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Car companies suffer from political uncertainty - Daily News Egypt

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Car companies suffer from political uncertainty

Political events have contributed to the downturn in the Egyptian car market and led some companies to make changes in their plans to import vehicles in the second half of 2012.

Many are hoping that stability will return to the market after Mohammad Morsi’s victory in the presidential elections.

George Soliman, Director of Sales for BMW, said that political events forced dealerships to change their plans, expecting a 10% decline in sales.

He added that the company plans on offering three new models starting in August. They are the BMW300 with a price tag of EGP 375,000, the BMW325, and the BMW 335, both going for EGP 500,000. Soliman said. However ongoing instability could lead the company to delay the models’ unveiling in Egypt until September.

Khaled Fawzy, an official with Suzuki, noted that business plans will depend on the prospects for political stability in the coming period. He said that his company plans on introducing a new 800cc model when the situation calms.

Mohamed Halmy, a member of the cars division at the Cairo Chamber of Commerce, said political events created a disturbance in the automobile market. He added that sales did not rise to normal rates even when dealerships lowered prices, noting that the poor performance of the Egyptian pound made it more expensive to import cars and car parts. He proposed that domestic vehicle manufacturing be further developed in Egypt. A new system with a greater focus on domestic manufacturing would create jobs and be in contrast to the old system which set up for the benefit of a small group of importers.

According to Effat Abdel Aati, head of the cars division at the Cairo Chamber of Commerce, said that sales in the automobile market are down 80%. He feared that the Egyptian pound will continue to fall against the dollar, making it increasingly difficult for merchants to import vehicles and spare parts.

He denied that there was any tension between local dealers and parent companies, saying that the contracts which require Egyptian dealers to buy certain quantities of automobiles contain provisions for unforeseen events such as revolutions and wars. The provisions prevent the parent company from suing local dealerships in the case that they are unable to meet their obligations in such circumstances.

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