The Egyptian car market has dramatically changed in the wake of the coronavirus (COVID-19) pandemic, according to Karim Naggar, Chairperson of Kayan Egypt for Trading and Investment and Managing Director of Egyptian Automotive & Trading Company (EATC).
The entire automotive industry has been hammered worldwide by the lowest demand for new vehicles in decades, Naggar said.
Kayan is Egypt’s official SEAT, Skoda, and Cupra importer, whilst the EATC is Egypt’s official Volkswagen and Audi importer. Both have demonstrated support for the country’s automotive market.
Before the coronavirus (COVID-19) pandemic, SEAT, Cupra, Skoda, Audi, and Volkswagen passenger cars, as well as Volkswagen commercial vehicles had benefitted from positive changes in the local market during 2019.
Naggar’s both companies showed a commitment to cut prices of their European-built vehicles following the government’s decision to apply “zero-customs” on imported European cars.
“Before the COVID-19 outbreak we were committed to offering high-quality European vehicles at affordable prices, aligning with the Egyptian government’s move last year to apply zero customs on imported European cars. Some of our brands had achieved record sales in the local market in 2019,” Naggar said, “We had an ambitious plan for Kayan Egypt to acquire 6% of the local market sales of passenger cars in the next three years.”
“Car manufacturing giants have been severely hit by the coronavirus pandemic that has caused a sharp downturn in global economic growth this year,” he said, adding, “The worldwide lockdowns forced cars manufacturers to halt production at many plants in major European countries for weeks.”
He noted that China’s exports of vital car components to the EU have also shrunk significantly. The monetary impact on the continent’s automotive industry stands at about $2.5bn, according to some estimates.
Naggar said the Egyptian car market has not been immune to this crisis. The previously mentioned factors, along with the suspension of new vehicle licensing at traffic department units during March and April, have caused a significant decline in local car sales.
“Despite new vehicle sales plunging to unprecedented levels in our two companies, and after-sales and maintenance services dropping by almost 40%, we were keen to keep our employees and their payroll intact amid the COVID-19 outbreak,” Naggar said, “Securing our workers’ jobs and reducing their exposure to the coronavirus are of paramount importance, we also extended the warranty of all our group brands’ cars, keeping our loyal customers safety as a priority during the pandemic.”
The deferment in loan premium payments undertaken by some automotive companies was a response to the Central Bank of Egypt (CBE) move delaying loan instalment payments for six months. This was due to the ongoing coronavirus pandemic, which has had a significant effect on consumer spending and confidence. Naggar called for the banks to ease their monetary policy further, and extend the payment period with no additional interest.
“Adapting to the COVID-19 crisis is paramount to keep the economy moving,” he said, “Since the beginning of the pandemic, many carmakers across the globe have been launching new models online because of the need for social distancing.”
Naggar noted that carmakers worldwide have shifted their marketing strategies away from traditional methods. Instead, they have embraced digital marketing and social media as the future of the sector’s marketing strategy.
“I believe that the local market won’t return to pre-coronavirus levels before August 2020, and car prices might go up in the coming period, due to the decline of the Egyptian Pound versus the US dollar and foreign currencies, and also the potential increase in shipping costs by 50% due to the high risks emerged from the current crisis. Overall, supply and demand is the main determinants of car prices,” Naggar forecast.