What’s in a tuk-tuk? Happy Egyptians paying low fares, of course

Known as the rickshaw in the Indian Subcontinent or the tuk-tuk in Southeast Asia, the three-wheeler has been growing in popularity in Egypt since the 2011 revolution. It is a highly affordable means of transportation for everyday Egyptians.

Ghabbour Auto (GB), the country’s biggest distributor of tuk-tuks, began importing them from India’s Bajaj Auto about a decade ago. A study by the Industrial Modernization Center (IMC) said there are over 500,000 tuk-tuks in Egypt, with an average of 750,000 workers working on them.

Although the tuk-tuk is officially scorned as a means of transport because of the pollution it generates, it is widespread as a means of transport in several villages, governorates and remote areas, as well as densely populated and popular districts in cities. The vehicle is called tuk-tuk because of the staccato sounds it creates when in motion.

Egyptians of modest means like tuk-tuks because of the low fare. But three-wheelers also tend to have a high accident rate because they can tip over easily. Passengers usually sit in an exposed cab. They pay the equivalent of 25 American cents, sometimes even less.

The first three months of 2011 made up the second-best quarter ever for tuk-tuk sales in Egypt with an increase in sale of almost 49 per cent, as (GB) Auto revealed this week.

Revenue from passenger cars and commercial vehicles dropped and net income fell by almost 90 per cent, to a marginal profit of EGP7.7m ($1.3million).

Raouf Ghabbour, CEO and Managing Director of GB Auto, said that the recent revolution did not affect the soundness of the business model or the company’s customer base.

In part, these record levels of unit sales are attributable to supply constraints experienced in 2010 that saw tuk-tuk sales rather static. That said, GB Auto management believes that current sales levels represent a significant and sustained uptick in demand.

Lower-income buyers, the primary consumers of this line of business product offerings, have proven to be quite resilient in light of recent events, leading management to anticipate that as the Egyptian economy stabilizes, motorcycle sales will witness a similar uptick in 2Q11, GB Auto explains.

Main sectors like vehicles, frames, after-sales services and the activities of consumption finance have begun recovering since March, Mr. Ghabbour said. Meanwhile, motorcycles and tuk-tuk sales have increasingly grown despite the general economic slowdown.

The manufacture of three-wheelers made a fortune for Bajaj Automobiles in India. Its chairman, Rahul Bajaj was widely reviled, however, for being the single most significant contributor to urban pollution. Pollution is the bane of Indian cities.

Ironically, as if to expatiate his sins, Mr. Bajaj has become a leading environmentalist. His three-wheelers now are fitted with anti-pollution devices, for the most part.

GB auto plans to continue cutting spending. During the first quarter of this year, the company reduced stock levels in all sectors while making sure there is adequate inventory to meet the possibility of supply disruption in the future.

Another stimulus for tuk-tuk sales would be the general improvement in accountable, people-friendly governance that should accompany a new government with a popular mandate, following elections later this year. Hosni Mubarak’s regime and its local officials took a rather dim view of the tuk-tuk, and only created official licensing regulations for the vehicles in 2008 according to Financial Times.

Mr. Ghabbour said that Egypt would need to support and promote short-term solutions to prepare the ground to put Egypt on the right path regionally and internationally.

(Ikram Al Yacoub, a writer at Al Arabiya English, can be reached at: [email protected])