How to select your new automotive manufacturing site in Hungary
by Dr. Balazs Csorjan, investment promotion specialist
How to select your new
site in Hungary
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Hungary is a low-cost manufacturing
location inside the EU market.
Beside pharmaceutics, electronics,
SSC, tourism and food processing,
automotive industry is undoubtedly
one of the leading branches in the
These few slides try to help you when
it’s about automotive industrial site
Did you know?
● There are 4 OEMs and 700+ suppliers in the Hungarian automotive manufacturing industry, which produced
450k cars in 2015, employing 100k workers. Car manufacturing per capita is similar to Spain’s numbers.
● There are a traditionally strong automotive component manufacturing focus in the Hungarian economic
policy. Hungarian governements think, suppliers (component manufacturers) provide stability to automotive
industry, and deeper embedement to the Hungarian economy. New OEMs are welcome in Hungary, but
suppliers are highly welcome.
● Hungarian government agency’s Subcontracting Department supports the matchmaking of suppliers.
The main automotive manufacturing
region is the North Western part of
Hungary, located in Győr (Audi),
Esztergom (Suzuki), Szombathely
Suppliers like Alcoa, Continental,
Dana, Denso, Delphi, Hirschler,
Johnson Controlls, Kirchhof, Magna,
Rába, Valeo, Visteon etc. doing
business in this part of the country.
The settlement of Mercedes-Benz
new small car manufacturing plant in
2008 in Kecskemét shows the
emerging importance of Eastern
Hungary (see later the whys)
Suppliers like Bosch, Delphi,
Eismann, FAG, Hajdu Auto,
Hirschmann, Johnson Controlls,
Knorr-Bremse, Magna, Modine,
Remy, Shinwa, ZF etc. doing
business in this part of the country.
Next slide: short video about
Mercedes-Benz’ Eastern European
Unemployment is maybe the most
relevant difference between the
Eastern and Western part of
Hungary. Western Hungary has
shortages in many professions
and in many labour market
segments, while Eastern Hungary
“is a human mine”. With an
example: the entire Western
Hungarian Region has a similar
number of job seekers (30k+) like
a single Eastern Hungarian town,
Hajduboszormeny and its vicinity
Not independently from
unemployment, Budapest and
Western Hungary have higher
labor costs. In numbers, the
average monthly gross earnings of
employees was 281 thousand
HUF (approx. €930) in Budapest,
217 thousand HUF (approx. €720)
in Western Hungary, and 188
thousand HUF (approx. €625) in
Eastern Hungary, in 2013.
In Eastern Hungarian automotive
industry, a well-trained,
experienced, skilled worker earns
monthly gross 150-250k HUF and
an engineer between 300-600k
The Hungarian vocational education
follows the “German modell”. The so
called dual education means:
vocational school students learn
practical skills at companies.
There are no relevant differences
between Western and Eastern
Hungarian vocational education,
however the leading universities are
in Eastern Hungary (Miskolc,
Foreign language education at
vocational level is an issue, but there
are planned projects for low-level,
highly industry-specific and large-
scale tech language education.
The new Hungarian Labor Code
has 4 benefits:
● it provides more simple
termination of employement
● more flexible rules for
compulsory minimum salaries,
● more flexible working time,
● and finally: more overtime.
In Central and Eastern Europe, there
are approx. 1,000 industrial parks.
More than 20% of CEE industrial
parks are in Hungary (in Poland there
are less than 100 industrial parks).
The developed Hungarian industrial
park network provides excellent road
and rail transportation connections.
In Eastern Hungary, some business
parks provide direct motorway access
on a very low-cost level.
Real estate costs
Industrial land average sales prices
are between 20-30€ per sq.meter in
larger cities, and under 20€ in smaller
towns. 10€ per sq.meter can be
regarded a very good deal, however
some municipailities offer a free of
charge industrial land.
Manufacturing rental market is small
outside Budapest, but the average
rental fees are between 2.5 and 5 €
per sq.meter per month.
The Hungarian electricity market is highly regulated by the EU. The EU has a
competitive energy market (theoretically), separating the grid developers and
energy providers. (On-site grid development is managed by business parks). As
a key account, you can achieve competitive energy prices.
EU energy price statistics can be checked here >>
Developed infrastructure makes
Central- and Eastern Europe more
attractive location than other
emerging countries of the world.
Hungary has 1600 kms (approx.
1000 miles) motorways network,
far the largest one in Eastern
The Hungarian motorway system
is Budapest-centric, all the ways
are going to the capital city.
There are 3 international airports in
Budapest Airport: the 2nd largest hub
in Eastern Europe, more dozen daily
flights inside Europe.
Debrecen International Airport
(Eastern Hungary) has a strong air
cargo focus; passenger flights to
Western Europe and to
The Fly Balaton Airport in the
Western corner of Lake Balaton has a
strong low-cost air flight focus.
Grants by the
When it’s about industrial site selection,
grants can be the cherry on the cake. I don’
t suggest to make a decision based on
grants only, but why shouldn’t calculate
with free money when some governments
The main topics when it’s about grants for
manufacturing: job creation subsidies,
training subsidies and cash grants.
Over €10M investment you can achieve
VIP incentives from the Hungarian
You cannot imagine the creativity of Eastern
European mayors when it’s about investment
promotion. Some offers a one-year entrance for all
your future staff to the matches of local basketball
team (“it will support your recruitment”). Others
provide international school development projects
and family assistance to your expat manager
The bravest local governments offer special deals.
E.g. the municipality of Hajduboszormeny, Eastern
Hungary, provides a free of charge industrial
property for 50 new jobs + a dedicated vice mayor
to manage your investment within the Hungarian
public administration. By the way, the location is
inside the top10 best cost effective regions of
Europe (ranked by Financial Times’ fDi Magazine),
so beside basketball tickets you can gain pretty
good deals on municipal level, too.
Budapest: more international schools
in more languages (English, French
Eastern Hungary (Debrecen):
international school in English;
bilingual high schools (e.g: German-
Hungarian) and an English-Hungarian
other cities: bilingual high schools
The strongest organization is AHAI,
the Association of the Hungarian
Automotive Industry (in Hungarian:
MAGE). Its members cover almost
the entire industry, and has working
groups for governmental relations,
communication and labour market.
The networking events of AHAI can
be a perfect first step in the
Manufacturing Hungary Blog is an information source about
the manufacturing topics in Hungary and Eastern Europe. Our
goal is to support site selection team’s job, providing useful
Dr. Balazs Csorjan, investment promotion specialist, the
former regional director of Hungarian governmental
investment promotion agency. Dr. Csorjan has taken part in
350+ site selection projects - he knows your questions.
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