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GB Auto agrees to manufacture motorbikes and tuk-tuks with Bajaj Auto - Daily News Egypt

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GB Auto agrees to manufacture motorbikes and tuk-tuks with Bajaj Auto

The company relocated its Iraqi team to Cairo to reduce fixed expenses until conditions in the Iraqi market improve


GB Auto agreed to collaborate with Indian company Bajaj Auto to establish a factory for motorbikes and tuk-tuks in the local market, including the manufacture and assembly of auto-rickshaws and its Boxer 1500 model to meet the demand on these products in the Egyptian market, an official source at GB Auto told Daily News Egypt.

The source explained that the agreement gives GB Auto the right to obtain engineering data for manufacturing tuk-tuks and motorcycles. Establishing the factory was decided to coincide with the purchase of the manufacturing and painting equipment.

In the first quarter (Q1) of 2016, the motorbikes and tuk-tuks sector registered revenue of EGP 457m, a 6.5% decline compared to the same period of 2015. This is a result of a decline in inventory caused by the lack of foreign currency needed to import motorcycles and tuk-tuks.

GB Auto is still negotiating with international companies to participate in the knowhow aspect of establishing a tyre factory to meet the demand of the local market as well as other markets in the region.

The tyres sector at GB Auto registered sales of EGP 109.6m in Q1 2016, compared to EGP 82.4m in the same quarter of last year, a growth of 32.9%.

The company is in the process of obtaining a piece of land in the Suez Canal Economic Zone to establish a factory for motorbikes and tuk-tuks at a cost of $60m and a factory for the manufacture of tyres with $600m. The company will contribute 51% for the tyre factory.

In another context, the source pointed out that GB Auto relocated its Iraqi team to Egypt in order to reduce the fixed expenses until conditions improve in the Iraqi market, especially as the size of demand in the market has been negatively affected by the decline in oil prices and political instability.

Net profits of GB Auto declined by 45.1% in the first quarter of 2016, registering a profit of EGP 28.6m compared to EGP 52.1m during the same quarter of last year. Revenues declined by 8.6%, registering EGP 2.92bn.

This decline mainly comes as a result of the lack of dollar liquidity and the devaluation of the pound against the dollar.

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