BMW's big push
BMW's new Egyptian representatives are keen to boost their brand's presence in the marketplace. Niveen Wahish reports
For over four months now the identity of BMW's new representatives in Egypt has been the subject of much debate and speculation. Last week, it was finally announced that the Bavarian Auto Trading Company will have the exclusive rights for assembly, importation, distribution and after-sales support for BMW Group products in Egypt.
Ulrich Urban, chief executive officer for Bavaria Auto Trading Company informed the press last week of the structure of his company. It will consist of a consortium of investors, with Issa Al-Kawari, an investor from the Gulf, as majority shareholder and Urban as minority partner. The company will be chaired by Anwar Esmat El-Sadat, a prominent Egyptian businessman and nephew of the late president El-Sadat. An affiliate company, which will carry out the importation of the completely built units, will be owned by the three investors.
The announcement ended months of speculation over who would inherit the business after BMW failed to renew the licence of its former representative, Hossam Abul-Fotouh over financial irregularities.
The new BMW representative is now keen to get business up and running again. According to Helmut Broeker, BMW's general manager for Africa and the Caribbean, new cars from Germany will begin arriving soon and local manufacturing is also expected to start shortly. Egyptian production of three and five series BMWs was halted after Abul-Fotouh's troubles began.
It is still unclear as to where any future domestic car manufacturing will take place. According to the new representatives, negotiations are underway for the purchase of Abul-Fotouh's existing plant and BMW related businesses. "We want to make this a win- win situation for all," he said, referring to the Abul-Fotouh family, who need the funds to repay their debts. However, agreeing to an unrealistic purchase price would not be a sound decision said Broeker.
Although Urban refrained from mentioning the exact amount they are offering the Abul-Fotouh family, it appears to be below the asking price. Some 200 individuals may be made redundant if the deal does not go through.
However, even if the deal fails there is a back-up plan. According Urban, there are many factories with unused capacity in Egypt that could be made use of.
The new representative has the task, not only of restarting business, but also improving productivity and working on the brand image. According to Broeker, the parent company was unhappy Abul-Fotouh's performance over the past three years and attempted to help him out. "We would not walk away from someone who has worked with us for 23 years," Broeker said.
Over the past three years, the output of Abul-Fotouh's factory, which was setup in 1998, has not been steady.
During their meeting with the press, BMW's new representatives stressed their commitment to Egypt and the region despite events and the fact that the economic scene has not been promising for some time. "Things can only go one way, that is up," said Urban optimistically. The new representatives who, "will invest several million euros in Egypt", as Urban put it, hope to capitalise on Egypt's potential as a car market and as a base for exports into the wider region. According to Urban, Egypt's car market stands at 50,000 units. He believes the market will be much larger in the future.
The new representatives have also declared their intention to continue to work with, develop and upgrade the existing dealer and supplier chain.
