Car prices to see new increase when Egyptian pound is floated or devalued: GB Auto

Fluctuations in exchange rates have pushed tyre manufacturers to monitor situation before concluding partnership to establish the factory

The director of corporate finance in GB Auto, Menna Sadek, said that car prices are expected to see a new wave of increases when the Central Bank of Egypt (CBE) decides to devalue or float the Egyptian pound. She added that the current rapid increase in car prices is not a preemptive decision by companies to absorb the CBE's expected decision about the exchange rate.
She also stated that GB Auto, as an automotive manufacturer and distributor in the local market, had to increase prices in the past few days due to the significant jump in the US dollar's price in the unofficial market, which has led to an increase in the cost of operations.
Sadek added that GB Auto has short- and long-term commitments in US dollars and that it imports the cars' components that are assembled locally, as well as the cars that are fully manufactured abroad in foreign currencies. Hence, it is normal that the cars' selling prices reflect new increases.
She mentioned that demand has maintained its level in spite of the price increase, which shows a transition in the doctrine of buying cars from being just a retail good to an asset, like real estate, used in maintaining the savings' value.
Sadek explained that the company's sales size this year will be close or slightly higher than last year, and that the company's market share is seeing a remarkable increase in the local automotive market. According to the most recent statistics announced by the Automotive Marketing Information Council (AMIC), the company's market share increased to 40%, compared to 26% previously.
She added that the sales of most automotive companies in Egypt have retreated due to fluctuations in the exchange rates, which has led to a lack of liquidity to buy US dollars in the companies and hence, they are facing challenges in maintaining operation rates. GB Auto has curbed this situation since the crisis started through directing all its liquidity to push operations forward.
Sadek said that GB Auto's sales in the external markets are currently not at their best, in spite of the slight improvement in the Iraqi market. There are difficulties in Algeria because the government there imposed a quota specifying the imports of every agent, due to the US dollar crisis.
She continued by saying that the company still has a low stock of cars in Libya which it is trying to sell, while tyre sales in Jordan remain steady.
With regard to the company's expansion plan, Sadek stated that GB Auto has not yet reached a partnership agreement with any foreign partner to provide the know-how of manufacturing tyres, although it was close to taking this step recently. However, the economic fluctuations and the sharp changes in the exchange rate push international companies to slow down before taking that decision.
She also noted that a know-how agreement was signed with the Indian Bajaj company for the tuk tuks and motorbikes factory. They are currently working on obtaining the licences for the factory land, as well as conducting the designs and producing some components in Egypt, in preparation for the establishment operations.
As for the agreement GB Auto signed with Careem, Sadek said that GB Auto is increasing the rate of use of Careem's cars, which reflects the increase in the sales of cars of which Careem contracts with. That is why GB Auto decided to conclude a partnership stipulating to grant offers to those who buy cars in order to work for Careem.
She added that GB Auto follows the policy of giving offers to distributers who register good sales rates.