Today I will regale you with the story of the planned bus purchase by the Budapest Közlekedési Vállalat (BKV), owned by the City of Budapest. One hundred and fifty extra buses must be in service by November, when the long postponed but urgently needed reconstruction of the M3 metro line will begin. Those who are unfamiliar with the way business is done in Hungary will undoubtedly think that the purchase of buses doesn’t merit a whole post. But, as we all know, nothing is so simple in Hungary, especially with Viktor Orbán as prime minister.
By now all Hungarian municipalities, including the capital, have been stripped of most of their assets. They have lost their schools and hospitals, and they receive less and less money from the central budget. They are unable to apply for a loan without government approval. Even the Hungarian government, however, realized that the M3 line was in such a state that a tragedy could easily occur at any time, and therefore, as a necessary adjunct to the line’s reconstruction, it agreed to guarantee the loan necessary to purchase buses to carry the displaced metro traffic. And yet, from day one, the hands of Mayor István Tarlós and the members of the city council were tied. The government stipulated that only 75 buses could be in “ready-to-run” condition. The other 75 would be delivered in a half-finished state, and the purchaser would have to finish their assembly. IKEA buses, I guess. The government’s insistence on two different providers, one of whom would by default be a specific Hungarian company, I’m sure raised the Budapest city council’s hackles.
Nonetheless, following government orders, in 2015 the city asked for tenders for two different kinds of buses. For the “ready-to-run” kind, they received four bids. The winning bid came from the Polish company Solaris Bus and Coach S.A. The company, which was established 20 years ago, produces about 1,000-1,200 buses a year. In the other category, there was only one company that turned in a bid, the Hungarian MABI-BUS Kft. which is known primarily for its development of an electric bus called Modulo. The Polish “ready-to-run” Solaris cost €277,000 while the one that still required assembly cost €278,800.
According to the company’s website, so far only 63 complete buses have been manufactured, which have been purchased by Hungarian cities. Most of the company’s work has focused on making bodies for buses, which were sold to the United States. According to MABI-BUS’s very modest website, buses with their bodies can be found in several American cities, including Los Angeles, Washington, and Boston.
MABI-BUS has a history of being favored and unfairly rewarded by the government. Until recently, the head of the company was involved exclusively in the field of information technology. In 2010, however, he decided to build trolley buses. In 2011 the company received a grant to develop an electric bus. The government decided that it would prefer electric buses to streetcars in the key tourist district of Budapest. BKV also wanted to buy 20 electric buses and accepted a bid from Siemens-Rampini, the company that supplied Vienna. The city, however, couldn’t finalize its contract with Siemens-Rampini because government approval came too late. Most likely intentionally. In a second round of bidding MABI-BUS got the job, although it was the Chinese BYD, the best known electric bus manufacturer, that won the tender.
A few days ago it was time for the maiden run of the Modulo electric buses, but “the premier wasn’t exactly a success.” After three hours Modulo ran out of juice. Moreover, the bodies of the buses are too wide for the Castle District, where they are to be used. They are unable to turn around at the end of their run. A little earlier, while on a trial run, a bus lost one of its wheels, injuring a passerby. These electric buses cost €560,000 each.
The 150 buses the city of Budapest now needs are ordinary gasoline-powered buses. Given the gap between the Solaris and MABI-BUS bids (taking into account the cost of making MABI-BUS’s vehicles whole and usable) and the latter’s lack of experience in manufacturing gasoline-powered buses, the city council decided to simply ignore the dictate from the government and buy all 150 buses from Solaris, especially since delivery was guaranteed by the time the work begins on M3. As you can well imagine, the Orbán government was anything but happy with the city council’s “disobedience.” After all, the government had made it crystal clear which company it prefers. So, a week ago, the government reduced the size of the guaranteed loan. Suddenly there wasn’t enough money to buy 150 buses.
And what was the response from Budapest? As of three days ago, Tarlós claimed that in this case the city will buy only 110 buses and the rest will come from other routes. Tarlós in his blunt manner, in an interview on HírTV, said that he understands the decision to opt for the Hungarian-made buses because of national interest, but “at the moment there is no such thing as the manufacturing of buses in Hungary.”
Of course, this cannot be the end of the story because Viktor Orbán has to have the last word on every issue. On Wednesday, during a recess of the cabinet meeting, Zoltán Kovács, government spokesman, told MTI that the cabinet had decided “on a three-year strategy of bus manufacturing which would ensure the competitiveness of Hungary in the extremely intense international competition.” He added that already during the negotiations concerning the purchase of the Budapest buses the government asked the city to keep in mind national economic interests. Perhaps the best reaction to the announcement was portfolio.hu’s sarcastic headline: “The long-awaited national bus manufacturing is coming.”
Another most likely economically disastrous decision was made just because Viktor Orbán would like to help a Hungarian oligarch. The manufacture of buses is indeed a very competitive business. It is true that during the Kádár regime Ikarus did well, but then the Hungarian company had a ready market in the Soviet bloc and in some of the less developed countries. Once that market was opened to international competition, Ikarus’s sales collapsed. To develop a competitive international bus manufacturing business from scratch doesn’t seem promising. The six largest producers of buses in unit terms — Zhengzhou Yutong Bus (China), Daimler (Germany), Xiamen King Long Motor (China), Volkswagen (Germany), Marcopolo (Brazil), and Toyota (Japan) — accounted for two-fifths of all sales worldwide in 2013. There are more than a hundred larger and smaller manufacturers of buses. I highly doubt that serious feasibility studies have been undertaken, but MABI-BUS has already received grants worth billions of forints for the design and manufacture of its buses.
Of course, foisting the largely untried products of this company on Budapest is an absolutely foolish economic decision, but it seems that such considerations are immaterial to the Orbán government. I guess promoting MABI-BUS by all means possible, even those bordering on the illegal, is part and parcel of this regime’s unorthodox methods of running, and ruining, the country’s economy.