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visibility as to when this will be resolved. GB Auto will
continue to prioritize a lean and efficient cost base, formu-
lating pricing policies that will take judicious advantage of
its pricing power to preserve margins for as long as possible.
Downside risk could be mitigated by any move to prioritize
foreign exchange for CKD kits as opposed to CBU units,
given GB Auto’s position as a leading domestic assembler.
Furthermore, the market still awaits the finalization of the
Automotive Directive, which aims to benefit local assem-
blers and will be a game changer for our margins.
On the Commercial Vehicles and Construction Equipment
line of business, management does not expect significant
growth of the tourism market until 2016. However, given
the ongoing investment in infrastructure and renewed
economic activity – such as the recent overhaul in public
transport that saw the government purchase more than 400
new city buses – divisions in this key line of business are
expected to continue their current growth trends for so
long as state spending on infrastructure (including urban
transport fleets) continues. As part of GB Auto’s ongoing
drive for investment, the company intends to launch a pre-
owned construction and heavy-truck distribution venture
in the first half of 2016, propelled by the success of our
pre-owned Passenger Car operation.
In-line with management expectations, GB Auto’s After-
Sales division performed well in 2015, boosting the con-
tribution of the Passenger Cars, Motorcycles and Three-
Wheelers, and Commercial Vehicles and Construction
Equipment opertions to the company’s overall profits. It is
considered likely that After-Sales will turn in a particularly
strong performance in 2016, especially as the company rolls
out new outlets in key, underserved geographic locations.
Since the beginning of the year, we had shifted payment
terms for our Tire business to an all-cash system. While this
initially pressured our sales levels during the first quarter of
the year, sales began to pick up again in the second quarter.
In the second half of the year, however, issues with FX al-
location began challenging the LOB once more.
Meanwhile, our Financing business delivered strong per-
formance throughout the year andmanagement expects this
line of business to continue this trend, especially with com-
pany’s fifth financing venture, Tasaheel, posting promising
results during its first months in operation. Turning our
attention to the wider region, GB Auto continues to view
measured risk as worthwhile and remains an investor in
long-term growth, not immediate payoffs. Our operations in
Algeria and Iraq should be viewed through that lens.
GB Auto is convinced of the long-term potential of the Al-
gerin market and has worked to align with Geely to get the
right models at the right prices, set up an excellent man-
agement team, and establish an effective dealer network.
Furthermore, our representations in tires are very warmly
received in Algeria. Going forward, management remains
watchful of opportunities to deliver a product offering spe-
cifically tailored to the Algerian market.
The Iraqi market, as expected and discussed in previous
earnings releases, began 2015 on a challenging note as a
result of political and security developments. Although it
remains possible that turmoil will remain a feature of the
Iraqi market for some time to come, private-sector actors
who stay the course throughout the headwinds will be those
ideally placed to capture the upswing when the market
begins to improve. Furthermore, management continues to
pursue a capital-light approach to in-market expansion that
has already seen it roll out its motorcycle and three-wheeler
offerings in Iraq, with the latter capturing the attention of
Iraqi consumers and achieving promising results.
In Libya, the challenging security situation is seeing GB
Auto liquidate its stocks as it prepares to exit the market. All
inventory currently still in Libya remains insured.
Finally, we note that guidance going forward remains sub-
ject to change in light of changing regional geopolitical and
macroeconomic conditions as well as the ongoing foreign
exchange challenge in Egypt.
11 | GB Auto |
2015