Automotive sales dramatically dropped in Egypt last year, and it is unlikely that they will improve over the next few months, said Osama Abul-Magd, head of the Egyptian Automotive Dealers Association, this week, who added that the market had seen a 42 per cent drop in sales in 2022, down by 172,000 cars from a previous total of 250,000 to 300,000.
The prices of vehicles have been affected by the war in Ukraine, the depreciation of the Egyptian pound, and other global challenges, he added.
With the advent of the new year and the depreciation of the pound prices almost doubled, according to Mustafa Hussein, chairman of the Automotive Information Council (AMIC). What augmented the situation is the fact that cars are globally pricier because of the higher cost of production inputs, he said, in addition to the higher cost of shipping.
A middle-of-the-road vehicle costs between LE750,000 and LE1 million, Abul-Magd said, adding that “from the looks of it, car prices are unlikely to drop in 2023.”
However, the second-hand car market will likely see a boom, especially for newer, slightly used cars. Abul-Magd said that price increases in new cars are always accompanied by increases in the prices of used ones as well.
But when it comes to the market for second-hand cars, there is no fixed pricing mechanism. Ahmed Moussa, a car dealer, said that “there are no clear standards for pricing second-hand cars, and each owner will decide the price freely.”
“I compared models online and found a car similar to mine but with manual gears. As a result, when I wanted to sell my car I added LE30,000 to the price of the one online and posted it for sale,” said one used car owner.
“I went to an automotive showroom to have my car priced, but I added LE50,000 to the price it proposed because I know showrooms suggest low prices so they can buy cars from their owners at low prices,” another owner told Al-Ahram Weekly.
“I priced the car I wanted to sell according to the price of the car I wanted to buy. I added LE100,000 to its original price to post it for sale. At the end of the day, I am free to price it the way I want,” said a third car owner.
According to car dealers in Cairo, the price of used cars has risen by 75 per cent in three months, resulting in a slump in the second-hand market.
“The used-car market is also suffering from a recession, and no one knows when it will end. A used car that used to be priced at LE100,000 is now selling for LE200,000,” Moussa said.
He added that people do not tend to sell their cars except if they need money. If the purpose is to buy a better car, they will not be able to afford one due to the current economic conditions.
“Don’t get rid of your car if it is in good condition,” Moussa advised, noting that it is no longer possible to find a good used car for less than LE200,000.
One car dealer speaking on condition of anonymity said that many used-car dealers have stopped trading because they have to sell cars at higher prices in order to make profit. “It is better to buy the new 25 per cent yield certificates from the banks. This gives you a guaranteed profit without any effort,” he said.
Many factors have contributed to the slowdown in the used-car market, including the coronavirus pandemic, the closure of the Nasr City used-car market to turn it into a residential area, and the depreciation of the pound.
After the closure of the Nasr City market, many dealers resorted to their circle of acquaintances to buy and sell cars, while others counted on online advertisements. The latter have introduced new problems as some people misrepresent the real technical condition of their cars.
Another method of buying and selling used cars is to present them for sale in showrooms, but people have been discouraged by the high prices sometimes asked.
To replace the Nasr City market, an integrated car complex has been established on the Cairo-Ain Sokhna Road. However, car vendors have not favoured the new market because of its location and worries about the availability of buyers.
According to government sources, the Nasr City market was not well-planned, lacked basic services, and caused traffic jams in the area.
The new car complex is located on 57 feddans of land and can host up to 4,000 cars. It offers services and personnel, including check-ups, maintenance, coffee shops, a real-estate registration office, traffic police, and firefighting and ambulance units, in addition to bank branches to facilitate transactions between buyers and sellers.
*A version of this article appears in print in the 19 January, 2023 edition of Al-Ahram Weekly.