is chairman and managing director of General Motors Egypt since 2007, and recently his responsibilities grew to cover North African operations. Chaba joined General Motors India in 1995 as national marketing manager and handled various portfolios in different capacities including vice-president for marketing, sales and after-sales at GM India before moving to GM Japan as director of marketing. With almost two decades of experience in the automobile industry, Chaba has assumed senior positions in several countries within General Motors. He has been also elected Executive Committee member of the Society of Indian Automobile Manufacturers (SIAM) and Governing Board member of the Automotive Research Association of India (ARAI) for two terms. Chaba spoke to Nesma Nowar about the prospects and challenges of the automotive industry in Egypt. How has the global crisis affected General Motors and the automotive industry in Egypt, especially given that General Motors Egypt (GME) was not hit as hard by the crisis as GM worldwide? The crisis hit Egypt in late 2008; in the meantime the overall industry hit the record of selling 260,000 units. But after the crisis struck towards the end of 2008, there was a crash in 2009 and industry sales dropped to 205,000 units. However in 2010 the automotive industry recovered from 205,000 to 250,000 units. Still we did not cross the peak of 2008, but I expect we will in 2011. When industry sales went from 260,000 to 205,000, trade volume also came down, but our market share kept going up, which means that we did not do as badly as the rest of the competition did. Actually our market share has kept improving over the past three years. Despite the crisis our market share in 2010 has reached 27 per cent, whereas three years back it was 17 per cent, so it has grown by 10 per cent in the last three years. In 2010 we ended up selling 68,000 units which is an all-time high for us. What has happened was that when the crisis was happening, we kept investing in brands, new products, training of people and expanding the networks through Mansour. So we kept adding more service and sales outlets and we did not stop our investment. Indeed Egypt's whole economy has handled the crisis much better than most of the other markets because I think that the fundamentals of the economy are much better than the rest of the world. Moreover, the Egyptian government has helped in one way by producing the Taxi Programme, which primarily aims to help local manufactures change the taxis, so our Lanos, Hyundai Verna and some other players were helped by that programme. Our factories kept running and we kept producing more cars. There is an agreement between Egypt and the European Union, which implies that Egypt will reduce tariffs annually by 10 per cent on new automobiles imported from Europe as of this year, aiming at reaching zero per cent tariffs on imported European cars. How will this affect the local industry and manufacturers? This will definitely change the panorama because European cars may be coming here at zero per cent duty by the 2017-2018 timeframe, so every local manufacturer will have to think in a very smart way about how they are going be competitive. As for GM, we are planning to have much sourcing from Asia, where we can find products at the right price, which can compete with European cars even at a zero per cent duty. Actually most of our products are coming from Thailand, Korea and Japan, so I would guess that more sourcing should be done from China, India and Korea in the future in order to ensure a competitive cost. I also believe that the government should play a role here because it has to decide very clearly the long-term policy it wants for the country. Because if it decides that Egypt will be a zero per cent duty country, this means it will become like Dubai, where anyone can buy a car from anywhere in the world at zero per cent duty. In this scenario local manufacturers cannot survive because our volumes are low, while in an economy of scale, size will not permit having a competitive product cost. I think that the government and the industry should work together to decide what is best for this country. The manufacturer needs to get smart regarding the cost, making it very competitive, and the government should work on expanding the industry so the size grows big either locally or through exports, and so that our cost becomes more competitive. What are the prospects and challenges of the automotive industry in Egypt? The main challenges are the government policies. We need to have the right government policies for the viability and the expansion of the market here. Egypt is a country of 80 million and we have to take care of the employment of the people so local industry and manufacturing will help create more jobs. In addition, when we are producing the cars, we buy many components locally and much employment gets created by our industry as every car that is being produced and sold creates 10 jobs. Moreover the automotive industry contributes two per cent to this country's GDP. So our industry has huge linkages with the economy of the country, so we need the right government policies that give some support to local manufacturing. Other issues obviously include that the government has to think of the customer's interest. We need to have the right standards for the vehicles so that the consumer can be assured of the right quality, and so that no manufacturer can deliver a bad quality product. From that perspective the government is adding many specifications and we support this, but we need to make sure that these specifications come at a cost which is affordable for the customer. There are other challenges related to infrastructure, we need to invest in this area. Governments all over the world spend money on roads and ports. Personal mobility in Egypt is primarily focussed on cars because other local transportation systems are not very encouraging. However, the automotive industry in Egypt has great potential because the fundamentals of the economy are strong and the government is trying to promote more reforms and liberalisation, which is creating more consumption and more purchases.
