beyondbrics

Egypt may be lurching towards a much-needed IMF loan, but that hasn’t put off some foreign partners. GB Auto, the Cairo-listed auto assembler, will begin putting together and distributing cars from China’s Geely in the second quarter of 2012.

GB will assemble the cars from kits supplied by Geely (the Hangzhou-based carmaker that bought Volvo in a $1.5bn deal in 2010), and will distribute the finished product in markets across North Africa, beginning with Egypt. The deal is “one of several partnerships we will announce this year,” said GB’s chairman, Raouf Ghabbour, in a statement.

GB controls 32 per cent of the Egyptian passenger car market, where it rose to success as the exclusive local assembler, importer and distributor of cars from South Korea’s Hyundai. It is now the the Middle East’s largest car assembler. High tarriffs on fully-assembled imported cars have encouraged a number of international auto brands, including BMW and China’s Chery, to have their vehicles put together in Egypt.

For Geely, the Egyptian deal is another step in efforts to push its products out across the world, after announcing last year that it would set up a production hub in Indonesia to target the fast-growing Southeast Asian market. The company plans on selling at least one model in the UK by the end of 2012.

While 2011 was a tough year for car sales (and pretty much everything else) in Egypt, the vehicle market is still a good prospect as a large and overwhelmingly young population fuel long-term economic growth. GB says there are about 30 cars per 1,000 people in Egypt, compared to 128 in China and 109 in Algeria.

GB also does a healthy side business as a local importer and distributor of three-wheel tuk-tuks, or autorickshaws, made by India’s Bajaj group. Tuk-tuk sales broke records in the first three quarters of 2011 (fourth quarter results are not yet available), and accounted for about 12 per cent of the company’s total sales. The company says the tuk-tuk’s popularity in Egypt’s rural hinterland and informal urban slums made it largely immune to a slowdown in the passenger car industry.

And if long-mooted reforms of Egypt’s bloated subsidy regime lead to higher fuel prices, expect tuk-tuks, powered by something barely larger than a lawnmower engine, to become increasingly attractive for urban transport.