Hungarian automotive industry: week 28
Last week, Europe´s, and consequently Hungary´s, financial markets were affected by the problems of Portugal´s financial sector, although the initial uncertainty somewhat improved by the final days of the week. Last week also saw several announcements in the auto industry and we were informed about new investments, while one of our OEMs reached a major milestone.
Let´s see what happened in week 28 this year.
Manufacturers
The European Commission started a detailed investigation of the government granted financial state aid that Hungary leveraged for Audi, seeking to probe whether its proceeds meet EU regulations. The Commission is also reviewing the state aids given to Ford's investment in Valencia and Porsche's and BMW's investments in Leipzig.
Preparations for the serial production of the new Audi TT, to be manufactured at the German car maker's Győr plant, are under way. Orders are already being registered in Germany.
This year 151 students completed Audi Hungaria's vocational training programme successfully. The best performers in each group received acknowledgements by the company.
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| 2.5 million Suzukis from Esztergom |
On July 9, the 2.5 millionth Suzuki car rolled off the production line in Esztergom, Hungary. The car is a 1.2-litre third-generation Swift in white, sold to a Hungarian customer. Last week, Mercedes-Benz reported on its role in social responsibility.
New Opel Corsa unveiled. Opel's best-selling mini car's fifth generation is raising the bar in the segment with several developments both inside and outside. These include a new turbocharged 1.0-litre petrol engine manufactured in Szentgotthárd, Hungary, a low-friction transmission and a brand new suspension.
Suppliers
Last week, we went to Münster and visited the world's largest coating factory, we had an insight into the manufacturing process of innovative automotive paints and lighting effects at BASF Coatings.
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| We visited the BASF Coating plant in Münster - Gallery |
Casts manufacturer Busch-Hungária Kft. has launched a HUF 6.4 billion investment in Győr, supported with a HUF 505 million state subsidy. By 2017, the investment will increase the company's current headcount of 250 by 105.
With a new investment, Lakics Gépgyártó Kft.-owner Lakics-family became a joint owner of Rutin Kft., one of Hungary's largest steel structures manufacturers. The result of the merger, one of Hungary's leading machine manufacturing group, is expecting an annual revenue of HUF 10 billion and is providing livelihood for 700 families in the South Transdanubian region.
BorgWarner is creating 350 new jobs in Oroszlány, Hungary. Frederic Lissalde, president of turbocharger systems manufacturer BorgWarner's Turbo Division, and Attila Bogár, the Hungarian subsidiary's CEO, informed our site about the company's near future. They pointed out that thanks to a balanced and stable market environment, expansions are expected throughout the entire BorgWarner Group.
Service providers
On Monday, they held a warning strike, on Friday, they dismissed the drivers involved in the strike at Budaörs-based hauling firm Lagermax.
Waberer's International Zrt. will buy 1,300 new Euro 6 trucks with an investment of over EUR 100 million, replacing more than 25 percent of its current Euro 5-standard fleet with an average age of two years.
Pappas Group member DanubeTruck Hungary Ltd. has taken over the distribution of Iveco light and heavy trucks and buses from Iveco Hungary Ltd.
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Over 100,000 cars roll off the production line at Suzuki's Esztergom plant, which also produces a significant amount of by-products. In order to decrease environmental load it is crucial to process these materials. We tried to find out what happens with residuary materials.
Education
Last week, President János Áder appointed László Palkovics the new Secretary of State for Higher Education at the Mirror Hall of Sándor Palace.
According to László Parragh, the President of the Hungarian Chamber of Industry and Commerce, Hungary's higher education will be completely transformed in two or three years. We interviewed Parragh after Audi Hungaria's end of the year ceremony about dual training, supplier development and the compulsory registration in the Chamber's database.
Economy
Hungary's economic growth will come near to 3 percent this year, significantly exceeding the eurozone average of 1.1 percent, reported EY in its latest quarterly forecast on the eurozone. Following the 2.9 percent GDP growth in 2014, Hungary's economic growth is expected to stay at 2 percent in the following years.
This growth rate conforms to current regional trends, although it significantly exceeds the growth rate of Western European states, reported EY. Export volume is also increasing: export in the eurozone is expected to grow by 3.5 percent in 2014 and 3.8 percent in 2015.
Export
Trade surplus continues to decrease thanks to dynamically improving import volumes. The Central Statistical Office (KSH) reported on Wednesday that the growth rate of imports has been higher than that of exports for the third consecutive month in May, resulting in a lower surplus on trade balance. In EUR terms, exports and imports increased by 2.4 % and 3.8%, respectively in the fifth month of 2014 compared to May 2013.
The EUR 419 million surplus on the trade balance showed a decrease of EUR 72 million compared to the corresponding month of 2013. In January–May 2014, the value of exports was EUR 34.938 billion, while that of imports was EUR 31.962 billion.
The forint's value decreased 3.7 percent against the euro and 0.9 percent against the dollar in the first five months this year compared to the same period in the previous year.
R&D
Last year, over HUF 420 billion, 1.44 percent of the domestic GDP was spent on research & development in Hungary on a national economic level, representing a 15.5 percent growth compared to 2012, reported the Central Statistical Office last week. Corporate R&D investments increased by 22.2 percent in 2013 compared to the year before.
At academic research sites R&D expenditures decreased by 9.7 percent. The number of research sites increased by 2.2 percent nationwide, while the number of employees engaged in research grew by 3.1 percent compared to the year before. Today, 58,200 people carry out activities in connection with R&D at 3,159 sites.
Banking system
According to Moody's Investors Service, the new law on currency-based credits passed recently has a negative effect on the credit risk rating of Hungary's banking system. Moody's analysts say the actions to be taken as a result of the new law will double the loss of Hungary's banking system compared to Moody's previous forecast.
Moody's announced it is expecting a EUR 2.6 billion burden of compensation on Hungarian banks should they fail to prove that the conditions of unilateral changes in the interest rates were presented in an adequately transparent way.
According to Moody's such refunds would amount to 28.3 percent of Hungary's banking system's total equity capital and decrease the banking system's solvency ratio from the 17.4 percent measured at the end of 2013 to 12.5 percent.
