Engineering Powerhouse Hungary – How JLR Capitalizes on Highly Skilled Hungarian Technical Expertise

Engineering Powerhouse Hungary – How JLR Capitalizes on Highly Skilled Hungarian Technical Expertise

2024. 05. 06.

#JLR #Engineering #e-mobility #Budapest #Suppliers

JLR has been selling cars in the country for a long time, but still not many are aware of the fact that Budapest has also turned into a major development hub of the company. Our in-depth report takes a glance at what impact it has on the OEM’s global operation and how it affects JLR’s strategy in the wake of the transition.

„So, you are going to Jaguar Land Rover, huh? That’s in district four, I’ll take you there,” the taxi driver says. He wants to drive us there in spite of his company’s switchboard operator’s instruction that clearly defined a location in district 13. Luckily, the driver can be convinced to stick to the original plan at last, so, your correspondent does end up on the right spot: JLR’s state-of-the-art office building.

“Many still associate JLR with the dealership that is, indeed, in district four,” Ákos Garaba, CEO of JLR Hungary Kft. explains. “My neighbor’s best guess was also that I’d be in sales when he saw my JLR Defender in the driveway.”

CEE, the Hotbed of Strategic Suppliers

The company set up its engineering center in 2018 in Budapest, and apparently it will take a while till that message comes across in the general public. It shouldn’t be like that, though. The Hungarian capital has quickly evolved into one of the leading innovation hubs of the corporation, with a 300+ headcount by now.

“Hungary has always been on the map, and careful planning preceded JLR’s move to set up crucial engineering capacities here,” Mr. Garaba notes.

What mattered the most is the availability of technical skills in Hungary what could work as a capability extension of the UK engineering resource. No matter how nice a location is, at the end of the day it all comes down to what you can deliver

Expectations have been high from the outset. The local team was charged with maintaining close contact with CEE-based suppliers as well as carrying out large-scale product development and testing. For JLR has 650+ suppliers in the region that produce some 27,000 parts in value of over GBP 5 billion. That accounts for 50% of all auto parts needed for assembly.

Among those suppliers is Dana Hungary that has been recently granted the JLRQ Award for consistently meeting high-quality standards over the long term and demonstrating itself as a reliable partner. (Read Dana’s investor journey here.) The proximity of partners is a huge asset, and the communications gap is also gone thanks to using Hungarian as the main working language.

Test, test, test. Testing is another key part of the activities. Thanks to a partnership with proving ground AVL ZalaZone, there is room for doing regular testing of JLR’s products. “We keep looking for engineers who can follow up with suppliers and thus help manufacturing. But we also need the kind that is into product development. At the moment around two-thirds of our engineers are involved in innovation.” The team has been growing dynamically although your impression of the office is anything but being a busy place. The slickly designed space with industrial interior features projects stylish modernity and creativity, yet, colleagues are hardly anywhere to see. “It’s because of our hybrid work scheme, we have a full house only in corporate events,” Mr. Garaba adds.

Record Profits Don’t Just Emerge out of Thin Air

Just how hard the staff works is showcased by record profits as JLR has recently reported the highest quarterly profits since 2017. “Profound changes that were set into motion a few years ago now start to bear fruit,” Mr. Garaba says.

We learned how to manage resources in times of scarcity and what to focus on. The result is heightened efficiency.

That efficiency is what drives revenues up, not bigger sales. “We are much more into quality than quantity, we don’t aim to sell models in the millions.”

This whole new approach was initially forced upon the company by the crises of the recent past from covid to supply chain disruptions to whopping energy prices. It now comes in handy, though, in the wake of the transition. The first of our all-electric Jaguars is on the horizon with a purpose to 'Inspire like no other', illustrating the promise to do things differently and attract a new audience of discerning clients.

Automotive Won’t be Eaten up by Simplicity

In stakeholder events pundits claim that due to the simplified structure of EVs and Gen Z’s anti car ownership approach OEMs will have a hard time to differentiate themselves, and many suppliers won’t survive given that a lot less parts will be needed. Mr. Garaba believes that suppliers have been responding to the electrification-induced changes for years now. They have also realized how important of a role software would play. He is not afraid, though, that customers would solely need a chassis and four wheels to take them from point A to B.

“There are different segments of customers with different needs. Yes, some are into car sharing and have minimum needs, but there will remain a significant number of them that can be impressed by only a lot more. Anything that can be sensed will gain in significance: audio, video, not to mention the interior,

he points out. No wonder they work together with Mono Group (find their story here) that, in fact, puts its luxury interior portfolio on display in form of a Land Rover at their site.

Building on Legacy. Mr. Garaba praises the supporting environment by HIPA that turbocharged the initial investment and now helps grow the company’s local footprint. This is a great basis the company can build on that was originally set up by Nevijo Mance who just retired. “He kick-started the engine, so to say, and conditions are perfect for even further local expansion,” he says. The Budapest office can host at least 200 more staff, and the way things look at the moment, they will be also badly needed to meet growing demand.

Graduate Magnet

The plan is to further deepen relations with higher education institutions. Engineers have the privilege to get great tasks and the chance to grow. They are also engaged in working closely together with the dealership to promote the Land Rover Defender in dedicated events.

“We support sales this way as well. On the other hand, we keep working on gaining visibility for our engineering hub, which is, again, one of JLR’s main innovation centres globally after all,” Mr. Garaba says. And it deserves the lime light with certainty.