Elsaba Automotive has frozen its investments during the current year, due to the negative local and international repercussions of the novel coronavirus (COVID-19) pandemic, according to the company’s Chairperson Alaa El-Sabaa.
The investment plan is expected to be implemented during 2021, should conditions stabilise, and include the expansion of a new exhibition for one of the European companies Elsaba Automotive represents. This will also see the construction of a service centre branch for Nissan in Damietta Governorate.
El-Sabaa said that the time is not suitable for any new investments to be made, to avoid incurring further financial losses. This is particularly with the lower demand for purchasing vehicles of various kinds over the past few months.
He added, “The state of confusion in the auto market, due to price instability and lack of supply for some brands, will negatively affect the sectors business and sales results by the end of this year.”
El-Sabaa also said that, during the coming period, a number of expansions will be made alongside exhibitions and maintenance centres, as a service centre will be opened in Mansoura early next year, with investments of EGP 8m.
He added that a new showroom will be opened in Cairo, during the first quarter (Q1) of 2021, for the distribution of cars and vehicles manufactured by a European company.
Whilst refusing to disclose the name of the company, El-Sabaa said that the showroom will receive a total of EGP 7m in investments.
The Chairperson pointed out that all expansions during the next year will be self-financed, with no borrowing through the investment banking sector occurring.
He also pointed out that the establishment of a holding company has been postponed from its originally scheduled opening by the end of 2020, until the end of next year.
He added that his company is looking to list its various activities on the stock exchange, including in tourism and real estate among others, during a period of up to three years.
With regard to the over-price phenomenon, El-Sabaa said that the economic crisis caused by the global health crisis has reduced the display of models available in the market. The pandemic has also significantly shaken consumer confidence, meaning that many have now postponed purchases due to the lockdown.
He noted that there are no monopolies in the Egyptian auto sector, as monopoly practices only emerge in basic commodities that consumers cannot live without.
El-Sabaa also said that the consumer has many choices between many different models, types and price groups, which will affect their purchasing choices.
He said that the market is currently witnessing a sales decrease trend, by a rate ranging between 10%-20%, with the return of schools, compared to the sales witnessed during August and September.
He indicated that car sales began to improve after a state of recession during Q1 of 2020, due to the effects of the coronavirus.
El-Sabaa added that most car dealers and distributors in the Egyptian market have reduced their monthly shares of dealership contracts during the slowdown in demand for cars.
A General Automobile Division member has said that they expect the market to witness a state of improvement during the next month due to the holiday season, the celebration of birthdays and the New Year. The rise in sales is also likely to occur as expatriates return from abroad, which will enhance the demand for cars.