Hungary Development Department to Hungary
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CENTRAL COVERING THE EUROPE CENTRAL EUROPEAN AUTOMOTIVE INDUSTRY AUTOMOTIVE October 1996 REPORT Volume I, Issue 5 ISSN 1088-1123 ™ of its Frankfurt research and Hungary development department to Hungary. The company is look- PROFILE HUNGARY ing for possibilities to work with Suzuki: Profitable & Eyeing Robust Competition; technical universities in Budapest and Miskolc. The the Number One Slot Supply Base Needs More Investment plan is likely to be realized at the beginning of 1997. ITT is Car manufacturing began at Magyar Suzuki’s also working on development Esztergom plant in October 1992. The production Market Highlights: of an inexpensive ABS system for small process includes press work, welding, painting, and cars. [for more on ITT, see Opportunity Spotlight final assembly. In 1995, 12,200 Hungarian built In July of this year, Daewoo Corporation on page 8. ed.] Suzuki cars were sold in the domestic market, giv- purchased 85% of the Hungarian ball bear- ing Suzuki a 20% market share, second only to ing factory MGM Radax Rt. in Debrecen. UKM Rekard plans to invest DEM 5 GM/Opel. Suzuki’s experience in Hungary has The company’s shares were purchased from million into its Gyor factory over the next been a struggle the Hungarian privatization agency APV Rt. four years. The company produces cardan from the begin- Last year, the factory had income of HUF shafts and gearboxes and is 100% owned by ning. Early on, 3.5 billion and profit of HUF 1.3 billion. the German company UKM Meissen. [for the young factory Over the next five years, Daewoo plans to more on UKM, see Opportunity Spotlight on was exposed to invest USD 30 million to modernize the fac- page 8. ed.] unexpected open tory. The factory will be used to supply market competi- Daewoo’s Poland, Romanian, Chinese, In May 1996, Audi announced that it will tion, and a weak Indian, and South Korean factories. make an additional investment in interna- Hungarian econ- tional retooling and capacity expansion at its omy has resulted UBP-Csepel Iron Foundry Ltd. in engine manufacturing plant in Gyor. Audi in fewer domes- Budapest is currently preparing for the expects to have over DEM 1 billion invested tic sales than installation of an automatic moulding line in its Gyor facility by 1997. planned for. for various types of brake drums and disks Conditions, casting. The company forecasts a 15,000 ton Lamellen und Kupplungs GmbH (LUK), Dr. Frigyes Banki however, are drums and disks capacity for the new line. the world’s largest clutch manufacturer, improving. The Csepel was purchased in October 1995 by announced in June of this year that it will company will record its first profit in 1996. The the U.S. company Universal Brake Parts. [for build a DEM 150 million greenfield clutch CEAR interviewed Dr. Frigyes Banki, a native more on UBP, see Opportunity Spotlight on page 8. facility in Szombathely, in western Hungary. Hungarian and Vice President at Magyar Suzuki. ed.] Magyar Suzuki’s Esztergom factory CEAR: What percentage of your parts ITT Automotive Hungary plans to expects to record its first profit in 1996. The and components are purchased from local increase the size of its Veszprem factory in factory began production of the three-door manufacturers? 1997. The factory’s 15,000 sq. meter produc- Swift model in February 1996. [for more on Banki: At the start of our production in tion area will be increased by 5000 sq. Suzuki, see this month’s Profile on page 1. ed.] Esztergom in 1992 the local contractors’ contri- meters. The expanded capacity will be used bution was only 9%. The 1996 contribution is to manufacture electrical switches. By the In June of this year, RABA Rt. sold two 26%-30%. [Developing local suppliers] was the end of this year, the factory will employ 1000 prototype compressed natural gas (CNG) basic philosophy of this project. If you look at workers. ITT is also planning to move part Continued on page 2 Continued on page 11 CENTRAL Feature Country Continued From page 1 154). Approximately one-half of the 1994 sales were exports. EUROPE engines. The low emission engines are AUTOMOTIVE being tested in buses in Hungary; as of late Hungarian sales of automotive parts and REPORT August they had already seen 4000 kilome- components in 1994 were HUF 43,695 mil- ters of use. Raba has also recently lion, up from HUF 26,443 million in 1992. October 1996 developed and is now producing drop cen- Approximately 50% of these parts and com- Volume I, Issue 5 ter axles for buses Formerly Published as the and low noise Major Foreign Investors Central Europe Business Report axles. [for more on in the Hungarian Automotive Industry From August 1995 to April 1996 RABA, see Opportunity Spotlight COMPANY INVESTMENT LOCAL COMPANY/LOCATION Publisher Ronald F. Suponcic, Jr. on page 8. ed.] Alcoa USD 146 million Alcoa Kofem Kft (aluminum casting, rolling) Szekesfehervar Editor-in-Chief Jeffrey A. Jones, Esq. Audi AG USD 600 million Audi Hungaria Motor Kft Budapest-based (engines) Gyor Perion Battery Central Europe Automotive Report™, 4800 Daewoo USD 30 million MGM Radax Rt (ball bearings) Debrecen Baseline Rd., Suite E104-340, Boulder, CO Factory Co. Ltd. is currently involved Ford Motor USD 170 million Ford Hungary Manuf. & 80303 USA, is published monthly, except (components) Sales Ltd. August, by Central European Trade & in supply negotia- Szekesfehervar Marketing, L.L.C. in Boulder, Colorado. tions with “a few” General Motors USD 287 million Opel Hungary Manuf. Ltd. car manufacturers (engine & car assembly) Szentgotthard The mission of the Central Europe that are planning ITT Automotive USD 40 million ITT Automotive Automotive Report is to provide market, (components) Magyarorszagi Kft to move opera- Veszprem investment, and business information that tions to Eastern Suzuki Motor USD 280 million Magyar Suzuki Corp. can lead to joint venture, greenfield invest- (car manufacture) Esztergom Europe, said Dr. ment, and product distribution United Technologies n.a. United Technologies Janos Agh, (wire harnesses) Automotive Hungary Godollo opportunities in the automotive sectors of Perion’s Sales VAW DEM 80 million VAW Slovenia, Hungary, Czech Republic, Slovak Manager. [for more (engine components) Gyor Republic, Poland, Bulgaria, and Romania. on Perion, see Source: ITDH The Central Europe Automotive Report Opportunity Spotlight intends for its information to be used to on page 8. ed.] increase foreign investment in the Central ponents were destined for export. European auto sector; improve the avail- On September 27, 1996, G.M. plans to Electrical automotive components account- ability, quality, and competitiveness of open a cylinder plant in Szentgotthard. ed for HUF 7,847 million of 1994 sales, up products and raw materials available to significantly from HUF 2,454 in 1992. Over Central European auto manufacturers and Hungary’s 8% import surcharge is sched- 80% of those components were exported. suppliers; strengthen existing Central uled for elimination on July 1, 1997. [for more market figures, see graphs on pages European companies by introducing foreign 3 and 10. ed.] capital, technology, and expertise; and pro- vide opportunities for auto manufacturers Opel Hungary’s Numbers Investment: and suppliers to expand their markets. 1992 1993 1994 1995 Audi, General The entire contents of this magazine are Car production (units) 9,300 13,344 12,282 12,844 Motors, Suzuki, and copyrighted by Central European Trade & Car exports (units) 2,735 3,204 1,101 3,936 Ford are four of the Marketing, L.L.C. with all rights reserved. Engines (units) 22,000 75,000 160,000 265,000 Revenues (mil. Ft) 9,074 20,345 43,093 n.a. largest foreign Reproduction or use in any form, without Exports (mil. Ft) 1,691 8,402 29,151 n.a. investors in Hungary permission is prohibited. Annual subscrip- Employment 514 482 569 670 (see chart on page tions are $195 in the United States & Asia Profits before taxation (mil. Ft) -1343 736 6095 n.a. 2). By the end of and $155 in Europe. Source: Opel Hungary, ITDH 1995, Hungary had attracted over USD A revised Unfair Market Practices Act 12.5 billion in foreign direct investment. Ad & Subscription Sales will come into force on January 1, 1997. [for Per capita, this represents USD 1,233, com- Tel: [1](303) 784-5653 an analysis of the revised Act, see this month’s pared with USD 177 for Poland, and the US Fax: (800) 684-3393 Legal Advisor on page 5. ed.] Czech Republic’s USD 573. Approximately International Fax: [1](510) 927-2630 20% of the FDI in Hungary is greenfield Email: [email protected] Hungarian Automotive Market Figures: investments. “We are very satisfied that we Europe Office: Hungary’s automotive industry (including invested here,” said Eva Lendel of ITT Tel./Fax: [42](7) 374-431 parts and components) saw sales in 1994 of Automotive Hungary, referring to the com- ul. L. Derera 2, I./48 HUF 124,116 million, compared to HUF pany’s DEM 40 million investment in its 830 01 Bratislava Slovak Republic 62,638 million in 1992 (USD 1 = HUF Veszprem factory. 2 October 1996 • CENTRAL EUROPE AUTOMOTIVE REPORT © Central European Trade & Marketing, L.L.C. 1996 Car Parts Exports & Imports ORDER TODAY! (million forints) CENTRAL Year Exports Imports TO SUBSCRIBE, FAX ==== ==== ==== 1991 625.3 1885.7 EUROPE THIS PAGE TO 1-800-648-3393 1992 1754.1 2886.2 (FROM OUTSIDE THE US 1993 1762.2 8506.4 FAX TO (510) 927-2630) 1994 3211.9 11453.5 AUTOMOTIVE 1995 6089.0 8267.5 Indices (previous year = 100) ❑ RENEWAL ❑ NEW SUBSCRIPTION 1992 280.5 153.1 REPORT 1993 100.5 294.7 1994 182.3 134.6 CEAR 1995 189.6 72.2 SUBSCRIPTION ORDER FORM Source: Ministry of Industry & Trade Name Title About 50% of the FDI is located around Company Budapest, and over a quarter is in north- western Hungary.