Central-Eastern Europe is an important centre for global vehicle manufacturing. The region’s cost benefits and competitive advantages within Europe stem primarily from its cheap, motivated and efficient labour force that can be employed flexibly as well as the rapid and cheap access the region offers to the main markets. Due to the highly competitive situation and price-sensitive consumer market, manufacturing in the region is primarily focused on the output of small and medium category, mass produced cars with a low profit content; the impact on the regional supplier network as a result of vehicle manufacturing investments is similarly significant.
The vehicle industry sector is one of the leading branches in Hungary, with more than 100,000 people employed directly or indirectly in the industry. Approximately one-third of businesses active in the sector operate in compliance with ISO 9001 or TS 16949.
The supplier network and the offer of the large number of local suppliers are basically good: there is a motivated network available, the majority secondary or tertiary suppliers, although the number of primary suppliers is constantly increasing.
Due to the favourable characteristics of the region, numerous multinationals have organized not only their manufacturing activities but also their R&D in Hungary. For instance, Knorr-Bremse, Bosch, GE, Continental and Audi.
Approximately 90% of vehicles manufactured in Hungary go for export, while this figure exceeds 80% for engines and components.
Key export products:
Key export markets:
Around 86% of exports are to countries of the EU. Hungary has a particularly strong export relation with Germany, and among countries outside the EU with Russia.
Hungary is the market leader in terms of engine manufacturing in the region: in 2010 Audi Hungaria, which has an annual capacity of 3 million units, produced 1.65 million engines and 38,500 cars. Annually Opel in Hungary manufactures half a million petrol and diesel engines as a result of the expansion of the GM Powertrain at Szentgotthárd, while A and B series Mercedes Benz types will be assembled at the DAIMLER AG Kecskemét works from 2012.
Investors find that Hungary offers an advanced logistics network, trained, efficient, flexible and creative labour force working at a far more preferential cost than West European wage rates.
However, Hungary is not only distinguished in the “classical” auto and components manufacturing sector. Hungarian enterprises have shown outstanding performance in the area of alternative propulsion driven by the so-called “greening processes” in the vehicle industry. Just as major vehicle manufacturers not only continue to develop the internal combustion engine and, virtually without exception, they also place great emphasis on the development and manufacture of alternatively powered models, so too ever more domestic enterprises are taking part in the development and manufacture of vehicles using alternative propulsion units and their spare parts. Perhaps there is no better way of indicating the skills of Hungarian developers and manufacturing companies in this field than by mentioning the annual Széchenyi Race (www.szechenyifutam.hu) in Győr, which is Europe’s most important innovation competition where all entries are exclusively alternatively driven vehicles.
Professional associations operating in the industry cover a significant proportion of the sector. The Association of the Hungarian Vehicle Component Manufacturers (www.majosz.hu) and the Association of the Hungarian Automotive Industry (www.gepjarmuipar.hu) have around 300 members, while the Hungarian Vehicle Engineering Cluster (www.engineering-cluster.com) set up in 2009 has 13 members. The objective of the latter is rallying domestic enterprises offering engineering services in the Hungarian automotive industry, coordinating and asserting their common interests, increasing their market capacities by working together, and by operating an economic and professional network and knowledge base that is visible internationally. There are 50 members in the North Hungarian Automotive Cluster (www.nohac.hu); the organization was established at the end of 2006 with the aim of bringing the auto industry suppliers of the region together and thereby increasing their competitiveness, innovative and revenue-generating capacities.