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Coronavirus pushes passenger car sales forward in Egypt - Daily News Egypt

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Coronavirus pushes passenger car sales forward in Egypt

Passenger car sales in Egypt increased 24% during September 2020 on annual basis

Passenger car sales in Egypt increased 24% during September 2020 on an annual basis to reach 17,051 cars, compared to 13,734 cars in the same month last year. Truck sales also increased to 3,348 vehicles during September 2020, compared to 3,055 units in the comparison period, with a growth rate of 9.6%, according to the monthly report issued by the Automotive Marketing Information Council (AMIC).

However, bus sales in Egypt witnessed a decrease of 34.1% in September 2020, bringing the total number of buses sold to 2,506 buses, compared to 3,055 in September 2019.

Total car sales during the first nine months (9M) of this year reached 107,617 cars, compared to 87,272 cars during the same period of 2019, an increase of 23%, despite the novel coronavirus (COVID-19) crisis.

Locally assembled cars managed to make a slight increase of 0.6%, bringing the total sales in the 9-month period in 2020 to 63,247 vehicles, compared to 62,871 vehicles for the same period last year.

As for the sales of imported cars, they witnessed high growth during September 2020, reaching 89,085 vehicles, compared to 62,435 vehicles in September last year, with a growth rate of 42.7%.

In this regard, Honorary Head of the AMIC, Raafat Masrouga, attributed the increase in car sales in the recent period to the purchases that were postponed due to the pandemic.

The decline in sales that the market witnessed in the second quarter (Q2) of the year was not a reluctance to buy, but a wait-to-see strategy on the part of consumers until the health conditions in the country stabilise and the virus impact abates, he explained.

Masrouga added that the possible second wave of coronavirus may cause the auto market to stop again as consumers will once again delay car purchase, He called on dealers and distributors to be prepared for the second wave of the virus.

He said that the increase in sales of imported cars is greater than local ones, and this is due to their lower prices and availability, pointing out that the abolition of customs on European cars and cars of Turkish origin contributed heavily to this end. In addition, many consumers largely prefer imported cars because they have more advantages than the locally assembled ones.

The automotive expert called for encouraging consumers to purchase locally assembled cars, especially as the state is moving towards localising the auto industry, calling for special incentives to be put in place to encourage sales of locally assembled cars. Firstly, companies should reduce the price of locally assembled cars by 20% compared to imported ones, while increasing the efficiency of the car.

With regard to the over-price phenomenon, Masrouga indicated that the parent company has nothing to do with this phenomenon, stressing that the agent conducts a study and determines the price of the car in advance to import it.

He explained that the current system of taxation and digitisation made it very difficult for the agent to change the official price. He confirmed that 98% of car agents had nothing to do with “over-price”, pointing out that the problem appears in the distribution stage.

Regarding the claim by some that agents are trying to compensate for the losses of unpopular cars by increasing the price of the popular one, Masrouga said that the parent company already gives the agent some less popular cars, but all this is calculated in the first pricing of cars, and therefore this excuse is not justified.

Osama Mahmoud, General Manager of Sales and Marketing at Auto Group, the authorized distributor for many brands and partner of Proton brand in Egypt, said that the recent increase in sales came as a result of the launch of many 2021 models of international brands, such as Hyundai Elantra which achieved sales of 712 cars during September only.

Mahmoud added that the emergence of new brands in the auto market during the past period was a major reason for the increase in sales volume. He noted that many brands have changed their agents in the Egyptian market to increase sales. In addition, the marketing campaigns and offers contributed to the increase in sales.

He pointed out that the current year, despite the Coronavius and production hiatus in Q2 of 2020, did see a massive negative impact on the car sales, but rather the local market was affected positively due to the offers made by agents.

He pointed out that the cars that are currently assembled in Egypt are old models; however, their prices are close to the prices of new imported cars.

He called on local manufacturers to produce new models that attract consumers and increase their quality and reduce prices. He also stressed the necessity of the state support in order to encourage the local production.

Montaser Zaytoun, Chairperson of Zaytoun Auto Mall, said the introduction of 2021 car models in Q4 of 2020, with the abolition of the curfew, led to encouraging consumers to buy new cars.

Osama Aboul Magd, Chairperson of the Egyptian Automotive Dealers Association, said that the increase in sales during September and October came as a result of the previous six-month slowdown in sales due to the coronavirus pandemic. He noted that many consumers tend to purchase new cars before the beginning of the new school year.

However, he expected a decrease in sales again in the coming period due to the new academic year, especially in case of the emergence of the second wave of coronavirus.

Focus2Move (F2M), the US market research agency, confirmed that the Egyptian auto market is one of the best-selling markets around the world during 9M of 2020.

The American agency indicated in a report that the Egyptian auto sector scored a strong start in Q1 of 2020, before sales declined due to the outbreak of the coronavirus, but the total sales recorded until September stood at 146,950 units, an increase of 29.3% year-on-year.

F2M explained that car sales last September amounted to 21,177 units, with a growth rate of 18% compared to sales for the same month of 2019, which contributed to the continuation of the overall growth rate.

Another report issued by Bloomberg Economic Agency pointed out that the global economy was greatly affected by the coronavirus, as major automakers were forced to close factories which resulted in a shortage of production components for the auto industry.

The American credit rating agency, Moody’s, expected that car sales around the world will witness a decline of 2.5% this year due to the pandemic.

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