CAIRO: Thanks to millions of dollars of investment and a restructuring of its operations in Africa, General Motors has been able to cut costs and increase its market share in three years, explained Rajeev Chaba, managing director and chairman for General Motors’ North African operations.
Starting this month, GM has officially completed the restructuring of its operations in Africa, after having two different offices in Cairo, which created “redundancies” at the firm, Chaba told Daily News Egypt on the opening day of Formula Al Ahram 2011.
The 18th annual Cairo International Motor Show, Formula Al Ahram, will go on from January 12-16 and coincides with the fifth annual Egypt International Boat Show.
Currently, General Motors has divided African operations on the continent into two north and south components.
Chaba, who has been with the firm for 18 years and has been handling GM’s Egyptian operations for three years, is now also responsible for Algeria, Morocco, Tunisia, Libya and Mauritania.
Using Egypt as an operational hub, he added, GM will be able to capitalize on the number of free trade agreements that Egypt has signed with its North African neighbors, allowing the automaker to cut costs by avoiding trade tariffs.
With restructuring now complete, it will seek to build on its 27 percent of the market share in Egypt, where GM sells both Chevrolet and Opel.
In 2010, GM Egypt was able to produce 50,200 units as well as sell 68,000 units in total locally, both of which were record numbers, Chaba said.
From a 17 percent market share three years ago, the 10 percent jump is attributed to the relatively high number of products Chaba’s firm has rolled out on to the streets of Egypt: six new models in the past two years.
Additionally, GM has invested millions of dollars — LE 600 million over the past three years and is set to unleash a further LE 100 million in 2011 — in its Chevorlet brand as well as expanding in capacity and in training its workforce, which totals 1,300 in Egypt.
He pointed out that due to growing demand that has resulted from such aggressive activity, GM is short of land for manufacturing, and is looking to scoop up more.
Chaba said that GM’s local operations are performing so well that Chevorlet, one of GM’s top brands, will unveil three new models this year, which will likely debut in the third and fourth quarters of the 2011 fiscal year.
With a growing demand for passenger cars, which has exploded from a modest 60,000 units for Egypt in 2006 to 260,000 in 2008, GM predicts 2011 will surpass this threshold.
He noted that 2010 had been a strong year, with 250,000 units sold, but was lower than projected due to the global recession.
A report released in October 2010 by Synovate research firm concluded that Egyptian consumers have a preference for Japanese cars and that in the coming month, 15 percent would purchase a Kia, another 13 percent would choose a Hyundai, while only 8 percent would select a Chevrolet — as well as Toyota.
Being the market leader in terms of sales in Egypt, Chaba riposted that in spite of such findings, GM’s ability to deliver quality vehicles explains how his firm has propelled itself to the pole position within the local market.
He also believes that looking at GM strictly as an American brand is somewhat simplistic given that many of the components for its vehicles are produced in Asia.
Moreover, the firm recently purchased Daewoo’s Lanos model, a popular, affordable brand that can often be spotted on the roads around Egypt.
While Synovate’s study would seem to imply that such a strategy may have started to fall short given Egyptian consumers intent to buy largely Asian vehicles in 2011, the fact remains that GM has been witnessing a rapid growth in its market share, as Chaba underscored in this specific context.
Also, owing to the burgeoning middle class throughout much of the emerging market world, GM has for several years been shifting its strategy so as to capture this growing consumer market.
Already, as Chaba noted, GM boasts a 10 percent market share across all of Asia, the Middle East as well as in Africa, which was just 6 percent three years ago.
Chaba is confident that GM will consolidate its market position in Egypt looking ahead on the back of an already strong year in 2010, which saw car sales expand 26 percent for the overall market while GM surpassed the average, with a robust 32 percent increase in sales.