Nearly a fourth of Bajaj Auto’s three-wheeler overseas shipments head to Egypt, making it the second largest market in the world for the Pune-based company after Sri Lanka
The Egyptian government is building itself a new capital from scratch and strangely this is sending shockwaves around 5,000 kms away to Bajaj Auto, which supplies three-wheelers (3Ws) to that country.
Nearly a fourth of Bajaj Auto’s three-wheeler overseas shipments head to Egypt, making it the second largest market in the world for the Pune-based company after Sri Lanka.
But in late November 2018, Egypt Prime Minister Mostafa Madbouli called for a restriction on free imports of three-wheelers (locally called toktoks) into the country in a push to make its youth take up ‘serious jobs that can help develop and build the country’.
Rakesh Sharma, director, Bajaj Auto, said, “There was some discussion in the (Egyptian) government of curtailing the imports of three wheelers because of a really ludicrous logic of labour getting employed as 3W drivers and not being available for building the new Cairo (new capital)”.
During Q3 FY19, the maker of motorcycles such as Pulsar and Avenger exported 90,426 units of 3Ws from India, a year-on-year growth of 24 percent.
Though 3W export growth during the third quarter was in healthy double-digits, it was the slowest of the three quarters for the year led by Egypt. In Q1, Bajaj Auto 3W exports grew 69 percent, whereas in Q2 the segment clocked 49 percent over the corresponding quarter last year. This notable growth was a result of pre-buying by Bajaj Auto’s distributors in Egypt.
“As a preemptive step, our importer and distributor in Egypt decided to advance a lot of the purchases just in case the government takes some punitive action for one or two months. So, we will see a kicker in the international business purely on account of extra volumes from Egypt,” Sharma added.
While the Bajaj toktok has become a household name as it is the most preferred means of transport in Eqypt not just for locals but for millions of tourists visiting each year to see the pyramids, it has also invited the ire of government authorities.
As early as 2014, the Egypt Industry Ministry decided to stop imports of toktoks as it was found that the three-wheeled passenger carriers were used in committing crimes as well in terrorist attacks. Several of such vehicles were found to be invalid and driven by youths without driving license. However, subsequently the ban lifted and imports resumed.
Now as a means to appease to the government, Bajaj Auto has announced plans to set-up a factory in Egypt that would manufacture the toktoks.“What will work in our favour is that since the last one-a-and-half year we have been localising a lot of our components. Around 30 percent of the value of 3Ws is put together in Egypt itself and there are plans for setting up a new factory in Egypt,” Sharma stated.