A number of automotive agents have decided not to pay customs fees on imported cars and let the distributors pay them in exchange for letting those distributers decide on the car prices, in line with what they pay to provide currency.
Sources said that the agents made this move after the US dollar exchange rate adopted by the Customs Authority reached EGP 17.82, compared to EGP 8.80 before the Egyptian pound flotation decision. The new system these agents are following is to pay the car prices until they reach Egyptian ports, and then to let the distributers or merchants pay the customs fees to release the shipment.
Sources also said that the automotive agents are struggling to provide dollars, so they have involved distributors and merchants as partners in importing and pricing the cars.
Alaa El-Saba, board member of the Cairo Chamber of Commerce and chairperson of El-Saba Automotive, said that the automotive companies are monitoring the dollar’s price, and that the current circumstances are hindering companies’ ability to make any decision with regards to pricing.
He added that the dollar exchange rate at customs exceeds EGP 17.82, meaning that customs have almost doubled. This reflects on car prices, which, he said, will be “imaginary” in the next few days.
El-Saba expects imported car prices to increase by 20-30%. It is likely that a number of merchants will depend on sales of the locally manufactured cars; he expects to see price increases for these cars.
Nissan is now depending on its Sunny and Sentra models which it manufactures in Egypt, while Peugeot has increased all its models’ prices by EGP 20,000-50,000. But this won’t be the final price increase, he added.
El-Saba warned against companies suspending car imports as this would halt the economic cycle of these companies, causing them to incur significant losses.
He demanded that the Customs Authority fix its dollar price at EGP 15 for at least a month, so companies can price their cars and push sales forward.
Nashaat Abu Hetta, deputy head of Abu Hetta for automotive trading, said his company has decided to suspend buying and selling for at least the next 10 days. Automotive companies are still monitoring the currency prices and pricing cars is impossible at the current time, he added.
Abu Hetta added that the car prices which increased after the pound flotation decision will increase again within days, as car prices have become subject to the varying dollar exchange rate.
He added that the dollar price at customs increasing by over 100% will push the market towards very strong price hikes in the next few days.
Toyota increased the price of its Fortuner by EGP 50,000, while Mitsubishi increased the price of its Lancer by about EGP 20,000, raising the price of its basic segment to EGP 215,000.
Abu Hetta said that his company suspended buying dollars during the current period in order for banks to increase the dollar amounts they possess. He said that, in this way, automotive companies must do their duty towards the state, as cars are one of the goods that have drained dollars the most in recent years.
Raafat Masrouga, honorary head of the Automotive Marketing Information Council (AMIC), called on automotive companies to suspend importing for two months to give the dollar price the chance to stabilise. The dollar price at customs increasing to EGP 17.82, has doubled the custom fees on cars.
Following the decision of the Central Bank of Egypt to float the pound, some automotive companies suspended sales, deciding to reprice their cars, while other automotive companies are still waiting for the dollar price to stabilise and the confusion in the market to come to an end.