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IN DEPTH: A closer look at Egypt's car boom - Daily News Egypt

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IN DEPTH: A closer look at Egypt's car boom

In 1982, Nisma Mohamed Hassan was the 10-year-old daughter of a lower-middle class family that owned no cars. Ahmed Abdel-Aziz was a 17-year-old high school student, one of nine in a car-less lower-middle class family. Fifteen years later, Hassan and Abdel-Aziz got married and now have three kids aged 12, nine and seven. The family …


In 1982, Nisma Mohamed Hassan was the 10-year-old daughter of a lower-middle class family that owned no cars. Ahmed Abdel-Aziz was a 17-year-old high school student, one of nine in a car-less lower-middle class family.

Fifteen years later, Hassan and Abdel-Aziz got married and now have three kids aged 12, nine and seven. The family has two cars – one for each parent, and they plan to buy each of their kids a car when they are of driving age.

Take this trend and multiply it by hundreds of thousands, and it’s easy to see why the number of cars on Egypt’s roads has shot up 402.6 percent in the past 25 years or so, from 932,477 vehicles in 1982 to 4,686,992 cars by the end of 2008, of which 22 percent are in Cairo, according to a report issued recently by the Central Agency for Public Mobilization and Statistics (CAPMAS).

A CAPMAS study published in Al-Ahram newspaper in the early 80s showed that in Egypt’s population of 44 million, there were 22 vehicles for every 1,000 people. That number has now tripled, with 62 vehicles per 1,000 people by the end of 2008.

By the end of 2007, there were 431 companies operating in Egypt’s automotive industry, according to an Information and Decision Support Center (IDSC) report, with a total capitalization of LE 7.2 billion, of which LE 1.3 billion is foreign direct investment.

Pros and cons

One of the first things people think of buying when they start making money is a car, and it’s widely regarded as a status symbol as well as a positive indicator of the country’s economic development. At the same time, the news may be less bright when viewed in the context of the limited capacity of Egypt’s roads.

In 2007, Prime Minister Ahmed Nazif formed a committee to look specifically at solving the nation’s traffic problems comprised of representatives from the Ministries of Interior, Transportation, Administrative Development, Environmental Affairs as well as officials from the Cairo governorate and engineering professors from national universities.

The committee was tasked with finding solutions for Cairo’s congested roads, growing number of traffic accidents, lack of organization and, more importantly, putting a ceiling on the number of new cars licensed to roll down the streets of the capital.

Of Egypt’s total vehicle production in 2006, 67.4 percent were passenger cars, 26.7 percent were trucks and trailers and 5.9 percent were buses, according to an IDSC report. As for sales figures, 77.6 percent were passenger cars, 15.9 percent were trucks and trailers, and 6.5 percent were buses.

Much of the stimulus package put forth by the government to cope with the economic crisis is going towards infrastructure spending, namely road work; and several other government initiatives are focusing on improving the national public transportation network in hopes of mitigating people’s reliance on private vehicles.

“Even if I can afford to buy my kids three cars when they grow up, I would love not to do that if there is a decent public transportation network, Hassan told Daily News Egypt.

Hassan, who lives in Hadayek Al-Ahram, a gated community on Cairo’s outskirts, said that not only is driving in Cairo no fun anymore, it’s becoming more dangerous. Ideally, her children will have access to a wider and improved public transportation network, but if it’s not ready when they’re old enough, “I will hire a driver to save them the struggle and keep them safe, she added.

What drove the boom?

Retail banking has been taking off in Egypt since the beginning of 2000s, and one of the main trends has been auto loans, which is how many Egyptians finance their car purchases.

Capitalizing on the trend, several companies have also facilitated car financing. For Sameer, 38, it was quite a convenient arrangement, to “pay 35 percent of the total price of the car and the rest [in monthly installments] on zero interest.

For Ola El-Sedeeq, 30, a bank loan was the only solution to finance her car purchase after moving with her family to Rehab city, more than 30 minutes away from the center of the capital.

Another main contributing factor to the car boom were the tariff cuts on imported vehicles, slashed from 100 percent to 40 percent in 2004; in addition to other cuts on imported components, Salah El-Hadary, secretary general of the Egyptian Automobile Manufacturers Association (EAMA), told Daily News Egypt in a previous interview.

The looming question seems to be how to balance a flourishing automotive industry while keeping the streets from overcrowding. Effat Abdelatti, chairman of the car agents, distributors and dealers division at the Cairo Chamber of Commerce, stressed the need for “coordination between several authorities.

While praising the government’s taxi replacement program, he struck a more conservative tone when commenting on the proposed initiative to replace old private cars. “It’s a whole different story, he said.

Topics: FJP

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https://dailyfeed.dailynewsegypt.com/2009/07/23/in-depth-a-closer-look-at-egypts-car-boom/
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