, there will be a shopping bag in almost two-thirds of cars. Tissues, a phone cable and charger, and hand sanitiser are also considered important items. More than one-third of the respondents keep some food and/or drink in their car in case of emergencies.

Although it’s often standard to be able to sync phones with an in-car system, only one-third of the respondents take advantage of this feature. Only one in four drivers say they leave their phone in their bag to avoid distractions. The rest place them in cup or phone holders.

Decades ago, motorists navigated with maps and relied on their instincts in familiar areas; today, we prefer to use route planners. Most drivers will not even set off without such assistance, the only difference being whether they rely on the in-car navigation system or a mobile app. Only one in five drivers said they don’t use such aids, relying instead on their instincts.

New Record for Domestic Used Auto Market in April

An estimated record 80,900 autos changed hands in Hungary in April, 21% more than in 2023, acccording to data provider DataHouse. Although this is a preliminary estimate (there is always a delay in recording transfers following sales), the previous monthly peak of 76,000 is certainly a thing of the past.

“After the monthly volume of used car sales hovered around 70,000 last year, the domestic market has seen a spectacular rise since the beginning of the year,” says Bertalan Halász, CEO of jóautók.hu, which runs Hungary’s first verified used car marketplace.

Domestic Used Car Sales in the First 4 Months (2024) autos/mth January February March April

Source: DataHouse; JóAutók.hu

“In February and March, the number of vehicles changing hands was regularly above 75,000, but the preliminary volume of over 80,000 in April is an unexpected development, even if the final figure may remain slightly below 80,000.”

The spike in activity is due to a combination of factors. The fall in inflation has brought a rebalancing of household incomes (helped for many by the current high yields from government bonds), and interest rates have fallen spectacularly, boosting credit sales.

In some used auto segments, last year’s price falls have not been followed by a rapid rebound, with

many cars still being offered at affordable prices. In addition, in the first four months of the year, new car sales were up by 10%, and imports of used cars were up by almost 4%, which also provided a further boost to the domestic used auto market as replacement vehicles came onto the market.

Older and Cheaper in Vogue

“In the previous year or two, many people postponed their purchases because of soaring used car prices and falling real wages, and some of these transactions are now materializing,” Halász says.

“As a result, it is mainly used cars that are coming onto the market in greater numbers than planned. There has been a shift towards older and cheaper vehicles than before, so for now, it is the lower end driving the market,” he adds.

Although the general market environment still harbors uncertainties, the momentum at the beginning of the year means there is a growing chance that the annual record will be broken in 2024; the previous peak of

825,000 was reached in 2022.

The Hungarian second-hand car market was dominated by lower-middle-range autos (29%) and small cars (21%) in the first four months of the year. The most popular models in the former category are the Opel Astra (5.2%), Ford Focus (2.9%) and Volkswagen Golf (2.6%). The Suzuki Swift (4%) is the most popular small car, followed by the Opel Corsa (2%) and the Volkswagen Polo (1.5%). In the upper mid-size segment, the top sellers are the Volkswagen Passat (2.8%), the Skoda Octavia (2.6%) and the BMW 3 Series (2.2%).

Looking at January-April, the 305,800 autos changing hands on the used car market is 14.4% higher than the 267,200 registered in the same period last year. The number of used cars imported in the same period was 36,100, up 3.4% on 2023.

The average Hungarian car is primarily used for commuting or shopping, Suzuki says.

Car Importers

Ranked by total net revenue in 2023 (HUF mln)

4

3 MERCEDES-BENZ HUNGÁRIA

5

6

7 PORSCHE INTER AUTO HUNGARIA KFT. www.porscheinterauto.hu

Fabiola Attorri Moya Hu

Jacek Pawlak

Andrea Kővágó-Laky, Viktor Szamosi

Zoltán Gombos, Neil Domonic Fiorentinos, Stefan Hofer

Szabolcs Nagy Tamás Tótvári Péter Árvay

Pál Bihari, Attila Seres Attila Seres Zsolt Jakab

1139 Budapest, Fáy utca 27. (1) 451-5100 info@ porschehungaria.hu

1133 Budapest, Váci út 96–98. (1) 328-5305 cs.hu@ cac.mercedes-benz.com

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

2000 Szentendre, Galamb József utca 3. (1) 777-7555 inform@ford.com

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

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

2040 Budaörs, Szabadság út 117. (1) 451-4851 awdinfo@ autowallis.com

2040

Atsumi Masato

Esztergom, Schweidel J. utca 52.

Auernigg, Tamás Wachtler Péter Surinya Tamás Bognár

Attila Sávoly Tünde Krupp

Viktor Dávid Illés, Zoltán Tringer

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

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

1172 Budapest, Cinkotai út 34. (1) 253-0880 level@volvo.com

Pál Kovács Péter Tajthy Ibolya Ördög

György Balkányi, Zsófia Bálint Kovácsné Attila Sávoly Zoltán Mocsai, Gergely Kanalas

Tibor Együd, David Graham McGonigle Erika Káldi

Attila Sávoly Nóra Hajdu

Howells, Thomas Gardner

1186 Budapest, Cziffra György utca 15. (1) 887-5700 info@hyundai.hu

1194 Budapest, André Citroën utca 1. (1) 279-5555 kapcsolat@ p-automobil-import.hu

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

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

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

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

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

1152 Budapest, Városkapu utca 1. (1) 799-2250 infiniti@gablini.hu

4 Socialite Hungarian Film Industry Continues Punching Above its Weight

On the eve of the Hungarian Motion Picture Festival, MOZ.GO (June 12-15), I spoke with Csaba Káel, Government Commissioner for the Development of the Hungarian Film Industry, about this country’s remarkable success in the global movie market industry.

DAVID HOLZER

A graduate of Budapest’s prestigious University of Theater and Film Arts, Káel has directed television plays, commercials and the highly acclaimed opera film “Bánk Bán.” Since 2011, he has been CEO of Müpa Budapest. He is well plugged in internationally: a member of the European Academy of Sciences and Arts, the International Academy of Television Arts & Sciences, and the European Film Academy.

Before we spoke, Káel’s office sent me an article published in the U.S. entertainment bible, “Variety,” in which he references the “special film DNA” of the Hungarian film industry as one reason for its success. What did he mean by that?

“I meant that the size of this country has no bearing on why Hungarian filmmakers are so successful,” Káel told me. “The first Hungarian movie, ‘The Dance,’ was made in

1901,

just six years after the Lumière Brothers invented the portable motion-picture camera, projector, and printer that revolutionized cinema,” he noted.

“Since then, Hungary has had a very professional film business, and knowledge has been passed down from generation to generation. From Hungary, filmmakers spread outwards to Vienna, Berlin, London and then Hollywood, shaping the industry as they went. Hungarian Adolphe Zukor co-founded Paramount. Fox was founded by Hungarian Wilhelm Fried Fuchs, who Anglicized his name,” Káel notes.

Today, Hungary’s legacy manifests itself in the quality of the professionals who work in its film industry.

‘Easy and Enjoyable’

“Around 30 years ago, when foreign productions started coming to Hungary, the majority of the crew came from abroad, with the remainder being Hungarian,” Káel said. “In 2024, international productions are filming with 80% local crew. A lot of famous directors have told me that the quality of our professionals makes it easy and enjoyable to shoot here.”

Nowadays, it’s also not just the case that the Hungarians working on movies are only involved at more mundane or technical levels rather than in creative roles. Together with Patrice Vermette, Hungarian Zsuzsanna Sipos won an Oscar for her production design on “Dune” in 2022. This year, Zsuzsa Mihalek won Best Production Design for her work on “Poor Things.”

It’s not surprising, then, that Káel and his team are encouraging more international productions to use Hungarian creatives such as writers, directors

This year sees the 20th anniversary of Hungary joining the European Union and introducing its cash rebate system. Speaking to “Variety,” Káel explained, “Hungary was the first in Central Europe to do this, and we are very proud of that.”

Other European countries may offer more than Hungary’s 30% rebate, but there are stringent rules on how it must be used. The Hungarian system is, as Káel told “Variety,” “very simple but very effective.” It has also resulted in a steady flow of funds that have been reinvested.

World-class Facilities

Money has gone to build worldclass facilities to make this country even more attractive to foreign productions. Hungary has a unique film laboratory that offers not just the latest in digital but also the analog technology that, as Káel put it, “is popular with A-list directors.”

There is a wealth of different postproduction facilities, including studios that score soundtracks. Francis Ford Coppola, for example, recorded the score of his recent, controversial “Megalopolis” movie in Budapest.

Recently, the Hungarian government has invested in developing the NFI Studios at Fót, increasing its capacity to 12,670 sqm.

International productions now have a choice of five or six production facilities within a 20- to 25-minute drive from downtown Budapest.

Investment is necessary because, although the country, particularly Budapest, has certain advantages it’s hard for other countries to beat, Hungary can’t afford to become complacent.

of photography and even directors. The National Film Institute (NFI) also supports young Hungarian filmmakers by offering them the resources to make their own projects and get a foot in the door of a notoriously tough industry. This precious pool of homegrown talent forms part of an ecosystem that includes handsome incentives for foreign productions, world-class resources and the appeal of Budapest and Hungary itself.

Káel points out that Budapest is “a really eclectic city with plenty of very different districts, parks and streets that can double for any other European city.” With excellent flight connections, a choice of firstrate hotels, a thriving cultural scene and welcoming locals, it may be an exceptionally comfortable city for film productions to work in, but Prague and, increasingly, Vienna also appeal.

Káel didn’t appear phased by this competition. In any case, as he told me, “It’s not just a horse race. We try to collaborate with other Central European countries to show international productions that this entire region is attractive for them.”

The MOZ.GO Festival: Cause for Celebration

This year’s four-day Hungarian motion picture festival will be held in the Veszprém-Balaton region’s three cities as part of the post-event celebrations for them being the European Capital of Culture in 2023.

The NFI is also repositioning the most important event in its social calendar.

“The event was previously held in Budapest,” Káel told me. “But now we’ve introduced a summer festival

that’s

line

festivals at tourist destinations such as Cannes, Venice or San Sebastian. Visitors who attend our festival will be able to watch movies in splendid open-air theatres, on lakeside promenades and in historic gardens. We’ll show not just Hungarian movies, but films made in this country and co-productions. It will be a real motion picture feast for fans but also for industry professionals to network.”

vibe

more in

with

Csaba Káel, Government Commissioner for the Development of the Hungarian Film Industry.

Photo by Márton Pesthy.

AmCham Marks 35 Years in Hungary With Gala Celebration

The American Chamber of Commerce in Hungary celebrated its 35th anniversary at a gala event at Millenáris on June 7, welcoming more than 400 guests. They included AmCham members and partners drawn from top investors and government leaders, U.S. Embassy representatives, think tanks and academia.

project management at GE Healthcare, was joined by Zoltán Gábor Horváth, global supply chain development leader at GE Vernova and managing director of GE Hungary Kft., Jutas Földvári, MD of GE HealthCare, Central Eastern Europe, and Steve Edwards, executive plant leader and MD of GE Aerospace, Veresegyház, Hungary to reflect on cooperation with the chamber and discuss the future of GE.

Diversity Awards Initiated

One highlight of the program was the presentation of the new Diversity Impact Awards, launched this year as a special anniversary feature.

and competitive but is also invaluable for fostering an equitable and modern society,” underlined Lippai-Nagy.

The jury of Szabó, Andrea Juhos, AmCham’s diversity, equity, inclusion and belonging working group leader, and Antónia Mészáros, executive director of UNICEF Hungary, established the shortlists for both categories earlier this year. The event guests made the final ranking of the companies through live voting at the gala.

In the first category, the Inclusive Workplace Excellence Award, GE Healthcare’s program came first, with Thermo Fisher Scientific and Deloitte securing second and third places, respectively. The jury also presented a special prize to Work Force Hungary.

In the second category, the Community Inclusion Champion Award, gala guests voted NI Hungary (now part of Emerson) as the winner, followed by Accenture in second and Eaton in third. The jury also presented a special prize to Jalsovszky Law Firm and a special recognition for diversifying education to Budapest Business University (BGE).

The anniversary gala was opened by CEO Írisz Lippai-Nagy and Zoltán Szabó, President of AmCham Hungary, who, after looking back on the journey, reminded the audience of the power of collective action. Our community is working to make Hungary “a more competitive economy and essentially a better place to live for us and the generations to follow,” he said.

The event featured two keynote addresses by Minister for EU Affairs János Bóka and U.S. Ambassador to Hungary David Pressman.

Next was a discussion by the representatives of AmCham’s anniversary partner, GE, also celebrating 35 years in Hungary. Moderator Eszter Farnady, Eastern European director of

“We believe in partnerships, and AmCham has been a trusted partner in regulatory affairs, policy shaping along all these years. Together with AmCham, we also built local and regional relationships in these 35 years. To best serve our customers and to solve the biggest challenges in aviation, healthcare, and energy, three independent industry-leading global public companies – GE Vernova, GE Healthcare and GE Aerospace – were formed, and this whole transition was just completed this year. The new independent companies are committed to bringing energy to change the world, creating a world where healthcare has no limits, as well as inventing the future of flight,” GE said.

Diamond partner representatives Ákos Fehérváry, managing partner of Baker McKenzie and Ákos Janza, MD and head of enterprise transformation and global head of offices at MSCI, also shared their

“The awards serve as a testament to our commitment to diversity, which has always accompanied us along our journey. We hope it continues to stay with us in our business community, as diversity not only makes companies more resilient

A live performance from the Danubia Orchestra and an aerial trio complemented the program. The orchestra played iconic songs from the past 35 years, seamlessly linked together while the acrobats delivered a spectacular show with breathtaking, gravity-defying moves. The chamber highlight was the cutting of our anniversary cake by four of our founding members, followed by another live band, Sunny Dance, setting the stage for an unforgettable night of dancing. Guests also enjoyed a delightful chocolate tasting, a cocktail bar provided by Diageo, and a selfie corner, adding to the evening’s festivities.

thoughts on their companies’ foundation and the diverse initiatives launched together at AmCham with its members.

RENÁTA NÉMETH, AMCHAM

The GE opening remarks

U.S. Ambassador David Pressman Minister for EU Affairs János Bóka

The Inclusive Workplace Excellence Award was won by GE Healthcare

Zoltán Szabó, President of AmCham Hungary

The Community Inclusion Champion Award winner was NI Hungary

Boardroom Meeting Mulls Election, Presidency and Macroeconomics Events

Fifty guests drawn from Budapest’s CEO and diplomatic communities (including six ambassadors) started their day at the latest Budapest Business Journal Boardroom Meeting at the Matild Palace, A Luxury Collection Hotel Budapest, with a breakfast curated by Spago Budapest by Wolfgang Puck, on the morning of June 11.

Our regular roundtable discussion featured the Belgian Ambassador to HungaryJeroen Vergeylen and Tamás Lőcsei, country managing partner for PwC Hungary. Their conversation, moderated by BBJ editor-in-chief Robin Marshall, was framed by Sunday’s municipal and European Parliament elections, the passing of the rotating Presidency of the Council of the EU from Belgium to Hungary on July 1, and, of course, the latest macroeconomic outlooks.

Issues covered included how the European elections might influence power dynamics in Hungary and the EU, whether Péter Magyar and his Tisza party are likely to be a lasting force in Hungarian politics, and the fallout from the election, such

Sun Shines on BBJ Summer Sundowner

Around 200 guests enjoyed brilliant sunshine and beautiful views for the latest Budapest Business Journal Summer Sundowner on June 11 at the newly reopened Liz & Chain Rooftop bar of the Budapest Marriott Hotel. It was also the first opportunity to introduce BBJ business mixer guests to the new multi-property general manager, Angela Saliba, the first woman GM at the Budapest Marriott. In addition to the chance to meet with old friends, make new acquaintances and even do a bit of business, there was a tombola draw for three prizes of rising value provided by the hotel for various of its services.

as French President Emmanuel Macron’s decision to call a snap general election, and its potential economic impact.

Other topics included the highlights of the Belgian presidency, the likely priorities of the Hungarian presidency,

and Belgian-Hungarian relations ahead of the handover. On the Hungarian macroeconomic front, we touched on inflation and GDP growth this year and next, and whether growing real wages might benefit or threaten the economy.

Chamber of Commerce Corner

features news and events from various international business chambers. For further information and to register for specific events, visit the organizing chamber’s website. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu

German Hungarian Chamber of Industry and Commerce (DUIHK)

Last week, as part of its Network Digital initiative, DUIHK members visited the Budapest Experience Center for Industrial Innovation, CU.BE by Bosch Rexroth Hungary, a stronghold of Industry 4.0, where they were able to see the company’s latest technological achievements in action. The event was opened by DUIHK managing director Barbara

Zollmann and István Ács of Bosch Rexroth Kft. He presented the activities and results of the Bosch Group and Bosch Rexroth over the past year. The company’s innovative technical solutions presented included Smart Function Kit mechatronics, the Smart Flex Effector compensation unit, and the ctrlX Automation portfolio. Members also learned how modern data acquisition technologies are reshaping the domestic industry and what solutions Bosch Rexroth has developed for this. Finally, DUIHK members could learn about developments for factory automation, such as the Active Shuttle AMR intralogistics solution and the collaborative machines from Kassow Robots, which can almost completely imitate the functions of the human arm. Several large Bosch Rexroth projects for production automation were also presented. Many of these products were displayed in the showroom, bringing the theoretical solutions to life and making the experience complete for visitors.

Hungarian-French Chamber of Commerce and Industry (CCIFH)

On June 5, the French Ambassador’s Residence hosted a press conference and a reception marking the publication of the 2024 edition of “France’s Presence in Hungary.” This regular informative, concise and to-the-point publication, which gives a quick overview of the French economic actors operating in Hungary, was updated on the occasion of Hungary’s upcoming presidency of the Council of the European Union. The CCIFH and the economic department of the French Embassy in Hungary worked on it closely with the Hungarian organization of French Foreign Trade Counselors.

Since the survey was last carried out in 2020, France has maintained its prominent position as an investor in Hungary. According to the latest data from the National Bank of Hungary (MNB), France is the fifth largest foreign direct investor in Hungary, with an investment amount of EUR 5.15 billion and 5.1% of all foreign investments. Some 544 Frenchowned companies operate in Hungary, a marked +10.79% increase compared to the 491 companies in 2020. Those businesses currently employ nearly 49,000 staff, and their annual sales are more than EUR 13 billion.

The food industry, trade, consumer goods, and industrial activity still account for nearly half of the sales revenue of French companies in Hungary. The companies involved account for 37% of the total French presence, and their number of employees is 35% of the total.

The study also highlights the dynamism of the automotive industry, which doubled its sales in four years and increased the number of employees by 64%. In the environmental protection and energy sector, where the number of new businesses increased significantly, both sales and the number of employees were up strongly. Despite the decrease in the number of French companies operating in Hungary in the construction industry and the consumer goods sector, they registered much higher sales than four years ago.

Belgian Business Club in Hungary (Belgabiz)

and the Netherlands-Hungarian Chamber of Commerce (Dutcham)

Belgabiz and Dutcham invite guests to a “summer drink before the summer holiday.” Join the chamber for a drink and bites, and make valuable business and friendship connections in the pleasant atmosphere. The fee includes one drink and pizza.

• When: June 20, 6-9 p.m. • Where: ODA / Czakó Kert, Czakó u. 15, Budapest 1016 • Fee: Belgabiz and Dutcham members HUF 5,900 (incl. VAT); non-members: HUF 10,900 (incl. VAT).

Italian Chamber of Commerce for Hungary (CCIU)

The Italian Cultural Institute of Budapest hosted the extraordinary general assembly of the CCIU on June 11 at 4:30 p.m. This closed-door meeting was reserved for CCIU members. It was a significant opportunity for the community to take stock of the achievements and challenges of the past months and to look forward to upcoming activities, including synergy breakfasts with stakeholders, trade promotion events, workshops, Made-in-Italy fairs and exhibitions, Assocamerestero (the 86-member Association of Italian Chambers of Commerce Abroad) initiatives, networking events and much more. The general assembly was opened by Bernardino Pusceddu, president of the CCIU, who spoke about the importance of the chamber’s presence in Hungary. There was also an opportunity to discuss the development of Assocamerestero. After the assembly, participants could enjoy a traditional Italian aperitif accompanied by Prosecco.

Canadian Chamber of Commerce In Hungary (CCCH)

Join the CCCH on July 1 to celebrate Canada Day and the 157th anniversary of the Constitution Act of 1867. Known as Canada’s birthday, this day is a special occasion commemorating the country’s rich history and diverse culture. In Canada, celebrations include fireworks, parades, barbecues, concerts, carnivals, and picnics. In Budapest, the CCCH hosts a casual event featuring burgers, beers, and doughnuts. This is an excellent opportunity to connect with the community, celebrate Canada’s heritage, and enjoy delicious food and drinks.

• When: Monday, July 1, from 6-10 p.m.

• Where: Pasarét Bisztró, Pasaréti út 100, Budapest 1126

Swiss-Hungarian Chamber of Commerce (Swisscham)

The first episode of the Holinstinct: Revitalize and Thrive for Productivity and Well-being webinar series will air in July. It presents a holistic, integrated, and accessible methodology for well-being that addresses the needs of corporate and non-corporate clients through a multi-faceted system. This approach combines coaching, nutrition, physical activity and mindfulness, recognizing the interconnectedness of these factors in achieving overall well-being. It is a flexible and supportive approach, empowering individuals to take control of their well-being in ways that work for them.

• When: Tuesday, July 2, 2-3 p.m.

• Fee: Members free; non-members: HUF 10,000

Opening a business doesn’t make you a businessman.