Automotive industry must fight for every car in 2022

Csaba Kilián, Executive Secretary General of the Association of the Hungarian Automotive Industry (MAGE), moderated the discussion and asked the key players of the local automotive industry about past and present challenges.

Róbert Krisztián, Executive General Manager of Magyar Suzuki Zrt. said that the Russian-Ukrainian market is important for the Hungarian operation of the Japanese carmaker, as it sells about 10,000 cars a year there. However, due to the war, the company has stopped producing and supplying cars to these target countries, despite the fact that in the current circumstances every car counts and they would also need not to lose production capacity. They are currently working on how to redirect these vehicles to other markets.

This is a short-term difficulty, as these cars are built to a unique specification for their respective markets.

They can solve this problem in the longer term, by switching to cars of different specifications and the market can also absorb 10,000 cars these days. As regards supply chains, he noted that they do not have TIER1 suppliers on either of the warring countries. While Suzuki is not directly affected by the expected material supply problems, it is indirectly affected by them because their suppliers have subcontractors in these countries.

The semiconductor shortage forced the company back to the drawing board in the second half of last year, with the Esztergom plant only able to manufacture in a single shift instead of two for a long period. As a consequence, they produced 35% fewer cars than planned. They are more optimistic about this year than they were in H2 2021, despite the difficult conditions, as the semiconductor shortage remains a problem, and the war is only making the situaiton worse. He does not believe planning ahead in the automotive industry will be made easier in the coming period, and he also thinks that market players will have to react quickly to the challenges that arise.

Olívia Mesics, Plant Manager and Managing Director of Opel Szentgotthárd Ltd., Stellantis, explained that Stellantis is the fourth largest automotive company in the world, with 93 plants worldwide. On the one hand, this means a great importance for the domestic company, but on the other hand, competition is fierce, so all challenges are multiplied. In order to stay afloat, they need to react even more intelligently, as they need to stand their ground not only in external competition but also internally. The Szentgotthárd plant is not affected by the Ukrainian-Russian crisis, as their supply chain is primarily not in this region, but of course indirectly, like everyone else, this war is affecting them.

Their production is determined by shortages of semiconductors, chips and other materials. She also pointed out that last year had highlighted the need for automotive companies to be flexible. Stellantis recorded a 20% loss of units in 2021 compared to their original plans. From April this year, the assembly line will produce in two shifts instead of three, in order to balance out the negative effects. Mesics said that being part of a huge global supply chain means there are still threats in the market, so they need to remain vigilant because there is no telling when this situation will end.

Dr. Róbert Keszte, Country Director of Continental Group Hungary, said that the processes taking place in the world are so complex that they are not only unprecedented, but also raise many aspects. The coronavirus pandemic has not yet disappeared, with another wave spreading in China, making procurement difficult. For a year and a half, they have been struggling with semiconductor shortages, and all this is being compounded by the Russian-Ukrainian war, which is creating uncertainty. At the same time, the demand side remains very strong and they can sell basically any number of cars, but we cannot ignore the fact that price increases are also expected in the future.

In Hungary, Continental is present with rubber factories on the one hand, and electronics and sensor production on the other. The supply problem is affecting rubber productino via carbon black and synthetic rubber, as these raw materials are imported from the Russian and Ukrainian markets. Although there are alternatives on the world market, switching to them is time-consuming and involves higher purchase prices.

The country manager of Continental sees these difficulties as a drag on their 2022 business year.

Melinda Topolcsik, managing director of Bridgestone Tatabánya Termelő Ltd., said that the company had a record year in 2021 despite Covid-19. They were producing for the secondary market before 2018 and have been suppliers to OEMs since then. In Tatabánya they produce tyres for premium cars in more than 230 sizes.

The war has affected Bridgestone in several ways, with the suspension of its Russian manufacturing plant which thus affected exports. The burden of compensating for the loss falls on the other plants. The entire crisis will be determined by how much of the Russian and Ukrainian raw materials are stockpiled in European warehouses, especially by OEMs, she assessed, noting that the shortage of semiconductors in their supply chains is not a major problem. Topolcsik is optimistic about this year, and believes that if new orders come in, they will be able to expand their 155,000 square metre production hall in Tatabánya.

Ferenc Zoltán Szente, Managing Director of Rehau- Automotive Ltd., said that their Győr-based plant had been built in 2013, while the latest one had been inaugurated about two months ago in Újhartyán, which is a highly equipped plant with advanced painting technology. The last two years did not make ramping up production at the factory easier. 2021 started well, although they are dependent on OEMs as suppliers. In the middle of last year, the OEMs' semiconductor shortages did affect them, which forced Rehau to scale back production. The last quarter of last year gave cause for hope even though it was clear that the semiconductor problem would not be solved. This year also kicked off well, and they were upbeat abou 2022 right until Russia attacked Ukraine. The CEO is more worried about energy, and not so much about its price rather than about the security of supply, as the painting technology cannot work without gas.

Cover photo: Portfolio/Ákos Stiller