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2016 was the worst year for auto market: Ezz Elarab general manager - Daily News Egypt

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2016 was the worst year for auto market: Ezz Elarab general manager

Ezz Elarab’s sales fell by 40%

Ezz Elarab Automotive Group is considered one of major companies operating in the Egyptian market and has many global brands, even though the company’s performance in the market raises controversy. Some rumours have been circulated recently, claiming that the company intends to exit from the Egyptian market and sell all its commercial agencies.

Daily News Egypt held an interview with Bassem Ashmawy, general manager of Ezz Elarab, in which he replied to all the rumours about the company and revealed their new plans for the Egyptian automotive market.

Ezz Elarab is one of the major companies operating in the Egyptian market. What are the company’s agencies?

Ezz Elarab has the largest number of global commercial agencies in the Egyptian market, including Citroen, Volvo, Proton, Chrysler, Jeep, Dodge, Aston Martin, and Peugeot, as well as Kawasaki Motorcycles. The company also has a partnership deal with the Bavarian Auto Group to distribute its BMWs and MINIs in Egypt. In addition, we plan to launch new products soon.

How did you see the company’s performance during 2016?

Last year was the worst for the automotive sector within the last 30 years—incomparable with all challenges, whether global or local, experienced by the Egyptian market.

Does the recession that is seen in the market justify the decline in the company’s sales during 2016?

In fact, all the market’s indicators and sales declined collectively as a whole. Our company’s performance was not so good as well. The sales fell by 40% in 2016 compared to 2015, while the Egyptian market’s sales fell by more than 35%. It is a very serious indicator.

Nevertheless, we introduced new products and put a clear plan to revive sales again.

What are your expectations for the company’s performance in 2017?

We have developed a clear strategy in the automotive market based primarily on rational and careful dealing with different situations in the market. The unpromising beginning of the year has affected all economic sectors, including the automotive sector. However, the company’s readiness for bad situations makes us able to continue in the market regardless of any difficulties.

Does this mean that the company will stop offering new products and services this year?

Of course not. Ezz Elarab will offer many new cars of different models this year. For example, we will release new models of Citroen and Volvo for the first time in the local market, in line with their global launch. However, the company will be careful in its expansion in the market, as we will import a limited number of cars to avoid daily increase in car prices. Mainly, the company is keen about the customers’ interests and ensuring the best investments for them.

There are rumors that Ezz Elarab provides poor after-sales services. How do you see that?

This is not true. The problem is that some customers tend to send their cars to non-certified maintenance centers.

Ezz Elarab provides excellent services, and we were selected as the second best after-sales service provider by Citroen last week. The company provides regular training for its technical staff in accordance with the highest quality standards in cooperation with the parent company. All the employees in the maintenance and sale centre of Volvo receive training in Turkey and other countries, according to the parent company’s policy. It is the same case for all commercial agencies dealing with us.

There are other rumours that your clients will suffer heavy losses if they sold their cars. How do you see that?

Such cases are true only in the case where customers bought their cars from unauthorised distributors.

Ezz Elarab is the only company operating in Egypt that offers to buy its customers’ used cars. The purchase contract shows some important points that determine the actual value of the vehicle based on the calculation of the car’s mileage in the first year until the end of the car’s warranty period. For example, Volvo provides a five-year warranty. Thus, the customer knows the value of their car when they wants to resell it for the company.

Is the company committed to this contract with all customers?

Of course. Ezz Elarab cannot abandon its agreements and risk its reputation for any reason. However, the company made some adjustments as a result of certain economic conditions experienced by the country. For example, after the liberation of the exchange rate, the prices of new and used cars increased significantly. Thus, the company changed its prices for customers to avoid heavy losses.

How do you see the recent economic reforms taken by the government and the Central Bank of Egypt (CBE), as well as their impact on the company?

We fully support the economic reform programme implemented by the government. Actually, we previously demanded that the CBE liberates the exchange rate. Such economic reforms normally cause a state of unbalance to the country. We expect that the current crisis will vanish by the end of this year.

How did the company face the economic challenges represented in the shortage of dollars in banks?

Our situation was not different than other companies operating in the Egyptian market, with some changes in terms of internal policies. Rational import and careful study of expansions contributed to our company’s steadiness amid difficult circumstances. Honestly, we sometimes resorted to securing our needs of foreign exchange from the informal market, as to meet the needs of customers—especially car spare parts. The company has not imported large quantities of cars for the purpose of only selling them, but also for after-sales services.

Do you think the market will witness significant changes in the coming period, in light of current low sales rate?

The current period will not be suitable for unqualified companies. The Egyptian market is going through a very difficult phase, which requires extensive experience and adequate financial capabilities. I expect that the coming period will witness the exit of unqualified traders and companies from the market. The automotive sector will experience a “filtration stage” before reaching stability.

Does the company intend to increase its investments this year?

Ezz Elarab always offers new car models or opens service centres every year. For the current year, we seek to complete the restructuring of many service centres and showrooms. We have already begun the development of the Abu Rawash centre to fit all the company’s products. We will also complete the development of after-sales service centres and showrooms in Alexandria soon. In addition, Ezz Elarab will open a new branch by end of the year in Smart Village.

Does the company plan to release new cars this year?

Ezz Elarab will release new Volvo models in the local market, but I cannot disclose them now. We will also announce obtaining the agency of Citroen DS, which offers fashionable Citroen products, in addition to SUV cars which succeeded in the Egyptian market.

We have more surprises from Proton for our customers over the next two years.

How do you see the new automotive strategy? Does the company participate in the debates over the strategy in parliament?

We follow up on the development of the new automotive draft law, and the company’s director general participates in the parliamentary discussions. We believe it is a good project in general, but we require the legislators to take into account the interests of importing companies.

Did you agree with parent companies to use production supplies from Egypt in the case of applying the strategy?

We already prepared many scenarios to deal with this situation, most notably with Peugeot and Citroen, whose officials visited Egypt recently. They have shown great interest in the Egyptian market and visited many local factories. They also agreed to import some production supplies from Egypt. We also contacted Proton, which expressed its willingness to cooperate with us in this regard.

There are rumours in the market that the company intends to sell all its products and exit the market?

This rumour has been circulating in the market for 10 years. This is not true, and we will continue our work in Egypt, as well as expand our activities.

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