CAIRO: New car sales in Egypt are set to jump to a record this year, the head of the country’s main carmaker group told Reuters on Tuesday, brightening the outlook for local vehicle assembly firms such as GB Auto.
Egyptian automakers, most of which assemble foreign brands using imported parts, were hit by the global financial crisis last year.
Sales are now growing at pre-crisis levels, partly thanks to a government plan to offer affordable cars to taxi drivers, Salah El-Hadary, secretary general of the Egyptian Automobile Manufacturers Association, said in an interview.
"Sales figures show that the market is steering towards a speedy recovery in 2010 that will continue into the coming years, mainly boosted by the taxi replacement program," he said.
He forecast that sales this year would grow by 27 percent to around 260,000 vehicles. Around 45 percent of cars sold in Egypt are assembled in the country.
The top foreign brands are Chevrolet, Hyundai and Kia.
A recovery in Egypt’s vehicle market helped boost GB Auto’s revenue in the second quarter by 62 percent to LE 1.7 billion, with net income in the quarter amounting to LE 77.7 million.
Vehicle sales nationwide rose 31 percent year-on-year in the January-July 2010 period to 144,018 vehicles, Hadary said.
He forecast further growth after the taxi replacement program, managed by Egypt’s ministry of finance, spreads to cities other than the capital Cairo.
The taxi program has helped Egypt’s auto firms emerge from the savage downturn — and made Egypt’s streets a little safer and cleaner — by replacing many of the country’s grimy, rickety black and white taxis with new, locally assembled models.
The program aims to scrap around 50,000 taxis by the end of this year. The ministry has earmarked a budget of LE 560 million for the program’s first two years of operation.
Investment bank HC Securities said it expected GB Auto to capture a 25-30 percent share of taxi replacements. A similar government plan to replace old microbuses is under study and could be kicked off in 2011, Hadary said.
"If the microbus replacement plan comes into effect, it will bolster sales, increase domestic output and expand the country’s auto market," he said. "Local automakers are ready to take part in the plan once it begins."