Egypt’s automotive market is seeing unprecedented stagnation due to a confluence of factors, causing a dearth of new cars and a dramatic spike in used-car prices. The local car market has come to a near cessation since March 2022 when the Egyptian pound was depreciated by 16% against the dollar – rising to nearly 21.5% at present. Consequently, car prices have spiked. Moreover, the recently-adopted imports’ shrinking policy in light of the surging inflation augmented the depreciation impact and led to a shortage in new cars, causing a complete standstill in the market, experts say.
“Though this period [of the year] is supposed to witness the peak of cars sales, the sales, especially in August, have dropped significantly. We have around 95% deficit in cars,” Kareem Shereen, the owner of Shereen Car Automotive Showroom in Heliopolis, told Ahram Online.
“Meanwhile, we don’t have any imported cars. We only have some locally assembled cars,” Shereen said, highlighting that the crisis is not only limited to selling and buying cars, but it has also affected employment as many car agencies had to lay off most of their salespeople.
According to Selim Saber, a former salesperson at a well-known car showroom, he was obliged to take four unpaid vacations in less than three months due to the stagnation in sales.
Recent reports indicate that several foreign car companies said they will stop supplying their agents in Egypt due to disruptions in global supply chains, shortages of electronic chips, and precautionary measures to offset the repercussions of the Russian-Ukrainian war.
“I decided to leave my job to start my private business with colleagues by launching a used cars showroom in Nasr City district. The situation in the used car market, however, turned out not to be in a better condition. In the last five days, not a single car was sold,” Saber said.
In June 2022, the auto sales fell by more than a third, according to the Automotive Information Council (AMIC), when customers bought around 12,300 passenger cars, down by 35% in June 2021. Due to the shortage in new cars, used vehicles could be worth almost as much as their new models today.
“Consumers are not aware of the status of the used car market. Many people come to buy used cars, but once they know the high prices of used cars, they are surprised and tend to delay purchasing decisions or look for cheaper choices,” a used car dealer who preferred to remain anonymous told Ahram Online.
He added that he has more than 10-15 clients who are seeking to buy a used car for EGP 200,000 but no used cars are available with this price. The least price for an automatic used car in a good condition ranges from EGP 280,000 to EGP 350,000.
Hence, according to many people, used cars became one of the rare available solutions for whoever is seeking to buy a car in a hurry given that practically no new cars exist in the market.
“I was seeking to buy a new Peugeot 3008 with a budget of EGP 600,000, but as a result of this ongoing crisis, it’s so rare in the market and its price jumped to EGP 1 million in some showrooms. It’s totally out of my budget now and I’m searching for a used Kia Xceed in a good condition,” Ahmed Ismail said.
In early August, the Central Agency for Public Mobilisation and Statistics (CAPMAS) said Egypt’s headline annual inflation accelerated to 14.6% in July – more than double the corresponding month in 2021 – up from 13.2% in June.
The headline monthly inflation also edged up in July by 0.9 percent compared to June, CAPMAS said, noting that the prices of private transportation vehicles hiked by nine percent. Chinese cars are one available options for those who want to buy a new car, being available in the market for immediate purchase with reasonable prices, according to experts.
The share of Chinese car sales in Egypt increased to 25 percent to reach 23,200 vehicles during the first half of this year, up from 22 percent or 22,200 cars in the corresponding period of the previous year, according to AMIC.
“On an emergency basis, I wanted to buy a car immediately, so I bought MG6 as it’s the only option available in showrooms. I did not even have the privilege of selecting its colour. It was only available in black,” Soha Mohamed said.
Ahmed El-Gamal, 28, also resorted to the option of buying a Chinese new car BAIC X3 due to its availability at an affordable price. Meanwhile, almost all new car agents closed booking due to the unstable market, with no clear date for re-opening.
Ahram Online sought a well-known car agency to book a car and the salesperson said, “Reservations are suspended.”
Those who already reserved cars from agents before the crisis are still suffering, with some still waiting to receive the car after more than five months despite paying its full price. Others got a refund after filling a complaint with the Consumer Protection Agency (CPA). Even those who received their cars, the delivery was delayed for.
“We are hoping to hold a meeting with the newly appointed Minister of Trade and Industry Ahmed Samir and the new acting Governor of the Central Bank of Egypt Hassan Abdallah to discuss reviews and proposals for solving this crisis,” Nour El-Din Darwish, vice president of the Automotive Division of the Egyptian Chamber of Commerce, told Ahram Online.
Darwish shed light on a new emerging crisis in the car market, which is the shortage of spare parts because of import problems as well as the lingering impact of the Covid-19 pandemic that had affected supply chains.
In June, Egypt’s Prime Minister Mostafa Madbouly launched the national strategy for localising the automotive industry that aims to place Egypt as a main gateway for emerging vehicle markets in Africa and to build strong commercial and investment relations with main regional trade partners.
The strategy also includes the Egyptian Automotive Industry Development Program (AIDP), which provides the required framework to develop existing car assembling and manufacturing capacities and encourage new investments in this sector.
Although Darwish hailed the initiative of President Abdel-Fattah El-Sisi to encourage local products and nationally made cars, he said that “this is not a real-time solution to the crisis.”
On the solutions, Darwish said that amendments must be made to Resolution 9 that regulates the process of importing cars away from agents. For him, the solution harms the small importer, who only imports 10 cars per year, forcing him to have maintenance and spare-part centres to be allowed to import despite the presence of an agent for the same brands.
Darwish also called for importing personal used cars without exorbitant taxes as well as amending the law banning the import of used electric cars. The crisis should be solved in order to hold workers in the automotive sector, as it is one of the labour-intensive sectors, he noted.
“Egypt’s sales of cars range from 200,000 to 240,000 cars annually. This is a very low figure in a country of 103-million population. The import crisis should be solved. Cars aren’t entertainment goods,” Darwish said.
In 2021, almost 291,000 new vehicles were sold, 26 per cent higher than in 2020, according to the AMIC.
Credit:Ahram
