Egypt's GB Auto will sell vehicles in Iraq

Cairo : Egypt-based GB Auto yesterday said it had established an $80 million (Dh293 million) joint venture to distribute Hyundai vehicles in Iraq, opening up a new market for Egypt's biggest passenger car assembler.

GB Auto, which manufactures, assembles, imports and distributes vehicles for Hyundai, Bajaj, Mitsubishi, and Volvo said it was partnering with Iraqi Al Kasid Group of Companies and estimated total sales to reach around 36,000 vehicles within a year of operations in Iraq.

"Together, we will import and distribute a wide range of Hyundai vehicles and spare parts and build Iraq's leading after-sales service franchise," chief executive Raouf Ghabbour said.

The company estimated the passenger car market in Iraq at 120,000-150,000 units per year.

Survival strategy

Beltone Financial analyst Menatalla Sadek said: "The Iraqi market, despite the political instability, could sustain significant Hyundai sales".

Tie-ups between carmakers are being advanced as a survival strategy to cope during the downturn.

On January 14, GB Auto said it had an exclusive agreement to import and sell Mazda-branded vehicles in Egypt.

Last month, GB Auto's shareholders have approved issuing five-year bonds worth 1 billion Egyptian pounds (Dh667 million) to fund new service centres in Egypt and regional expansion.

GB Auto, Egypt's biggest listed automobile assembler, had said it aimed to increase its share of Egypt's passenger car market to around 30 per cent from 27 per cent now.

The firm operates six after-sales service centres in Egypt and plans to have 25 by the end of 2012, Investor Relations Director Bassem Al Shawy told Reuters yesterday.

New service centres

"At least 600 million Egyptian pounds will be earmarked to fund new after-sales service centres in Egypt," said Shawy. "

The remaining 400 million could be allocated for future expansions or acquisitions."

GB Auto manufactures, assembles, imports and distributes vehicles for Hyundai, Volvo, Mitsubishi and Bajaj.

The firm posted a 64 per cent drop in net income to 63.9 million Egyptian pounds for the third quarter of 2009 but said it saw an upturn in the car market.

GB Auto said in October it would form a subsidiary to help buyers purchase Bajaj vehicles on credit, a move that would help it expand sales in lower income groups.