CEO says rebound in demand leads country into a 'different world' after currency reforms sent inflation soaring
Egypt's biggest car firm GB Auto forecasts sales to double next year
Egypt’s biggest car distributor and assembler, Ghabbour Auto, expects automobile sales to double in 2019 compared to last year, amid a rebound in demand crippled after currency reforms sent inflation soaring.
The Cairo-based company, which also has operations in Iraq, Jordan and Algeria, expects automobile sales to surge by 25 per cent to 4,800 cars in September as it resumes distribution of China’s Geely vehicle this month, said GB Auto’s chairman and chief executive, Raouf Ghabbour.
That increase will help push up profits this quarter versus the last, especially as national car sales are seen climbing 40 per cent to 140,000 this year from 2017, and are expected to reach 180,000 in 2019, he said. With the upswing in demand, GB Auto is no longer “incurring losses on the models we sell”. In addition, the company is making money on the new models it sells and cutting its net debt levels.
“It’s a different world," Mr Ghabbour said.
Consumer demand in Egypt took a hard hit after the central bank floated the currency, raised interest rates and increased fuel prices in November 2016. The moves stabilised the economy and helped secure a $12 billion International Monetary Fund loan but saw the pound half in value and inflation soar to over 30 per cent before it began to ease again this year.
The measures left companies like GB Auto, which has distribution rights for Hyundai, Mazda, Cherry and Geely, as well as the two and three-wheelers of Indian manufacturer Bajaj and commercial vehicles, struggling.
The company posted losses in 2016 and 2017 for the first time since it went public in 2007, as it had to unload inventory at a discount. It returned to a profit in the first half of this year.
GB Auto plans to begin building a new factory in Ain Sokhna near the Suez Canal next year to manufacture two and three-wheelers with output set to begin in 2020, Ghabbour said. A big share of that production is earmarked for export, particularly to east Africa, he added.
Looking ahead, Mr Ghabbour said the company sees no impact to its operations as a result of a decision to revoke the duty on car imports from Europe that’s set to take effect in January. The company could consider securing the distribution rights of a European brand, he said.