Youm7.com unveils latest scandal of Volkswagen, AUDI and SEAT importer in Egypt, Karim Najjar.
This feature comes only a few days before Matthias Mueller, Chairman of the Board of Management of Volkswagen AG mother-company, will hold a speech about the new strategy of the Volkswagen Aktiengesellschaft at the Autostadt in Wolfsburg.
The feature about Volkswagen Egypt & AUDI Egypt (EATC), which was uploaded on the website after it was published in the printed edition of the daily newspaper of Youm7 on Thursday 2nd of June 2016, included many information and documents about the ongoing dispute between the two main shareholders of EATC Karim Najjar and the Egyptian-Lebanese co-owner MEATCO (Middle East and Africa Trading Company) and the Egyptian authorities.
This article comes as no surprise to the Egyptian consumer and to the automotive media sector in Egypt, as there had been countless scandals involving the management and the customer service of Volkswagen Egypt / AUDi Egypt over the past few years.
We at autoarabia.org are among the very few media outlets which have published countless customer complaints and dozens of articles about the unacce
Karim El Najjar is one of the share-holder of the Egyptian Automotive & Trade Company (EATC), which is the official importer of AUDI and Volkswagen in Egypt. Unfortunately Karim Najjar is also the recently-appointed SEAT importer through his company KAYAN, after the SEAT dealership was taken away from SMG (Porsche Egypt / Harley Davidson Egypt), which is owned by the Ghattas family in Egypt.
And in 'another' desperate attempt from the current Volkswagen Egypt management to mislead the Egyptian consumer and the Egyptian media, Karim EL Naggar and Volkswagen Egypt / AUDI Egypt are apparently planning to invite some automotive advertising supplements this week in Cairo in order to tell them their point of view, which would then be published as paid advertorial in those advertising supplements.
This is the same 'media-strategy' which Kareem El Najjar did last year during the 2015 Frankfurt International Motor Show, when he invited a couple of advertising representatives of automotive supplements and automotive 'magazines' for a 'friendly chat' at the motor-show, in a desperate attempt to improve his already extremely-damaged reputation in front of the Egyptian public and the Egyptian authorities, and of course also in front of the decision-makers at the Volkswagen and Audi headquarters in Wolfsburg and Ingolstadt.
We heard from sources that Youm7 website and its newspaper have obtained this week more official documents regarding the ongoing financial scandal between Karim El Najjar on the one hand and his co-owner MEATCO and the Egyptian Investment Authority & Alexandria Port Customs Authority on the other hand, and that another feature will be published shortly again on the Youm7 website and in the daily Youm7 newspaper.
It seems to us that many readers and Volkswagen, AUDI and SEAT owners in Egypt are not really aware about the ongoing crisis and the management as well as customer service failures at EATC.
It also became very obvious to us that the decision-makers at the Volkswagen, AUDI and SEAT headquarters in Wolfsburg, Ingolstadt and Spain are not really 100% aware about the horrific reputation damage of their brands in Egypt and that they probably do not have a complete overview about what is going on with those three dealerships in Egypt, because they are probably receiving inaccurate, false and misleading information from Karim Najjar and the EATC management in Cairo.
Therefore we at autoarabia decided to help out with a quick and brief summary on the ongoing dispute according to various media reports and to our own researches:
- According to various media reports, the sales numbers and market shares of Volkswagen Egypt and AUDI Egypt, which are bundled under the name of the so-called Egyptian Automotive & Trading Company (EATC), have declined significantly over the past years. This decline was caused mainly by the unprofessional management of EATC and the deteriorating consequences of the ongoing conflict between the main shareholders Karim El Najjar and MEATCO (Middle East and Africa Trading Company. MEATCO is chaired by Mrs. Dalia Ezz El Din.
- Since the dispute between Karim El Naggar and MEATCO started approximately five years ago, which led to Naggar’s dismissal from his position as chairman of the Egyptian Automotive and Trading Company (EATC), no reconciliation has been reached between the two EATC partners.
- According to those media reports, Mrs. Dalia Ezz Eldin, who is also a senior partner in the EATC, assured that Karim EL Najjar is not related to the Lebanese Kettaneh family and that he only owns 10 % of the EATC, while the rest of the shares are distributed between other local and regional shareholders.
- The conflict between Karim EL Naggar and the other shareholders were the consequence of a major financial and administrative dispute which was revealed a long time ago. This revelation led to Karim El Najjar's dismissal by the general assembly of the company. The general assembly’s decision was adopted by the General Authority for Investment and Free Zones (GAFI).
- Karim El Naggar had been chairman of MEATCO since its establishment and remained chairman until the dispute with the company’s shareholders erupted, which consequently forced him to resign from this position.
- According to statements of Mrs. Dalia Ezz El Din, MEATCO is an Egyptian joint-stock company, in which 99% of the shareholders are Egyptian while the remaining 1% is a foreign partner (Nabil Kettaneh from the Lebanese Kettaneh group). This is the truth about the company. It is not a Lebanese company. They also work in many commercial and investment activities, in fields that vary from construction to direct investments in commercial and industrial projects.
- MEATCO said that they are not planning to close the Volkswagen / AUDI dealership in Egypt and that they are not planning to lay-off any employees, as claimed by Karim El Najjar in several interviews in newspaper advertising supplements.
- If the dispute would be settled in the favor of MEATCO and against Karim El Najjar, then MEATCO is planning to increase the numbers of employees from 650 to 1000 employees and would also increase the number of service centers and retail branches, according to Dalia Ezz El Din.
- MEATCO chairperson Dalia Ezz El Din also confirmed in media reports that MEATCO would focus on providing the original Volkswagen and AUDI spare parts for the Egyptian customers, as they have suffered from a very poor performance of the Karim El Najjar management over the past few years.
- According to Ezz El Din, the disagreement between Karim El Najjar and MEATCO broke out in 2009 for many reason, especially because of the budgets he presented in 2010 which not only showed very poor sales numbers and performance of AUDI and Volkswagen, but which also showed a clear manipulation in the profit. In 2010 the budget had registered sales of approx. 695 million Egyptian Pounds (EGP) and a profit of only 4 million EGP, which is less than 1 %. In 2012 the budget had registered sales of approx.. 640 million Egyptian Pounds and a profit of only 5 million EGP, which is also less than 1 %. At that point MEATCO demanded the change of the poor and incompetent management in order to the deterioration of the market shares and the sales numbers in the Egyptian market, especially since the Volkswagen sales numbers did not exceed 3,600 units while the nearest competitors sales numbers had exceeded 5,000 units. The worsening of the Volkswagen sales numbers in Egypt continued until it reached 1,900 cars around the end of 2014.
- The situation of the Audi dealership was even much worse, as the annual sales numbers between 2009 and 2014 did not exceed 600 units. AUDI Egypt sales numbers were more than disappointing as they were less than 500 cars in 2014.
- According to media reports the market share of EATC fell from 1.7% in 2013 to 1.2% in 2014. In addition to that EATC stopped announcing its indicators in 2015 and the first six months of 2016.
- In 2014 the total sales numbers of Volkswagen and AUDI sales in Egypt reached 2,478 units. Based on the non-confirmed AMIC numbers of overall market sales numbers of 207,973 units, this would be an insignificant 1.2% market share for both AUDI and Volkswagen brands in the Egyptian market.
- The problems with the Volkswagen Nutzfahrzeuge section (VW Light Commercial Vehicles) in Egypt have also worsened over the years, especially after the problems with the Turkish Volkswagen importer DOGUS AUTO started a couple of years ago, when DOGUS Auto took over the Volkswagen LCV dealership from Karim EL Najjar and EATC.
- Karim El Najjar was kind of disloyal to his EATC business partners when he applied for the Spanish SEAT dealership and created a separate company called KAYAN Egypt, instead of integrating SEAT into the already existing Volkswagen and AUDI network through the EATC company.
- In other media reports Dalia Ezz EL Din stated that the most significant reasons for the dispute between Karim EL Najjar and MEATCO were the low sales numbers, the declining profits as well as the bad reputation of the Volkswagen and AUDI products and their customer service in Egypt.
- The dispute between MEATCO and Karim El Najjar intensified after the shareholder agreed in 2013 on the subscription in capital increase by pumping around 50 million EGP into the company under the command of Karim El Najjar, but Najjar failed to present any comprehensive and detailed studies for the expansion plans.
- According to Dalia Ezz El Din, the EATC co-partner Karim Najjar is not the major share-holder in the EATC company and does not own 65% of the shares as he personally claims. Furthermore Karim Najjar breached the agency contract with the Volkswagen AG and AUDI AG mother-companies when he tried to trade the shares for personal reasons. The shares distribution is roughly as follows: MEATCO 42.5%, Engy Faltas Ayad 38.5%,
Karim Naggar 10%, Mai Mourad Estefno 8%, Jihan and Miral Naggar 1%.
- The financial manipulations by Karim Najjar and his management at EATC, forced MEATCO to raise the dispute to the General Authority for Investment and Free Zones (GAFI) in Cairo, which is an affiliate of the Ministry of Investment and the principal government body regulating and facilitating investment in Egypt. MEATCO discussed the conflict with GAFI and the latter started inspecting the files. The GAFI authority then indeed found some manipulations conducted by Karim Najjar and accordingly requested an extraordinary meeting of the general assembly in order to look into dismissing and isolating Karim Najjar from his position as chairman of EATC.
- At a certain stage during the ongoing conflict between the two main parties, the idea of a partner buy-off by the other partner was raised, and MEATCO agreed to do a full evaluation of the company. But after the price was set MEATCO rejected the offer after they found out that Karim Najjar manipulated the company evaluation for his benefit, and MEATCO then continued with the GAFI procedure to dismiss and isolate Najjar from his position as chairman.
- Karim Najjar was removed from the board when MEATCO filed the lawsuit against Najjar accusing him of committing financial violations while he was chairman of EATC. Najjar was then removed from the EATC board and his sister Miral Basil was appointed as the new EATC chairperson. After that the 'new' EATC board unanimously agreed to appointing Karim Najjar as the new General Manager of EATC, which resulted in MEATCO taking all legal actions against the Board of Directors at the time.
- Based on those legal actions of MEATCO against Karim Najjar and Miral Basil, the Egyptian Customs Authority decided to stop dealing with both Karim Najjar and Miral Basil regarding EATC and the import of Volkswagen and AUDI cars to Egypt, even though both their names were still listed in the official documents and the commercial register of the company and were liable to sign documents and paperwork.
- Dalia Ezz El Din confirmed in previous media reports that she heard about other businessmen interested in buying the Volkswagen & Audi dealership in Egypt, and added that this would not be possible as long as the conflict between MEATCO and Karim Najjar is still ongoing. She also added that the two Volkswagen AG and AUDI AG mother-companies would not agree to sell or hand-out the agency to anyone else not belonging to 'Volkswagen International' or who has not worked with them before.
- Furthermore MEATCO chairperson Dalia Ezz El Din confirmed that Volkswagen AG and AUDI AG know about the ongoing legal conflict and that they are completely dissatisfied with the actions of Karim Najjar when he sold company shares to members outside the shareholders, thus breaching of the most important contract conditions between EATC and Volkswagen AG / AUDI AG, which prohibits any agency shareholder to sell his shares or add a new partner without the written approval of the mother-company in Germany.
So will the Volkswagen Group finally take some serious actions about the unprofessional business behavior of Karim Najjar and his unprofessional management of EATC after they read about those extremely business-harming incidents and disputes at the three VW, AUDI and SEAT dealerships in Egypt?
I believe it is now inevitable to ban and kick Karim EL Najjar out of their dealership network after all the damage which he has done to those three renowned brands, and possibly even demand a compensation from him for all the reputation damage he caused to the four brands Volkswagen, Audi, SEAT and Volkswagen Nutzfahrzeuge (Light Commercial Vehicles) over the past years.
In addition to that it also seems inevitable that Volkswagen AG and Volkswagen Group must re-assess and re-evaluate the Egyptian and the Middle East markets, and also must implement new Representative Offices and National Sales Office in those markets.
Those Representative Offices and National Sales Office should then bundle all Volkswagen Group brands, including Porsche, Bentley, Skoda, Scania, MAN, Ducati, Volkswagen, AUDI and SEAT under one umbrella and report directly to the VW Group headquarters, especially since most of the dealerships of those brands in Egypt and the Middle East region have serious reputation problems and are managed by unprofessional and incompetent management staff.
One last advice to Mr. Matthias Mueller, Chairman of the Board of Management of Volkswagen AG: When appointing a new importer for the Volkswagen, AUDI, SEAT, Bentley and the other VW group brands, I highly recommend that you do a comprehensive and independent survey about the Egyptian market in order to avoid appointing unprofessional car companies or car managers such as Raouf Ghabbour as new importers.
I also recommend that you stay away from partnering with any current or previous Chinese car importers in Egypt, in order not to get affected negatively by their bad reputation in Egypt.
Best thing for Volkswagen AG and the other VW group brands would be to appoint authorized dealers only instead of sole importers, whom would all have to report and would be supervised by the Volkswagen National Sales Office or the VW Group Representative Office.
Stay tuned with us as we will update you when more information will unfold about the ongoing scandals of Karim Najjar with Volkswagen Egypt and AUDI Egypt, here on autoarabia.org and in other Egyptian media as well.
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Click here to read the full Youm7.com article about the scandal of Volkswagen Egypt and Kareem El Najjar
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