General Motors (GM) has temporarily suspended its assembly operations in Egypt as currency issues hold auto parts up at customs, according to a report by Reuters citing a company source. "The entire sector has a currency crisis; we can't make a car without some of the parts. We stopped production temporarily as of yesterday until we can clear the imports held up in customs," said the source.
Significance: Egypt has been in an economic crisis since a 2011 uprising and subsequent political turmoil drove foreign investors and tourists away. Dollar reserves have more than halved to USD16.4 billion since then, according to the report. The Egyptian pound fell heavily in black market trading on Sunday (7 February), although trading continues to be relatively stable versus the USD in official markets. The Central Bank of Egypt may opt for a managed depreciation of the currency, rather than the current policy of devaluing it periodically without real notice of the timing. This would help narrow the gap between the official and black market rates, and ease pressures on the Central Bank's foreign reserves. Meanwhile, Egypt is a key market of GM in the Middle East and Africa. It is the second largest market by volume for the automaker after Saudi Arabia, according to IHS Automotive data. GM currently produces Chevrolet brand vehicles in Egypt through its joint venture (JV) with Al-Mansour Automotive in 6th of October city. According to IHS Automotive forecasts, the JV produced 44,627 units of Chevrolet-brand light vehicles in 2015 including the Chevrolet Lanos and Aveo cars, Rongguang van and D-Max pickup.
