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ONE ON ONE: Expert says auto sales improving, but not at last year's pace - Daily News Egypt

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ONE ON ONE: Expert says auto sales improving, but not at last year's pace

While car sales have been improving gradually since the start of the year, Egypt’s auto market is only expected to sell around 200,000 this year, according to Salah El-Hadary, secretary general of the Egyptian Automobile Manufacturers Association (EAMA). Car sales in Egypt have been declining since the onset of the global economic crisis, but the …


While car sales have been improving gradually since the start of the year, Egypt’s auto market is only expected to sell around 200,000 this year, according to Salah El-Hadary, secretary general of the Egyptian Automobile Manufacturers Association (EAMA).

Car sales in Egypt have been declining since the onset of the global economic crisis, but the market has recently seen a slight improvement. Total sales for 2009 are expected to come in anywhere between 180,000 to 200,000 compared to last year’s record figure of more than 260,000, El-Hadary told Daily News Egypt in an interview.

While the Arab world’s most populous country usually produces a little over 100,000 cars annually, the market expanded threefold in 2008, reaching a “historic record of 261,112 cars, El-Hadary added.

April saw domestic car sales reach 15,601, an improvement over January’s figure of 10,765 cars. “The trend is improving, said El-Hadary, and while figures for May have not been released, they are expected to remain positive.

“June’s results will be on the same positive track, however, the market is still not back to its 2008 boom, he added.

Tracking the sector

Giving a broader vision of the local automotive sector, El-Hadary said Egypt has more than 20 manufacturers operating under joint venture agreements with international brands.

Among these manufactures, there are a few main players: Chevrolet and Hyundai each have a 17 to 20 percent market share, Toyota has 8 percent, Nissan has 6 percent, Suzuki and Speranza with 5 percent each, and the rest is distributed among the other manufacturers.

The boom in Egypt’s automotive sector began in 2005 as sales grew 60 percent over the previous year. “The main trigger for the boom were tariff cuts on imported cars from 100 percent to 40 percent in 2004, in addition to other cuts on imported components, El-Hadary said.

The year 2006 saw sales surge 40 percent, then 35 percent in 2007 and 32 percent in 2008. Then things started slowing down.

Still, the global financial crisis has had less of an impact on local manufacturers than what happened to the auto industry in the US or Europe, El-Hadary said, except for Jeep Cherokee which had some problems importing components from a floundering US auto industry.

The first signs of the crisis showed up in August 2008; and then September sales figures dropped slightly. The ensuing slump in Egypt’s stock market created panic in all sectors, and in the auto world, “sales dropped dramatically as people decided to hold on to cash and put off spending.

This trend lasted until February 2009, when the market started gaining some traction. As April rolled in, car sales had grown 45 percent compared to January, he said.

Data on the sector is released on a monthly basis by the Automotive Marketing Investment Council (AMIC), which operates under the EAMA, and whose members include both producers and distributors, El-Hadary said.

The EAMA is also a member of the International Organization of Motor Vehicles (OICA), which releases similar reports on global auto markets.

Egypt exports the same numbers of buses and minibuses as some EU countries, such as Italy and Spain, “because local components in this category account for 70 to 75 percent, El-Hadary said, “that’s why we can compete.

Egyptian manufactures hope to produce 500,000 cars annually within the next five years. To that El-Hadary said, “It is a reachable goal if we maintain a growth rate of 20 percent.

Egypt’s automotive manufacturing sector is currently growing at 11.7, according to the latest figures available from the EAMA.

There are three challenges to reaching this goal. “The government should work more on activating trade agreements with other countries, and work on including automotives on the list of products waived from tariffs.

Secondly, the country needs to replace the old and dilapidated cars on its streets, and the new taxi initiative is one step in the right direction, he added. Finally, governmental entities should use locally made vehicles, he said; the rule is out there but many do not comply.

The EAMA is currently working with authorities to join the UN’s Harmonization of Vehicle Regulations (WP.29) forum, which would ensure that cars coming into the market meet safety and environment standards.

Meeting markets

Chinese cars have been on Egypt’s roads since the early 2000s, but they became more prevalent starting 2005. But during that time, several brands have entered the market only to see a swift exit, El-Hadary said.

At first, cars imported from China garnered a good share of the local market, mainly because of their cheaper prices, which made the idea of producing Chinese cars locally more appealing.

There are currently two Chinese branded-vehicles manufactured in Egypt – Speranza and Brilliance – both made with 45 percent Egyptian components.

“This creates jobs and helps feed other industries, El-Hadary said.

The Arab world produces only 12 percent of its total automotive market, with Egypt making 100,000 cars annually and Morocco producing 30,000.

One third of the market is in Saudi Arabia and the other third goes to Gulf Cooperation Council (GCC) countries. The last third goes to the rest of the Arab world.

The reason for this distribution is because while the first two markets have “no railway networks, they do enjoy higher-than-average incomes.

To read the other stories in our monthly special focus on Egypt s auto sector, click here:

http://thedailynewsegypt.com/admin/article.aspx?ArticleID=22470

http://thedailynewsegypt.com/admin/article.aspx?ArticleID=22471

Topics: FJP

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https://dailyfeed.dailynewsegypt.com/2009/06/17/one-on-one-expert-says-auto-sales-improving-but-not-at-last-years-pace/
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