Ankush Arora, CEO of Al Mansour Automotive Group, discusses survival strategies post-pandemic, government efforts to promote local industry, and the future of the local market.
Replies were edited for length and clarity.
Q: What is the scope of Al Mansour Automotive’s operations?
The Al Mansour Automotive Group has operated as a passenger and commercial vehicle distributor for 50 years. We have been the market leader for 20 years [based on data from the Automotive Marketing Information Council, an industry body]
We have been assembling cars locally for the past 44 years. It started with a joint venue with General Motors, becoming their local manufacturing partner for commercial vehicles and the importer of passenger cars (Chevrolet) since 1983.
Local components account for over 60% of our commercial vehicles. In our passenger cars, it is around 45% [the minimum required by law].
Since 2020, volatility in global supply chains, foreign currency challenges and external factors have caused us to pause local assembly of passenger cars and focus solely on commercial vehicles.
Q: How much damage has the local auto market incurred since the pandemic?
Regarding sales figures, the local auto sector entered 2020 on a high note. Annual growth rates in 2019 were up 35% compared to 2018.
Despite the lockdowns in 2020, local automotive sales continued growing to 2021, when more than 325,000 units were sold — the highest on record. It was also our best year for both commercial and passenger cars. We sold 50,000 locally made units, 42,000 of them were commercial.
Between 2019 and 2021, our import car sales also boomed. We sold 93,000 units versus 52,000 units by the end of 2018. It took us just three years to almost double our sales.
That growth declined aggressively in 2022 and 2023, mainly due to bottlenecks in global supply chains caused by the pandemic and conflicts in Ukraine and Gaza. Local sales dropped by two-thirds.
Another factor we had to cope with was rising car prices due to limited supply, coupled with increasing demand, among other critical factors, which complicated importation.
Starting in 2024, we saw signs of a recovery as Inflation rates tempered and the March devaluation stabilized the exchange rate and supply of dollars.
Q: What was your survival strategy?
The critical factor that allowed us to successfully navigate the uncertainties of the past two or three years is that the company has always been lean and agile despite its large footprint.
We saw the writing on the wall in early 2022 and quickly decided to focus on the things we can control. For example, we couldn’t control what was happening in Ukraine and Gaza, global oil prices or foreign currency shortages.
Instead, we focused on things we could influence, such as keeping our costs under control and eliminating any inefficiencies in our system.
We offered customers more services and privileges, especially after-sales maintenance and spare parts availability, to keep them happy with their cars rather than chasing market share and volume.
That meant attracting owners of our high-end brands (Opel and Peugeot) to our official service centers via promotions. We also catered to our commercial vehicle and low-end car owners who prefer roadside repair shops because they are cheaper and convenient.
The second part of our strategy was to develop and expand existing operations in Iraq, Libya and Sub-Saharan Africa to mitigate some of the group’s risks in Egypt.
We also aligned our managers and executives on the requirements in this new phase by shifting their mindsets from chasing volume and market share to targeting existing customers with successive services.
Q: What will your sales strategy be in the coming few years?
What we see in Egypt is similar to regular business cycles. During inflation, consumer behaviors, preferences, expectations and habits change. Our challenges and opportunities stem from our diverse brands and, therefore, broad range of target customers.
Accordingly, our pricing strategy will continue to be a function of the brand. Our target is to have an offering from at least one of our brands at every price point. We also will focus sales and marketing efforts on what drives sales in each of our brands, be it price, prestige or technology.
Q: What do you think of the government’s efforts to promote the local car industry?
The government’s Automotive Industry Development Program (AIDP) is undoubtedly a big motivator for bringing more local assembly and manufacturing projects to Egypt, ultimately making it a regional automotive manufacturing hub. It supports both suppliers and manufacturers.
Incentive programs like AIDP are vital as the auto industry is very capital-intensive and has a long return-on-investment period compared to other sectors.
The key to AIDP’s success is for local auto manufacturers to focus on cars that are in high demand in the local market. Without those vehicles, you can’t achieve scale and, therefore, can’t be competitive. That ultimately prevents local automakers from exporting their cars.
In addition to AIDP’s incentives, the government has significantly expanded the road network, making passenger and commercial cars more appealing as drivers are considerably less likely to encounter traffic jams.
One missing element is affordable, tailored auto financing options. Even before the challenges since 2020, buyers almost always bought their cars in installments. It will be more vital now with the recent price jumps.
For us, as manufacturers, policy and regulation consistency is vital because we base our long-term plans on what they say.
Q: Are there plans to assemble new models in Egypt? Are any of them EVs?
We plan to manufacture three models locally. The first will be introduced toward the end of this year and the last will be in the second half of 2025.
None of these models is an EV or hybrid. However, we are open to introducing electric vehicles if local market conditions are favorable.
Q: How do you see the future of local auto manufacturing?
We are at an exciting crossroads regarding where we take the automotive industry. The country has enormous potential for consumption and supply manufacturing has many strengths, including human talent and geographic location.
Free trade agreements with neighboring countries will be essential to making Egypt a continental and regional auto manufacturing hub.
First, local auto manufacturers need to avoid assembling “show and tell” luxury brands, which happened in the early 2000s. This made Egypt an auto-manufacturing country, but not an export hub as we never reached suitable volumes.
Focusing on the needs of most local car buyers will attract more automakers to capitalize on that opportunity. We saw that happen in Thailand with commercial pickups and in India when Suzuki partnered with the government to build affordable city cars.
The goal is to have a few manufacturers build huge volumes (tens of thousands of units annually) rather than many car brands build lower volumes (thousands of units yearly).
The former scenario would see costs per unit decline because of economies of scale, increasing competitiveness, scale and, ultimately, exports.
This Q&A first appeared in August’s print edition of Business Monthly.
