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The leading automotive manufacturer/trader in Egypt with over 50 years of heritage covering local and export markets.
Products / Services
Passenger cars - light commercial vehicles trucks & trailers - buses - construction equipment - spare parts outlets service centers - and consumer credit.
Representation
Hyundai - Scania - Volvo - Mitsubishi - Mazda - Bosch - SKF - Brother - Sumitomo - Lassa - Apollo - Pharos.
 Strategy
 A word from the President
Half a century ago, the late brothers Kamal and Saddek Ghabbour had the foresight to envision the Egypt of today, a modern country with booming industry, increasingly modern infrastructure and a growing consumer base. Their desire to see their vision come true led them to establish one of thje very few truly private companies at the time, Ghabbour Brothers. This establishment has earned invaluable goodwill over the past fifty years in the automotive Industry thus preparing the ground for today's direction. From the early days, dedication to customer satisfaction and product quality was their main asset and today that legacy remains strong. Our efforts in fostering industry stem from our belief that industrialization is our country's surest path to development. We see ourselves as pioneers in this field. We have overcome many obstacles to reach our current position of leadership. Our Group's motto is "Highest quality at the most attractive prices". We strive to maintain our heritage and exceed expectations.
The Group's Vision & Mission
Our vision is to set an example for Egyptian private business by being the employer and partner of choice through securing a competitive position in the international business arena. The Ghabbour's mission statement is: "To contribute in raising the quality of life of the Egyptian society by offering quality products to our customers, job opportunities, improving labour skills, employing advanced technology and preserving the environment in the process". Thus our mission allows us to participate in building the Egypt of the 21st century. This spirit of vision and mission was born in 1948 from our primary goal of becoming a quality institution, for our customers, our employees, and the society in which we live.
INTRODUCTION TO THE GHABBOUR GROUP
GB automotive is the parent company of the Ghabbour Group of companies, developed over the last 50 years by two generations of one of Egypt's leading business families into the largest private sector automotive group in Egypt, with consolidated annual sales revenues of LE 1,271 million for 1998 and an expectation to reach LE 1,736 million in1999.
STRUCTURE
The Ghabbour Group now consists of 11 trading and manufacturing companies that encompass virtually all sectors of the Egyptian automotive market from small passenger cars to heavy trucks, luxury coaches and construction equipment sold through a country wide sales networks that is second to none. Its market offering includes complementary products and services including consumer credit, spare parts, tyres, and after sales service and repair.
The market leader in a number of sectors, especially in that of luxury tourist buses whose bodies it designs and manufactures. In 1998, it held 66% of this market, in face of open domestic and foreign competition. The Group is also market leader in the economy sector of the car market, with 20% share of the auto sales in 1998.
Franchising leading international brands in Egypt including Hyundai, Scania , Mazda, Volvo, Mitsubishi, Bosch, SKF, and Sumitomo.
A highly dynamic Group of companies to which 5 have been recently added that will carry the group into the 21st century as a regional leader in the automotive sector:
THE GROUP CONTINUES TO DIVERSIFY ITS MARKET RISK BY
Adding Mitsubishi to Hyundai and Mazda as a major offering to the market in cars and light commercial vehicles.
Adding Volvo and Mitsubishi to Scania as a major offering to the market in buses
Adding Volvo to Scania as a major offering to the market in heavy trucks
Entering the heavy construction equipment market with Volvo
Developing significant new products for the domestic city mass transit, labor and school bus market
Developing a large secondary market for vehicles with GB Trade in
Aggressively pursuing export markets for it buses, with initial success in exports to Saudi Arabia. The Group also plans to exploit its location in the international market, being at a focus point in the trade between Asia and the EU, and similarly strategically located for Africa and the Gulf, together with Egypt's bilateral trade agreements, to develop export markets for motor vehicles.
The Group possess strong management and clear vision, led by one of Egypt's leading entrepreneurs possessed of a recognized expertise in the automotive market and supported by a management team purposefully recruited from international corporations to drive the development and coordinated operations of the Group. To facilitate this the Group Implemented international standard policies and procedures, and installed a leading international MIS system.
GHABBOUR PROFILE
Subsidiary Companies
The subsidiaries of GB Automotive are engaged in
Manufacturing
Assembling
Importing
Distributing
a broad range of products for the automotive market, viz motor cars, minibuses, buses, heavy trucks, trucks, tippers, and trailers, light commercial vehicles, heavy construction equipment, spare parts and tyres, and after sales maintenance and trade- in services.
GHABBOUR EGYPT
Is a market leader in buses and trucks. It dominates the luxury tourist coach market in Egypt with coaches built principally on Scania chassis, having achieved a market share of
66%. In addition it produces a successful range of inter-city and mini bus bodies for the local mass transit market, and is developing a range of buses on Mitsubishi chassis. It has achieved a 45% market share with the inter-city and 55% market share in the mini buses. Ghabbour Egypt posses a clear international competitive advantage in bus body manufacture which it is in the process of further exploiting with an aggressive pursuit of export markets. These operations will enjoy a tax holiday until November 2000 where after they wi8ll transfer to GB buses.
Ghabbour Egypt also sells Mazda cars and light commercial vehicles, Scania heavy trucks for VSCI, generator sets and marine engines, and Bosch spare parts. In 1999 it will commence the sale of Mitsubishi cars and light commercial vehicles on a significant scale.
ITAMCO
Is a market leader in passenger cars and tyres. It is one of Egypt's leading automotive sales companies, marketing and selling a range of Hyundai passenger cars, light commercial vehicles, trucks, buses, mini buses, as we as tyres and spare parts, with one of the country's most extensive distribution networks in the automotive market.
ITAMCO
International Trade Agencies Marketing Corporation S.A.E
Address :
21, 23 Giza Street
Nile Tower Building
P.O. Box : 120 Giza
Tel. : 5702711 (20 lines)
PRIMA
Is the largest sector car assembly operation in Egypt with a capacity now of 18,000 units p.a. of Hyundai Accent. Its output is sold to Itamco or by Itamco as Prima's agent. Its extensive facilities and pool skilled labor is also employed in the assembly of Volvo trucks and production of bus bodies on Volvo chassis on a toll basis for Interland. The company will enjoy tax holiday until November 2001.
PRIMA Engineering Industries S.A.E
21, 23 Giza Street
Nile Tower Building
P.O. Box : 120 Giza
Tel. : 5702711 (20 lines)
Fax : 5700505
Plant : Giza Industrial Zone
Cairo
Alex Desert Highway Km 28
Tel. : 5390061 - 5390062- 5390335 - 5390338
Fax : 5390012
VCI
Was established to supply Prima with components. Its goal is to maximize the local content of the Group's vehicle assemble operations. Its benefits from tax holiday until
2004. VCI also assembles Scania heavy trucks, which are sold for it by Ghabbour Egypt. A major expansion in assembly.
VCI Vehicles Components Industries S.A.E
21, 23 Giza Street
Nile Tower Building
P.O. Box : 120
Tel. : 5702711 (20 lines)
Fax : 5700505
Giza Plant :
Sadat City
4th industrial Zone
Tel. : 049/ 600251 - 600558- 600454
Fax : 049/600258
INTERLAND
Markets and sells Volvo trucks and heavy earth moving equipment, together with Ghabbour buses built on Volvo chassis, with buses and trucks being assembled on toll basis buy Prima and after 2000, the buses by GB Buses. With these Volvo products the Ghabbour Group is entering for the first time, the markets for heavy earth moving equipment, City buses and, eventually, luxury cars.
GB BUSES
Is to provide, by 2001 large scale facilities for the manufacture of bus bodies on a variety of chassis to be sold by Ghabbour Group trading companies as well as for third parties, with an annual design capacity of 4,000 units per shift. The company will also benefit from a significant tax holiday. GB Buses facilities are being designed specifically to maximize the company's ability to compete not only domestically but also on the export markets of the Arab world, Northern Africa and the Mediterranean basin. Thus it is intended that GB Buses become the production hubs for these regions for Scania, Volvo and Mitsubishi based buses.
GB TRADE IN
Was established in the last quarter of 1998. Its target is to develop the market for trade-in received by Group companies in the course of the sales of their various automotive products. It is anticipated that a substantial business in second hand cars, light commercial vehicles, buses, trucks, and construction equipment will be soon established, greatly facilitating the sales options that can be offered by the other Group trading companies.
GB TRAILERS
Was also established in the last quarter of 1998. The group's long established business manufacturing truck tippers and trailers is to be transferred to the company from existing operations by year 2000.
INTERVIEW WITH
Dr. RAOUF GHABBOUR
CHAIRMAN OF GHABBOUR GROUP
On 10th February 1999
1/Q: Dr. Ghabbour, in 1956 Ghabbour Brothers was established. Forty years after, the group has expanded into 10 different entities. Could you tell us how it all started?
It started in 1946. In 1946, my father graduated from the university and he established with his brother an operation for cabs that expanded very quickly. Their requirements at that time for batteries, tires and cars started to become significant for their own operation. By the late 1940’s they decided to handle trading activities of cars, tires, batteries and spare parts. Later on, the company expanded into construction material, electronics and home appliances and automotive parts of all sorts. In the early 1970’s, after the 1973 war, the Open Door policy was initiated and we started to get representations of different international manufacturers like Bosch and others. Our initial approach to industry started in the late 1970’s when we started establishing service centers for our auto-representations. We started to acquire a wide group of young engineers who promoted the ideas of getting into manufacturing. We started with a trailor and superstructure production facility. By 1986, we got into the bus-body manufacturing activity and by 1995 we were involved in cars and light commercial vehicles assembly activity. Now, we are actively developing the feeding industries for auto manufacturing. That is briefly the background that was achieved by my late father and his late brother.
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2/Q: What is the current structure of the group?
Now, after a lot of diversification during the 1960’s and early
1970’s we returned to our initial activity, which was automotive activity. So, the automotive activity is our main business. The corporate structure is as follows: we have a holding company that controls the management and ownership of a group of companies. Currently, there are three trading companies, which are ITAMCO, Ghabbour Egypt and Interland Motors. We have four manufacturing companies, which are GB, Prima and Vehicles Components Industries (VCI) and GB Trailers. We have three free zone companies that undertake the transit activities for the group.
Now, we are establishing a new company that is five times the existing capacity of bus manufacturing. This mainly targets export markets. We have the representation of Scania Trucks & Buses, Volvo Trucks, Buses and Construction Equipment, Mitsubishi Light Trucks, Trucks & Buses, Hyundai Passenger Cars & Light Commercial Vehicles, Mazda and Tata India. In the parts activity we have Bosch and SKF. In the tires business, we have Sumitomo Rubber, Lassa & Faros, the local supplier.
3/Q: Could you give your companies’ basic figures?
Our turnover is about LE 1.5 billion. For 1999, we have a budget of less than LE 2 billion. The total number of employees is over 3500. We have a continuous market share of more than 20% of the total car market. We have 30% of the heavy truck market, more than 50% of the bus market, and 15% of the tyre market. We are not listed on the Stock Exchange but we are planning to do so. We are currently working on it. We are in the diligence process and we will choose the investment bank that will be the lead manager next month. Our aim is that it will take place any time during the second half of this year.
4/Q: The core business of your activities remains in the automotive industry. Is there any particular reason for this decision?
It was mainly for historical reasons. That was the first business that we developed and it has always been the most significant activity even when we diversified the group’s activities away from the automotive business. Five years ago, I decided to try to dominate the auto market and I could not do this by maintaining my electronics and home appliances activities. So, I decided to concentrate on auto market. I think that within the automotive business, there are a variety of different markets. So, within the auto activities, we are very much diversified. For example, the bus business is involved in the tourism sector, heavy transport is an industrial sector, and the passenger car is a consumer product. When the country faces difficulty in any of the sector, like tourism for example, we do not suffer that much because it represents 15 or 20% of our total business. But, when the tourism is prospering we also benefit.
5/Q: In terms of exports, with the opening up of Egypt, the treaty with the EU and the COMESA, are you trying to penetrate further markets?
Yes. We are very active mainly in the exports of buses. We believe that we have a very strong competitive edge in this industry. One year ago, we were not that much interested in exports because our production capacity was limited. The local market demand was booming and we could get better prices locally than from export markets. So, we were quite reluctant. After the Luxor incident, we focused on exports and we are now very active in the Middle East region. Our sales figures are high is Sudan, Syria, Lebanon, Libya, Jordan, Saudia Arabia and the Gulf region. We are trying to penetrate Africa. Our staff is studying the market in Congo. So, we are definitely planning to expand our exports especially now, that we are building a factory with 5 times the capacity of the existing one. It is far beyond the local market requirements.
6/Q: According to you, what are the best advantages of your product?
Bus manufacturing is a labor-intensive industry, even in countries like Germany, Sweden and France, it is still manual and will remain to be so. That is why you can see the migration of that industry from the north to the south. The competition is from Egypt, Turkey, Korea, and Latin America. You do not find that the north Europeans are competitive enough. They do have good products but they are far beyond the capabilities of people to finance.
7/Q: The three key words for success are ‘modernization, modernization and modernization’. What is your policy to upgrading your technology and training your staff?
We are in a continuous process of improvement. It is taking place very quickly. When I look back at this company 12 months ago it seems like a completely different one. Ten years ago I was a trader, five years ago I was an industrialist with plenty of inefficiencies and leakage. Today, I am well managed. This involves a very tough process of improving the system, the people and the management. Of course, when we discuss the budget I am very tough about discussing every item in the budget but I will spare no expense when it comes to the training of my staff. I watched my sales supervisor and sales division head and department manager and how they operate. These are very young people with a lot of potential and new ideas. I believe that those people will be the managers or directors of this company in five years’ time. I intend to really help them. We send members of the staff abroad quite frequently e.g. Dubai. We have a school for sales and marketing, a school for technicians that concentrate on after-sale services and another for technicians that concentrate on quality of production.
8/Q: Are you planning to add more alliances to your existing portfolio?
No, I am not. But it is important to understand why. I have been involved with Scania for 20 years but then I added Volvo in 1999. The reason is that I was trying to adapt to what was going on in the international market where there is a lot of consolidation especially when it comes to the auto business. But, handling two giants is a very challenging task. So, I would not add a third one. But when we started the concept of GB Bus, the new bus factory, this capacity will place us as one of the biggest producers in the world. I sent invitations to all of my suppliers asking them to consider this factory as their anchor production base for the region. I have already received an official consent from one of my suppliers. This means that I will not undertake the entire marketing job for the production. But rather, I will receive an order from the manufacturer to produce and supply to a third country. I believe that this is the future development. We will have alliances with those people, help them and take advantage of cheap labor cost in the country.
9/Q: What are your long-term objectives?
One of them is what I have just mentioned. The other one is a strategic or medium term objective. I am trying to position myself as the one having direct contact with the end user. I do not want any brokers. I am doing this and I shall succeed. Today, I retail 100% of my trucks and buses, 30% of my passenger cars and light commercial vehicle, which is an achievement. I have a plan that in two years I will reach a 50% retail and 50% wholesale. I am investing large amounts of money in retail outlets, which are an entire network of sales and service centers. I am also investing a lot of money in consumer credit finance. I want to be able to give any volume of business to the end user according to his/her financial capability. I believe that this country has a bright future and that it is a prime market. We have a population of 60 million, 60% of which are less than 20 years of age. So, if we are successful in supplying them with a finance package that suits his/her income and if we have the complete infrastructure to support a healthy collection, then the sky is the limit. It will be a very big market. During the last year, we have been investing a lot of money in that process.
10/Q: Would you be willing to attract further investments?
This is the whole idea of floatation. Until now, I have a few million pounds to finance my credit program but it will be consumed very quickly. So, to cope with such investments, whether in distribution, finance or manufacturing, we are going to open the company. We are ready but I am a perfectionist. I do not want to enter the market unless I have a ‘World Class Level’ of satisfaction.
10/Q: As far as the agriculture and tourism sectors are involved…
They have nothing to do with the core group. This is my own personal business.
11/Q:Could you give us some details about what you have been doing in those sectors?
In the agricultural0sector, we have 2000 acres that concentrate mostly on banana, mango, grapes and vegetables. I have started restructuring a few months ago because until now we have been operating in a very traditional manner, like my grandfather used to (just farming and then waiting for the dealer to buy the crops, either to distribute in the local market or to sell it to an exporter). We did not do the whole chain, which was against my beliefs. But, I was too busy in my other business to tackle this issue. At present we have a lot of changes.
First of all, we are starting a kind of industrialization and taking a step ahead in order to break a few of the distribution chains. For example, we have imported a shreading machine to wash shread and pack vegetables to create on-the-shelf salad packets for consumers. So, I eliminated the wholesaler and the transporter and I closed the circle. This is typical of the change what I want to do. This is a good company that makes a lot of money but still the middleman, who does not invest or takes any risks, makes more money than I do. If I foresee three or four years ahead, I can see a very different company and a whole new scenario. I have invested a lot I have 300 acres of grapes that are grown according to the Latin American system, for example. The old system, which was a lot cheaper, involved steel bars and wiring which is no longer used. Now, the product is more visible so that we can have better control over quality, color and similarity.
12/Q: And what about the real estate development business?
I used to have shares in a company in the tourism sector but I sold them a few months ago. The second most important activity that I am involved in is real estate development. I do not manage it. I have 50% of the equity in a company that has started as a very small one and now it is worth LE 0.5 billion. My partner is very young,
36 years old. He is very active and aggressive. We buy a lot of land that we develop and sell at credit. We focus, not on the high end of the market but, on the middle segment where there is plenty of demand and the money is really accessible. I have two big projects in Alexandria, one is 55,000 square meters in the center of Alexandria where we are making 14-floor buildings. Each building is on 1,600 square meters. We sell two flats daily.
12/Q: What makes a leader in the Egyptian economy?
I believe that the leader in this country is the one who invests serious money in the economy. It is no longer the era of managing a project with banks or other people’s investments. It is very costly. You have to have solid finance and the appetite to make long term investments or medium term investments. You have to believe in management and invest in it. Today we pay LE 40 million annually as a base salary (fringe benefits are not included in this figure). Some members of my staff receive salaries as the European standard. If you look at the difference in living standards between Egypt and Europe, you will find how much I believe in management. I believe that it is a matter of investments, management, system and long term vision.
13/Q: What has been your most satisfying achievement since you have been chairman of Ghabbour Group?
I did not inherit my company. I made it the way it is now. I did work in my father’s company but he was a 25% shareholder. My equity was 12.5% (the rest went to my sisters). I quit ten years later and built my own company. After my father’s death, I bought his company. When I took over the two companies I became the leader in the auto industry. I am proud of taking the risks I took and made it happen. I am even more proud of developing the trader’s shop mentality into a corporate one believing in investment, management and quality.
14/Q: What is your personal background?
I was born in 1953. I graduated from the Jesuit school (a French school) in Egypt. I joined the faculty of medicine because the business future in the country was gloomy. When I graduated in 1976, the Open Door policy had already started and the big activity had just begun. So, I decided to work in the business and I realized that I liked taking risks.
15/Q: Knowing that Forbes magazine reaches more than 4 million readers, what will your final message to them be?
I was interviewed by the Financial Times in 1991. At the time the economy was in a very bad shape. I could feel a very negative spirit from their questions regarding the economy. They were right, of course, but if you know what is going on in the street you can have a kind of knowledge that others who live thousands of miles away can not. So, I told them that I am very happy that international investors are reluctant to invest in Egypt because I think that the local business people are too small and if there is an interest by foreign investors we will lose all our positions. So, I wish that foreign investors maintained the same attitude until we built a strong base. When I look at my company 8 years ago, I was doing a LE 200 million business, which is 10% of what I am doing today. Today, if a multinational wants to come to Egypt they will have to pass through my door, which was not the case 8 years ago. This is an invitation for them to come. |
© World INvestment NEws, 1998.
This is the electronic edition of the special country report on Egypt published in FORBES Magazine,
May 31st issue.
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EGYPT
