After a pick-up in sales in March compared to the same time last year, Egyptian car sales slumped again in April in an industry that has been badly affected by the Covid-19 crisis.
Car sales were down by around 47 per cent compared to sales in March and by around 22 per cent when compared to April 2019. On a monthly basis, the downward trend was noticeable in March as well, where despite marked increases in sales on an annual basis sales were down by around 25 per cent compared to February.
According to Hussein Mustafa, former CEO of the Egyptian Automobile Manufacturers Association, passenger cars represent the bulk of sales in the Egyptian car market, and companies had cut prices and offered unprecedented discounts to encourage consumers.
“Automotive companies are simply trying to survive this year, let alone make a profit,” Mustafa commented.
He warned that if the status quo continued, in which supplies have been reduced by international car manufacturers because they have cut production capacity and there have been delays in shipping, this could affect stocks and cause prices to increase.
It could also lead companies to downsize their operations, affecting the country’s income from taxes and customs charges and leading to negative impacts on employment. The shortcomings in imports and shipping did not only affect companies importing cars but also those assembling them, since about 50 per cent of locally assembled cars use imported components, Mustafa added.
Amgad Al-Feki, deputy manager of the Al-Kasrawy Group, a local automaker, attributed the slowdown in sales to the closure of traffic departments over several months as part of the lockdown following the outbreak of the coronavirus. He was optimistic that with traffic departments resuming their work, the market could soon recover.
Precautions taken to fight the Covid-19 pandemic had affected people’s purchasing power, and purchasing decisions had also been affected by the curfew and limited working hours of car showrooms, Al-Feki added.
He said that car sales might pick up in the last quarter of this year if car manufacturers begin working again at full capacity and car companies introduce discounts and appealing prices together with banks offering loans and offers to consumers.
He said the car market in Egypt was passing through an unstable period and that fluctuations in the exchange rate could also lead to potential increases in prices.
*A version of this article appears in print in the 25 June, 2020 edition of Al-Ahram Weekly