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When I look back at 2015, I see a year that was wrought
with both challenges and opportunity for GB Auto. From
the very start, we found ourselves faced with several ob-
stacles, including a challenging macroeconomic backdrop
across our footprint, a currency crisis in our home market
of Egypt, and increasing security risks and political unrest
in our regional expansion markets.
But GB Auto is no stranger to challenges. Drawing on past
experience, which most importantly taught us to always
keep one eye on the future, we leveraged our deep knowl-
edge and diversification strategy not only to survive, but to
thrive amid adversity. Our results in 2015 are a testament to
the effectiveness of the strategy we began implementing in
2011: creating shareholder value by deriving a larger part
of our revenues outside of Egypt (our core market) and Pas-
senger Cars (our core product line). It is this diversification
drive that is shielding us today from economic and geopo-
litical conditions that are beyond our control.
Softening demand due to political unrest in Iraq and an
uncertain regulatory climate in Algeria took a toll on our
Passenger Car sales, as did the shortage of foreign currency
in Egypt, which imposed new constraints on the supply
side even as demand remained robust. Nevertheless, we
continued to invest in the growth of our business and our
product portfolio: 2015 saw us sign an agreement with
Aboul Fotouh (AF) Automotive and China’s Chery Inter-
national to become the sole authorized distributor of these
vehicles in Egypt. In 2016, GB Auto entered the market
with five CKD models compared to only two last year. We
remain watchful for a legislative package that has come to
be known as the “Automotive Directive” that would work
to protect the domestic assembly industry from unfair
import-based competition.
Meanwhile, difficulties sourcing foreign currency in our
home market affected our inventory levels and our ability
to meet market demand for some of our products, especially
on the Passenger Cars and Tires fronts. The Tires division
was hit hardest by the FX blow but started showing signs of
recovery toward the end of the year as we also began fine-
tuning our overall go-to market approach through activities
aimed at increasing market share and lifting profitability,
such as expanding the range of products we offer and shifting
payment terms to an all-cash system. Our plans to launch a
tire-manufacturing facility in the region are also underway
— a step that should allow us to lock-in supplies of products
appropriate for our domestic market, while also catering to
strong demand in the GCC and other MENAmarkets.
Our Motorcycle and Three-Wheelers line of business con-
tinued on a solid growth track, nearly doubling its revenues
from the year before. In 2015, we had decided to commence
sales of the popular Bajaj three-wheelers in Iraq, and opened
up a small service center and spare parts outlet in Baghdad.
The success of the launch prompted us to begin operations
at a second service center in Al Najaf, which also includes a
showroom.
Our current facilities in Egypt are considered the first motor-
ized assembly line of production for Bajaj three-wheelers out-
side of India. The company has finalized technical agreements
and will begin building new component manufacturing hang-
ers to install new painting and welding shops with consider-
able localization of both components and processes. Proceeds
from the capital increase through rights issue finalized inMay
2015will be used to finance this expansion.
The Egyptian government’s emphasis on infrastructure
development in 2015 drove growth in our Commercial
Message
from the CEO
2 | GB Auto |
2015
Message from the CEO