Sales in the Egyptian automotive market have dropped by 75 per cent on an annual basis, said a report by the Automotive Information Council (AMIC) this month. Fewer than 5,400 vehicles were sold in January this year, down from 21,200 vehicles in January 2022, the report said.

The falling sales were mainly driven by a hike in prices, said Mustafa Hussein, chair of the AMIC.

Problems in the automotive market began with the outbreak of the Russia-Ukraine war, followed by the halt in the letters of credit system for imports, the floatation of the national currency, and the subsequent appreciation of the US dollar against the Egyptian pound.

These things have led to an increase in the price of cars by at least 100 per cent, Hussein told Al-Ahram Weekly.

Other challenges also contributed to the hike in car prices, such as a rise in the cost of components and the global electronic chips shortage, he added. Moreover, the energy crisis the world over, coupled with the rise in fuel prices and the increasing insurance premiums on ships transporting vehicles, also contributed to the slowing sales.

In response to the rising prices and the fall in sales of new cars, some showroom owners have announced discounts on the extra costs they often add to the prices of cars in return for fast delivery.

Car dealer Wael Mahmoud said he had lowered his markup on many cars by LE100,000 and by LE40,000 for cars for which there is high demand. Some showrooms add markups of LE250,000, he pointed out, adding  that this is not a large amount when some cars can now sell for over LE1 million.

Mohamed Mahrous, another showroom owner, said he was offering installment plans on vehicles with a 25 per cent increase on the original price provided that buyers pay 20 per cent of the price in advance. He said he was worried about the market because the automotive companies have said that car prices are likely to rise further.

Car dealer Ahmed Al-Senousi advised against people selling their existing cars for the time being if they are in good condition. Car prices had risen by an “insane” amount, he said, adding that people should not buy new cars unless they want to start a specific project like taxis using taxi-hailing applications.

Vehicle prices have already increased three times since the beginning of the year, he said. Meanwhile, many people are looking to buy cars at affordable prices with minimal quality requirements.

Low-end Korean and Chinese cars selling for between LE350,000 and LE400,000 are currently in demand, but there can be long waits for delivery.

* A version of this article appears in print in the 9 March, 2023 edition of Al-Ahram Weekly