Oil price cut almost leads to bankruptcy of motorcycle assembly plant in Angola

9 October 2017

Agir Huang, a motorcycle assembly company in Angola, has been able to survive the crisis that began with the sharp fall in oil prices, said its director-general, Luís Gourgel, adding that the “business is currently viable,” despite the oil price crisis in the country almost leading the company to shut down.

The company was founded as a result of a partnership established between Agir Inc. and Zhong Xing, who in 2006 acquired a paint production plant sold by the Angolan state and decided to initially invest about US$3.0 million in motorcycle assembly, one of the passions of the managing director general, according to Angolan news agency Angop.

When the crisis began, the company’s management had to reduce imports of parts, manage stocks in the warehouse, limit daily production of motorcycles to 40 to 60 units and reduce the number of workers from 74 to 32.

With the difficulty of accessing foreign currency to import goods, the company began to lose the confidence of its supplier in China, as some products received were not being paid for.

“We had a lot of kwanzas, but it was difficult to get dollars in the bank to honour our international trading commitments, a situation that demoralised the suppliers and got the partners close to giving up,” said Luís Gourgel.

The company later began to benefit from the new schemes for the allocation of foreign currency by the National Bank of Angola, namely through the system of opening letters of credit, “which helped to minimise the critical situation that the company was going through.”

In May the company imported enough parts to assemble 300 motorcycles, “and current imports are for 800 motorcycles per month,” said Gourgel, noting that Agir Huang also sells accessories and provides technical assistance to customers.

The main markets for Agir Huang motorcycles, which are assembled in Angola from components produced in Guangzhou by Guangzhou Lingken Motor Co., Ltd., are the provinces of Luanda and Kwanza Sul, and the company also has representatives in Kwanza Norte, Uíge, Zaire, Lunda Norte, Benguela, Huíla and Huambo. (macauhub)