By Mohamed Ahmed
GB Auto has announced a four-part plan to deal with the foreign currency shortage and its impact on fair competition with imported vehicles.
The plan’s first element concerns flexibility in pricing of products to maintain margins of profit as long as possible, as well as taking precautions against any unexpected developments or risks.
According to GB Auto CEO Raouf Ghabbour, the second element is to control general and administrative expenses and support the working capital.
He explained in a financial report that GB Auto’s long-term plan – the third element – will focus on establishing manufacturing operations for products such as tyres, motorbikes and tuk-tuks.
The fourth element is to continue seeking legislation that protects the automotive industry in Egypt against unfair competition in other markets. This legislation is considered a major factor in determining the profit margin for car-assembly operations at the company.
He expressed his trust in the government’s policy of giving preferential tax rates for locally assembled cars, linked to the increase in the use of local components in manufacture.
The Cabinet studied the proposed Car Industry Law and they are optimistic that the suggestion will be submitted to President Abdel Fattah Al-Sisi soon.
Ghabbour said the company had made huge investments over the past few years to support assembly operations, with the first fully-automatic painting centre in the Middle East established. It also conducted deals with a number of companies manufacturing internal car parts.
The presence of legislation to support car assembly will allow Egyptian companies to move firmly in the direction of exporting vehicles, which the company does now with GB Polo buses.
Ghabbour said the company is looking forward to offering the second model of Hyundai Elantra, which will be assembled locally from the beginning of 2016, as well as three models by Hyundai, which will be externally assembled, at a later date. This will take place when the foreign exchange situation makes the necessary cash available for export.
In another context, Ghabbour said negotiations to acquire a company in accordance with the free-zone system in Port Said reflected a desire to increase the sales channels for the company’s products. However, negotiations have just begun and a final decision will be expected by the end of the year.
GB Auto achieved a net profit of EGP 102.6m in the third quarter of 2015, 89.9% more than the third quarter of last year.