The Volkswagen brand achieved sales of 2,300 Tiguan and Passat cars in 2020, and is targeting sales of 3,500 cars this year.
Medhat Ismail, Director of Volkswagen brand at the Egyptian Automotive and Trading Company, told Daily News Egypt that car sales in the domestic market rose by 28% in 2020. This compared to the previous year, which saw a significant decline after campaigns that saw a reluctance to buy among consumers.
Ismail added that, despite the emergence of the novel coronavirus (COVID-19) pandemic last year and its negative impact on the global economy, it positively affected car sales in the Egyptian market.
The first quarter (Q1) of 2020 witnessed a 60% growth in sales, however the closure of traffic units and notary offices, and the night curfew in Q2, as part of the government efforts to curb the virus’ spread, led to a decline in sales during the rest of the last year.
Ismail revealed Volkswagen’s plan to launch new models in the second half (H2) of 2021, including Touareg and Golf Facelift, for the first time in the Egyptian market.
He said that the decrease in the global production rate of vehicles as a result of the pandemic has prompted the parent company to reduce working hours. This has had a significant impact on import quotas and the delivery date of cars.
Ismail noted that the delivery of vehicles is now witnessing a delay of two to four months, due to the lack of vehicle imports in large part due to the closure of many charging stations as well.
Despite this, he expects the growth of vehicle sales in the Egyptian market to increase significantly, according to indicators and reports, with sales doubling in 2021 compared to 2020.
Volkswagen aims to expand its distribution network by launching more service centres and sales outlets, as well as increasing the number of showrooms nationwide in the next period.
With regard to after-sales services, Ismail said that the pricing of Volkswagen car maintenance are in accordance with the results of market studies, as well as studies of the maintenance provided by competing companies. These have ensured that appropriate market-relevant pricing has been put in place, with Ismail also denying the exaggerated reports of Volkswagen maintenance costs.
He stressed that the increase in the prices of spare parts are due to the floatation of the Egyptian pound and the increase in customs and taxes.
Ismail explained that agents seek to meet the customer’s needs by providing periodic and emergency maintenance services, to ensure that the car continues to operate efficiently and effectively.
Regarding social media reports claiming that the automatic transmission in Volkswagen vehicles rapidly deteriorates, Ismail said that this problem began in 2010-2011 but has since been resolved. He added, however, that though there are no further issues with gearboxes in current Volkswagen-manufactured models, some may still present with a defect. If this happened, the company makes sure to avoid repeating such defects in the following models.
Meanwhile, Ismail said that the worldwide demand in passenger cars is now trending towards SUVs. The trend began in North America in 1990, with many consumers preferring large 4000 cc engine cars for long-distance travel and transportation.
The increased demand on such cars not only reflected on their availability, but also ensured the rise in their prices. He noted that SUV cars represent 38% of van sales in the Egyptian market, and this year it may reach 40% of sales.
Ismail added that since the year 2000, the medium sports cars B segment with engines of less capacity ranging from 1600 to 2000 cc began to appear on the market and become more affordable. As a result, this segment of vehicle became more popular in the automotive market.
He revealed Volkswagen’s plans to launch multi-use sports cars in the C and D categories, which are smaller classes than the Volkswagen Tiguan currently available in the Egyptian market.
In terms of local assembly, Ismail said that the company is seeking to open a Volkswagen factory to assemble cars that are difficult to import from abroad. He added that there are no Volkswagen Passat or Tiguan models imported from Europe with customs exemption, in accordance with the European Partnership Agreement.
He also said that many Volkswagen models are manufactured in the Americas, which makes the cost of importing them very expensive. As a result, this has prompted the company in Egypt to address and present studies and requests to the mother company, requesting the opening of local assembly opportunities in Egypt.
This comes particularly in light of the Egyptian government’s move towards localising automotive industry manufacturing capabilities, and providing all appropriate incentives for investors to pump their investments into the local market.
Ismail said that assembling cars at the present time inside Egypt will support the local economy by opening up new markets and operating feeding factories in the country. It will also ensure more job opportunities at factories and companies, whilst, on the other hand, increasing the availability of Volkswagen vehicles in the local market and increasing sales.
As for the state’s move towards using natural gas in vehicles, Volkswagen seeks to import cars that run on a natural gas engine. The company also seeks to launch commercial cars powered by natural gas engines, and to participate in the Egyptian government’s replacement initiative.
In terms of electric cars, Ismail said that the German company is now looking to move into the production and manufacture of electric vehicles (EV). As part of this, they have reduced the production of fuel-powered cars and pumped more investments into the EV manufacturing field.
He added that Volkswagen has participated in the Paris Agreement, which stipulates a switch towards EVs, which is in line with the Egyptian Government’s shift towards the use of clean energy.
Ismail revealed that Volkswagen will launch EVs in Egypt at the beginning of 2024, coinciding with the end of construction work on the EV infrastructure and network in the country.
In a separate context, he confirmed Volkswagen’s participation in the upcoming Automech Formula Exhibition, where the company will launch the new Volkswagen Golf Facelift, Touareg, and Tiguan models, along with the new Passat. The exhibition is expected to take place at Cairo’s Egypt International Exhibition Center (EIEC) in June 2021.
Volkswagen is preparing to face the second wave of the novel coronavirus (COVID-19) pandemic by following precautionary measures, and reducing the number of employees at its offices and showrooms. It will also hold meetings online, and encourage the working from home as much as possible.
Ismail said that the global health crisis has caused a significant shift among companies towards relying on electronic marketing of their products. He pointed to Volkswagen’s move in this direction, which has also increased interaction, and pushed the company to provide more services that enable the customer to book car maintenance and spare parts from home.