By Ahmed Amer and Ahmed Farahat
Al-Mustafa Abdul Halim, Hyundai Franchise Director and Executive Vice President of Ghabbour Auto (GB Auto), the agent of Hyundai, Geely, and Mazda in Egypt, was interviewed by Daily News Egypt.
Hyundai spoke about surprises for the Egyptian automotive market by the end of this year; what are these surprises?
GB Auto targets offering three new cars in the next period: two SUV cars in the second half of the current year and a locally-manufactured Elantra by the beginning of next year.
What is your sales target for these cars during the next year?
For the two cars, we target selling 750-800 cars monthly, while the target of Elnatra is 800-1,000 cars monthly. I assure that the car will be offered in a good price to be suitable for a wide category in the Egyptian market.
We will begin to manufacture the Elantra; we coordinate with Hyundai over the manufacturing steps to benefit from its technology.
How do you evaluate sales of Verna, and what is its target?
Hyundai Verna was able to acquire 30% of the market share for locally manufactured cars during this year; GB aims to maintain this percentage by the end of 2015.
The General Authority of Government Services issued a tender to provide a number of cars for the public bodies during the last period. GB earned the right to supply Verna cars, which are fuelled by natural gas, and meet the required standards. It was agreed that GB would provide Verna cars until the end of 2016. The company has cooperated with both Cargas and Cartech to convert the cars to run on natural gas.
The company was able to provide 300 guaranteed cars for the governmental bodies; the provided cars have high safety standards and reduce gas consumption.
What about expansion in after-sales services?
The company intends to pump investments to add new service centres. It intends to open two new centres in Suez and Damietta after Ramadan, in addition to a third centre, S3, in Alexandria by the end of the year.
Moreover, the company targets opening new centres in Aswan and Luxor, and an S3 centre in Mansoura. It also plans to establish centres in Minya and Marsa Matrouh, after recently purchasing new land there.
What are your views on the automotive market under the Egyptian-EU Association Agreement?
The agreement entrenches the policy of giving European products control over the Egyptian market against the rest of the products, which will hinder the possibilities of manufacturing in Egypt.
How does GB Auto face the impact of this agreement on local manufacturing?
The company has settled a plan for developing the automotive industry in its factories over the next five years. It is expected that the Egyptian government will support the local industry very soon to protect it from monopolisation of the market by the European product.
What do you think of the strategic proposals for developing the automotive industry currently presented to the ministry?
All countries of the world have accepted the reduction of customs by lifting sales tax or imposing an additional tax in return for exempting local manufacturers from the increase through mechanisms suitable for every market.
It is important to pay attention to the consumer when developing a strategy for the automotive sector. Customs reduction segments have been applied, but the consumer did not feel this reduction in the car prices, which benefits the international European companies rather than the consumer.
One of the defects in the current situation is that it is moving towards the European, Moroccan, and Turkish monopolisation of the Egyptian automotive sector. This will be at the expense of non-European cars; Korean, Japanese, Chinese, and American cars.
If the situation remains unchanged until 2019, it will completely destroy the local automotive industry, including the assembly industry and the automotive feeding industries relying on it. It will also result in a decrease in the state’s proceeds from customs and taxes, which are key items in the state budget. It will also lay off more than 400,000 workers.
Thus, the COMESA agreement should be applied to open new markets for the local products, as a means of protection, since the agreement is not activated sufficiently. The producers spoke to the government about the necessity of activating the COMESA agreement, but we have not seen any change in the agreement’s position.
What do you think about the new indicative prices for automotives?
The Ministry of Finance and the Customs Authority examine the prices of all imported cars in their country of production through commercial representation offices in Egyptian embassies abroad. This is to limit the phenomenon of forged invoices. However, these standard procedures will not limit this phenomenon because the parent company will not reveal its strategy with its agents in countries all over the world.
If we want to restrain the forging of invoices in all forms and know the real prices of imported cars, we should see how countries in the Gulf deal with the issues of customs on cars. The Gulf countries impose around 5% to 10% fees on cars, and the customs differences can be calculated.
Also, international companies always look to the Gulf and North Africa as one area, and give them similar benefits. The state should get the assistance of experts in the market to place proper controls on forging imported cars’ invoices.
What is your evaluation of the auto market’s sales this year?
I anticipate that this year the automotive sector will achieve similar sales to last year’s sales. The market witnessed a state of recession during the months of March, April, and May of 2015, and June is expected to witness a similar recession.
Is GB Auto considering investing in the Suez Canal Axis?
The company cares about the area of the new Suez Canal, and is considering pumping investments in the upcoming period.
What’s GB Auto’s stance regarding the establishment of a unified entity for the automotive sector?
The company does not mind joining a unified entity for the automotive sector, as long as it is under the government’s care and proper entities that deal with the Egyptian automotive sector, without giving priority to personal interests over the public interest.