Egyptian Vehicle Market in the 2018 is finally positive thanks to the lower inflation on vehicles price and year to date September light vehicles sales were reported at 108.947 (+9.5%). However, the continue duties increase on fuel, vehicles and parts is limiting the growth.
In November 2016 the Central Bank of Egypt embarked on a major economic reform program that included lifting restrictions on foreign exchange transfers, which floated the Egyptian pound (LE). By letting the foreign exchange rate for the Egyptian pound to float, its value decreased by 32% resulting in substantial price increases throughout the economy.
One consequence is that vehicle prices in Egypt witnessed huge, spiraling price increases. This caused a corresponding 40% drop in new-vehicle sales due to the decline of purchasing power by both businesses and consumers, who were simultaneously battered by record high inflation rates, also resulting from the pound’s flotation. Inflation hit a record of 21.9% in 2017, but has since moderated to 13.5%, as of July 2018.
In the 2018, Egypt’s economy performed well in the fourth quarter of FY 2018, with GDP growth remaining at the multi-year high recorded for Q3, primarily due to higher investment and exports. The current account deficit also fell to a near five-year low, while the unemployment rate declined to a seven-and-a-half year low. More recent signs have been mixed. After operating conditions in the non-oil private sector improved in July and August due to increased new business inflows, conditions deteriorated in September, although businesses grew more optimistic about prospects.
Economic growth is expected to remain robust this fiscal year and next. Increased government investment spending, rising natural gas production, an improved regulatory environment and construction activity related to the building of the new capital city should boost activity.
In 2016 and 2017, the Egyptian vehicles industry has been buffeted by a devalued currency, spiraling new-vehicle price increases, higher interest rates, and three hikes in fuel prices as the government rolls back fuel subsidies to control budgetary expenditures. In addition, VAT increased in 2017 and duties for over 2 liters vehicles further increased.
The result was a unprecedent fall of demand with total vehicles (cars and trucks) sales down at 134.885 units at the end of 2017, down 36.8% from the previous year and well below the record of 284.000 units touched in the 2015.
Following two years (2014 and 2015) of high sales volume, in the 2016 the domestic vehicles market dropped down, hit by the impressive increase in the vehicles key-on-hand price and this trend has not changed in the 2017, when, VAT was increased again as the duty for vehicles over 2 liters. Indeed, according to the data released by the AMIC, in the 2017 total vehicles (cars and commercials) sales have been 134.885, down a huge 36.8%
In the 2018 the huge pressure on vehicles price has been reduced and the positive economic trend created mood for a recovery. According to data released by the local Association of Car Manufacturers, the market started the year growing 5.1% in the first half and during the second accelerated with a remarkable +16.4%, ending the first half with 73.170 sales, up 12.1%.
In June 2018, Egypt’s Ministry of Petroleum and Mineral Resources raised fuel prices: 95 octane gasoline increased to 7.75 Egyptian pounds a liter from 6.60 pounds; 92 octane raised to 6.75 pounds a liter from 5 pounds, and 80 octane increased to 5.50 pounds a liter from 3.65 pounds. The result was negative to the sector, and the third quarter sales have lost the propellent ending at 35.777, only 4.3% up, with Year to date figures at 108.947 (+9.5%).
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At brand-wise, the leader is Chevrolet with 22.803 (+0.8%) followed by Nissan with 20.876 sales (+12.3%) and Hyundai with 17.107 (+28.4%).
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