EXECUTIVE WORLD Balázs Németh, CEO, Porsche Hungaria Trading Co. Ltd.

executive world

Porsche Hungaria Trading Co. Ltd. has a special, distinguished role in the domestic automotive distribution as it has been the market leader since its establishment three decades ago. Since January 2021, its CEO has been Balázs Németh, an experienced crisis manager who has spent almost his entire professional career at the company.

RELIABILITY AND PREDICTABILITY

BALÁZS NÉMETH IS THE CHIEF EXECUTIVE OFFICER OF HUNGARY’S LARGEST CAR TRADING FIRM

After graduating from the Budapest University of Economics and Business Administration with a degree in public opinion research, sociology and sports management, "fate had it that Porsche Hungaria was looking for a young economist with a better than average command of German, and that's how I came to work here as a sales coordinator and assistant in 2001 alongside János Eppel, who was then brand manager at Volkswagen,” the CEO tells Diplomacy&Trade.

The first successful crisis managements

In 2004, he became sales manager at Volkswagen and deputy to the brand manager. In 2007, he moved to the retail area where he was director of Porsche Interauto Buda until 2011. At that time, it was one of the biggest dealerships in Hungary, with a lot of service stations, very high sales turnover, many brands, almost 130 employees. “Then came the economic crisis in 2008 and that made things very difficult for us there. We had to lay off quite a lot of people, but I'm very proud that I was able to turn a struggling company into a very successful business in four years, and that I learnt there and then how to manage people and run a company. It was a very serious challenge, to get into and manage such a big system there at the age of 32,” he recalls.

executive world

Balázs Németh returned to the headquarters of Porsche Hungaria in 2011, this time as Volkswagen brand manager, and he held that position until the end of 2017. During this period, he had to face another crisis, the so-called diesel case in 2015, “which was linked to the Volkswagen name, and in connection with that, I had to take over the entire crisis management of Porsche Hungaria at that time – I was given this honorable task by the management. There was also a lot to learn from that. Thanks to the excellent work of my colleagues and their very disciplined approach and task execution, that crisis was managed well in Hungary,” he says. At the end of 2017, he left the company and worked as a selfemployed consultant for three years. “Then, at the end of 2020, I was asked to take over the management of Porsche Hungaria, and after a selection process involving many stages, I managed to clear all the hurdles and was appointed as the CEO of Porsche Hungaria at the beginning of 2021,” he adds.

Values and principles

Porsche Hungaria's owner, the Austrian firm Porsche Holding Salzburg, was bought by the Volkswagen Group 11 years ago, so the company is indirectly 100% German-owned. As to what the main Austrian and/or German business principles are according to which the company operates and how he has managed to adapt them to the Hungarian context in his work, the CEO first recalls his childhood. “I had a fairly strict Protestant upbringing. In addition, when Hungarians were able to travel freely, I was in the fortunate position to work in a boarding house in a small Austrian mountain village for a month over two summers at the age of thirteen and fourteen in exchange for room and board. There, I learned the Austrian mentality, of which I already had some back home. There are Austrian ancestors in the family, including an actress from Vienna and an industrialist from Linz. So, I learned some of that Austrian and German mentality there. I also worked abroad every summer from the age of 18, in addition to my studies, in Austria, Germany, London and other countries, where I spent summers washing dishes, working as a waiter or a bartender. Again, I learned a lot of German language and German work ethic in Germany, even if it was limited to the hospitality industry. Later on, here at Porsche Hungaria, which has always been exemplary in terms of its perfectionism in Hungary, I also received a large dose of training that led me in the direction of embracing the classic German and Austrian work ethic and perfectionism. Porsche Holding, and Porsche Hungaria within it, is a peculiar mixture of having a German ownership while our direct employer rights are exercised by a holding company with a very substantial turnover and pre-tax profit, which has grown out of an Austrian family business. So, it is a special mix, which is why I do not usually define Porsche Hungaria as a classic multinational company in the Hungarian model, but rather as a hybrid situation, a blend of a family business that has grown into a giant, but still family-owned, enterprise and the operating philosophy of one of the world's largest car manufacturers. All that makes me feel very lucky for myself, the whole company and the people who work here.”

Reliability and predictability

As for the business principles or philosophical elements that help him in his job as a leader, Balázs Németh emphasizes two words: reliability and predictability. “For the 32nd year since we became Hungary's biggest car importer, this has always been our motto, and we are adamant about it, even in times as incredibly difficult as these, to earn, keep and renew the trust of our customers. That is perhaps one of the most important things. Predictability, perfectionism, precision, even if these may often sound like clichés, but in the life of the average person, the second biggest investment after real estate is a car. So, these are the qualities and attitudes that are very much needed and are very much in demand, regardless whether we are talking about private buyers or businesses, where this can also be a major expense. The use of a car is essential for mobility today.”

Lessons of crisis management

The latest crisis needing management is caused by the consequences of the Russian invasion of Ukraine. Regarding his previous experience and his management philosophy helping him to tackle the current situation, the CEO notes that “you learn as you go along. You probably have to have something in you, perhaps in this case a certain composure, because you can't get through this by rushing. Here again, I can only say platitudes, things like in a big storm you have to keep adjusting the sail, the size, the direction so that you can avoid any major disaster. When flying a plane, if there is a major problem, it is customary to say that you have to push the pilot's seat back and get a big picture of what you can do, where the problems are that need to be addressed first and where intervention is needed first. So on the one hand, you bring these with you, and on the other hand, you can learn them, but I think the most important thing in such cases is to be calm and to analyze the situation very, very carefully, to assess it, and on the basis of that to make very, very serious decisions: in terms of costs, in terms of customer management, in terms of relations with manufacturers and negotiating techniques, and the rhetoric we use to try to get our way to protect our customers or to support them as much as possible. I could highlight these as the most important elements in crisis management.”

ADVICES FOR CUSTOMERS

As a trading company, what is the most important for Porsche Hungaria is the customer. As Balázs Németh explains, they are trying to reassure their customers as much as possible, to serve them as quickly as possible and, most importantly, he emphasizes once again, to represent predictability and reliability in this extremely unpredictable period that the world is living through and will continue to live through for at least the next six months. “That is almost certain. A lot of the process has only just begun in terms of general price increases and price gaps.” Asked what advice he can give to current and prospective buyers in the current situation, the CEO points out that they should think very carefully about the decision they make and the car they buy, and that they should only and exclusively contact reliable specialists, dealerships and garages with considerable experience, because you cannot gamble at a time like this with cars that you have bought from unreliable sources, for example, second-hand cars. “I would like to draw everyone’s attention to the fact that there is a very serious financial risk in this, so, contact reliable specialists and make a very wise decision on the basis of what kind of new car you buy, depending on the condition of your own used car and what you need, and whether you are buying a new or a reliable used car. This is not the place for advertising, but still, I can say that here at Porsche Hungaria, we are fortunate enough to be supplied with both and in good enough quantities. It means that we can provide the cars that these types of customer needs are aimed at.”

Tackling crises of different character

In 2007-8, there was a financial crisis, then came a diesel crisis with a completely different character. The current crisis in the car market is again a completely different task and agenda. Obviously, the tools and methods for dealing with it are quite different. In response to this, Balázs Németh says that he thinks the recipe is very similar: “first of all, the human factor cannot be left out. We have to treat our colleagues in the same way, we try to instill in them the kind of calmness with which they treat our current or future customers, that is, how we deal with any dissatisfied people who are disappointed with, say, a brand, and make it clear that this disappointment can be cleared up and corrected and trust can be restored.” Going back to the crisis of 2008, the CEO stresses that then, there was a global trend where one had to find answers at a micro level to a macro problem, “which is not easy, especially if you have to cut costs sharply, part of which is, for example, to reduce the stock, which is very difficult. Compared to that, and compared to the diesel issue, the challenge that we are facing now is completely unique and special because there is no historical precedent, there is no protocol written for this, that in this case, you have to go right or left, you have to hit the brakes or you have to accelerate. We now have to make very creative and very smart decisions from one week to the next. If the HUF/EUR exchange rate goes up from 370 to 400 overnight, that is obviously a significant difference, and because we are talking about imported products, we have to take some action there without losing the confidence of our customers and without it looking like a rush. If the next afternoon, the forint is back at 375 against the euro, for example, you suddenly start cancelling a whole series of measures that were written and invented the day before. Plus, there is a global inflationary trend, there is a shortage in the supply chains, which is special because we are not talking about national economies in the non-classical sense of the word, but the world has become so globalized that there is simply total interdependence between different countries. It is not possible to produce most of the products without having as an actor a partner in a country other than your own, or even in a very, very distant country, which could be a manufacturer or a service provider or a developer. This is a whole new challenge,” he explains.

Local conflict, global problems

The pandemic caused by the new coronavirus infection has played a part in creating this challenge, as has the explosion in the world market demand for chips. Demand for smart chips has grown from 17 billion to 50 billion in four years, he adds. “Even without the health epidemic situation, it would have been difficult for the big three manufacturers, who cover 97% of the world market, to keep up with the demand. In addition, it should be remembered that in this global supply chain, within which the automotive industry is even more special compared to a consumer electronics or food product, because a car is made up of many, many thousands of components, and of a very, very wide range of materials: leather, walnut inlays, neon, nickel, many, many different types of plastic. There is a raw material 94% of which globally is produced in Russia. But if only 30% of the global supply of something is produced or mined in Ukraine as in the case of nickel, or neon, and production has halved or fallen by a third because of the war, that one-third drop can cause a very, very serious problem at the supplier level worldwide. It's very difficult to suddenly replace these with others. It will take two or three years to build a chip factory, or to set up plants with the development background to be able to somehow assemble the neon extracted from the air, which is practically the raw material for the lasers needed to manufacture chips. It is very complicated. Nevertheless, after every crisis, and in the middle of the current one, Porsche Hungaria is still the market leader in Hungary,” he points out.

Thanking customers for their trust and patience

Porsche Hungaria is the biggest car dealer in this country. “This is because we sell many brands. Representing six different brands means six different production philosophies and six different manufacturing, even if there are overlaps, of course, because we are talking about a big group and there are component and part similarities, but the composition of the specialist staff, the quality of the production lines, etc. is different everywhere. At the moment, in the spring of 2022, the biggest challenge is for the Skoda brand, although there have been signs of a looming threat since the middle of last year. So far, we have managed the situation very well and have managed to get enough cars. At the same time, we have, for example, received very good news from the Volkswagen plant and the Audi plant in terms of their production capacity. As the head of the company, I thank everyone for their patience. On behalf of the brands of Porsche Hungaria, I express my gratitude for the kind of loyalty and fidelity that we see, in the volume of sales contracts signed, which is a record, despite the fact that our delivery times are unprecedented for certain models, and there is trust there, so I can certainly only express my thanks to the customers,” the CEO concludes.