Brilliance Bavarian Auto Group aims to implement an expansion plan, despite the 66% fall in sales in Egypt over the first seven months of 2016. Daily News Egypt conducted an interview with Khaled Saad, the company’s general manager in Egypt, to learn more about this plan.
How is Brilliance facing the sales decline in Egypt?
The decline in sales is solely due to the unavailability of the cars. This scarcity was caused by a series of problems, the most pertinent of which is the lack of US dollar resources. Therefore, we plan to assemble the cars locally in Egypt, which would boost sales again.
Will this happen before the end of the year, as was announced earlier?
We did intend to begin local assembly this year through the Bavarian Group factories in 6th of October City; however, the changing US dollar exchange rate against the Egyptian pound delayed the project. We are currently looking for a suitable land plot for the factory and service centres, as well as exhibitions, and plan to begin implementing our strategy in the first quarter of 2017.
This is part of our future plan to cope with variations and developments in the Egyptian market.
Can you elaborate on this plan? Also, what are the advantages of producing the cars locally?
Assembling cars locally will boost their availability in Egypt to match the rising number of purchase orders. Furthermore, this will reduce the phenomenon of overpricing where cars that are limited in the market for whatever reason are offered at higher prices than the original by dealers.
As for the company’s future plans, we plan to invest in a 70,000-80,000 sqm plot of land which will become Brilliance’s “investment castle”. It will include an assembly plant, service centres, and a sales exhibition.
We are more concerned about the stability of the US dollar price, regardless of the exchange rate. We are not an agent or a dealership, but rather a parent company branch in Egypt. As part of our plans to export to the Middle East and Africa through this office, we are also aiming to attract feeder industry suppliers from China to work in Egypt and use the country as a gate for the Middle East.
What is the timetable for the project?
We already have penned plans and studies—it is only the purchase of the land that is delaying us. We have addressed several government agencies to provide us with the land we need, hopefully within the Suez Canal Area Development Project.
The problem is the lack of vision for investment zones, and the lack of information on available land and pricing at a time when the government seeks to increase investments into the country. I do not know why available lands are not advertised with clear specifications and prices—it would render it easier for investors to make a decision.
How much is the investment value of the project?
We initially agreed with the parent company to invest $120m, of which 70% (or $84m) will be channelled to this project.
Which models will be assembled in Egypt?
We will begin with Brilliance V5, V4, H330, and H1. Work will follow the specifications set by the state and we have skilled Chinese partners to maintain operations to international standards.
Will local assembly bring the price of your cars down?
Probably only by 10-15% as the high price of heavily taxed local components will keep costs up. However, it will erode the greed of merchants and distributors.
What is the expected production size?
We shall begin with two production lines: one for passenger cars and another for microbuses. The first will produce 5,000 cars alone.
Why do you not impose control over distributors?
Brilliance deals directly with 20 trusted distributors, but there are at least 300 dealers who are hard to control. This is where the state is supposed to step up.
As part of the parent brand, why are you not provided with cars on long-term contracts until the US dollar shortage is over?
The parent company is not interested in export and support. The Chinese automotive market has moved 20,000 units of the V3 model alone, so why would they be concerned? In fact, along with hindrances to exporting and the US dollar shortage, the Egyptian automotive sector is seeing unprecedented tough times.