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Tires
GB Auto has been among Egypt’s leading tire distributors
for more than 50 years. The company distributes Passenger
Car, van, bus, construction equipment, light-truck, truck, and
bus-truck tires frommanufacturers including Turkey’s Lassa,
Japan’s Yokohama, China’s Westlake, Triangle, Diamond-
back, Double Coin, Grandstone, and Goodyear.
This business unit also has an established regional presence,
with operations covering Iraq, Algeria, and Jordan. Efforts are
ongoing to round out the company’s product offerings, with
more important representations set to come on stream soon.
Despite difficulties faced towards the end of 2015 due to
a foreign currency crunch in Egypt, the Tires business
unit remains an increasingly important contributor to
GB Auto’s revenue and profitability stream, through both
increased sales volume and sustained foreign currency
sales in an environment of devaluation in the company’s
home market of Egypt.
Going forward, GB Auto intends to begin manufacturing
tires, which should allow the company to lock-in supplies
to meet domestic demand and regional demand, especially
in the GCC area, where c.99% of tires sold are imported.
2015 Business Review
2015 was an especially challenging year for GB Auto’s Tires
line of business, as revenues and profitability suffered from
the severe foreign currency shortage in Egypt as well as the
challenging geopolitical conditions in the region. Total sales
revenues dipped 21.9% y-o-y while gross profit decreased
by 43.4% over the same period.
During the second and third quarters of 2015, the company
incurred hefty demurrage charges related to delays in FX
allocation, which – coupled with the liquidation of slow-
moving inventory – adversely affected the Tires business’
top line and margins. Additionally, at the start of the year,
GB Auto had made a strategic and far-sighted decision to
shift payment terms to an all-cash system, which initially
also pressured sales levels. Management, however, expects
this decision to begin bearing fruit as economic conditions,
and in turn demand, begin to gradually improve.
GB Auto is also fine-tuning its overall go-to market ap-
proach through a number of activities aimed at increasing
market share and lifting profitability across the region and
starting 2016 on a more solid footing. Among these efforts
are, 1) the optimization of our brand portfolio to cover
new profitable segments (Double Coin for trucks and light
trucks, OTR tires in Egypt, Avon tires for Passenger Cars
and SUVs in Jordan and Iraq as well as Primo for Agri-tires
in Egypt.); 2) Consolidating our position in the Passenger
Car retail channels to improve the distributed volumes
and cement our position in direct sales to heavy truck
fleets and; 3) Shifting our payment terms to an all-cash
system for 80% of our Egyptian tire business and the re-
organization of our sales force to achieve a more effective
coverage of key areas in Egypt and Algeria.
The company has confirmed its short-term plans to launch
a tire manufacturing facility in the region to lock-in supplies
of products appropriate to its markets while also catering to a
strong local demand in the GCC and MENA regions. Negotia-
tions are ongoing with technology partners to grant the most
suitable product portfolio and competitive cost structure for
the project. Overall required capacity will be above 100,000
tons, in line with our cost competitive strategy.
Tires Revenues by Year
(LE million)
163.4
290.1
390.4
324.4
415.2
111.7
2010 2011 2012 2013
2015
2014
26 | GB Auto |
2015
Our Business Units and Brands