By Nadine Awadalla

CAIRO, Aug 17 (Reuters) - GB Auto, the Egyptian automotive assembler and manufacturer, expects demand for cars to pick up by the end of 2017 as dealers run down inventories, the company's CEO said on Thursday.

Consumer demand in Egypt took a hit in November last year, when the central bank floated the pound currency to secure a three-year $12 billion International Monetary Fund loan, a move which more than halved the value of the currency.

The IMF programme is tied to reforms such as tax increases and subsidy cuts which contributed to a jump in the country's headline inflation rate to 33.0 percent, leaving Egyptian consumers to grapple with sharply rising prices.

CEO Raouf Ghabour decided to hold back on sales to GB Auto dealers in the first quarter, allowing them to clear their inventories and adjust the price of their vehicles to reflect the new market conditions.

In the second quarter, GB Auto's passenger car sales revenues were down 38.8 percent year-on-year, while sales volumes were down 55.4 percent year-on-year.

But Ghabour said consumer demand for two- and three-wheel vehicles, such as bikes, tuk-tuks and tri-cycle motorbikes, has rebounded in June and July to pre-float levels, while demand for cars has edged up to 70 percent of what it was before the float.

"I am very confident that during Q4, we'll be completely off the hook - off the hook in terms of stock liquidation will be completed, our inventory level will be back to historical low levels," Ghabour told Reuters in an interview at his office on the western outskirts of Cairo.

Egypt's central bank has eased foreign exchange restrictions since the currency float, allowing importers like GB Auto easier access to dollars. But the bank also raised its key interest rates by 200 basis points last month, making it more difficult for GB Auto to pursue a potential plan to increase the capacity of its three-wheeler factory.

"I'm not saying I have suspended (expansion plans) but I'm working at a slower pace," Ghabour said, adding that the company was working on manufacturing tyres and alloy-wheels.

Beyond Egypt, GB Auto is looking at growth in Iraq, encouraged by an improving political situation and growing market, and Algeria, where it has applied for a license to create a Geely assembly facility.

Earlier this month, GB Auto reported a loss of 150.9 million Egyptian pounds ($8.51 million) in the second quarter of the 2017 calendar year.



($1 = 17.7275 Egyptian pounds)

(Reporting by Nadine Awadalla. Editing by Jane Merriman) ((Nadine.Awadalla@thomsonreuters.com;))