Cairo – Ghabbour Auto (GB Auto) will no longer represent Hyundai in its passenger car’s (PC) division in Iraq as the South Korean auto manufacturer changes its policy to a multi-distributor model strategy in the Arab country.
“Such business model never yields proper returns given the investments required to achieve sustainable automotive operations,” the company said in a statement to the Egyptian Exchange (EGX) on Wednesday.
GB Auto has succeeded in cementing Hyundai’s presence in the Iraqi market with a market share reaching 25% in 2019.
With gross margins ranging between 5% and 6%, the division will not yield enough returns to cover the cost of capital, the company pointed out, noting that “this division was loss making on the net profit level during 2015, 2016, and 2017; and broke even in 2018 and 2019.”
Operations will continue until the complete liquidation of all inventory and pipeline expected to last until mid-2020.
GB Auto said that it would look for new representations of PC brands in Iraq.
It is noteworthy that during the first nine months of 2019, GB Auto reported net profits of EGP 174.07 million, down from EGP 521.3 million in the prior-year period, including minority shareholders’ rights.
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