Car prices continued to rise without sign of a pause, registering record prices as a result of the foreign currency crisis and its effect on importing cars.
Prices have also increased as a result of the recent increase in the dollar exchange rate against the Egyptian pound, which reached EGP 10 to the dollar in informal markets.
Famous brands in the automotive market, including BMW, Hyundai, Chevrolet, Kia, Renault, Peugeot, and Nissan, topped the list with their price increases. Such increases, as notified to the companies’ agents in the Egyptian market, amount to a few thousand pounds depending on the vehicle.
El-Masria for Cars Chairperson Mohamed Ahmed Rayan told Daily News Egypt that car prices have risen over the past week by 3% to 5%, which included increases in prices for vehicles from BMW, Hyundai, Chevrolet, Kia, Renault, Peugeot and Nissan.
Rayan added that car prices will continue to rise in the coming period by 10% due to the continued scarcity of foreign currency alongside the increase in the dollar exchange rate against the pound. He also anticipated that sales in the automotive market will drop by 30% in 2016.
Deputy Chairperson of Abu Hetta Automotive Company Nashaat Abu Hetta said the market is currently witnessing a leap in car prices due to the dollar shortage. He added that some companies raise their prices on a daily basis according to the price of the dollar in the informal market, while others raise their car prices on a monthly basis by estimating the dollar price in advance.
Abu Hetta also revealed that companies that price their cars on a monthly basis have estimated the dollar exchange rate at EGP 11, which is an exaggerated figure. On the other hand, he added that companies that price their cars on a daily basis had set prices during the last week and estimated the dollar at EGP 10.25.
According to Abu Hetta, topping of the list of companies that have raised their prices are Hyundai, Kia, Chevrolet, Renault, Peugeot, and Nissan. While prices have increased by 5% to 9%, Abu Hetta anticipated that prices will continue to increase to more than 12%.
The automotive industry is currently suffering from the reluctance of customers to buy cars, said Abu Hetta. He said the automotive sector is considerably shrinking as a result of low supply as well as demand, which threatens the existence of all sectors of the automotive market.
Abu Hetta explained that his company postponed its decision to open a new branch in New Cairo as a result of the recession experienced by automotive companies. He said that if the current situation continues until the end of the year, their company will shut down.
Rafaat Masrouga, an automotive sector expert and honorary chairperson of the Automotive Marketing Information Council (AMIC), said companies’ shortage of foreign currency liquidity caused a shortfall in the supply of cars, prompting companies to raise their car prices.
Masrouga anticipated that the increase in the dollar exchange rate against the pound will lead companies to increase car prices of less than 1,600 cc by 5% to 7%, while the price of cars with more than 1,600 cc will increase by 10% to 11% affected by cost of shipping, transport, customs tarriffs, and taxes.
The decision to reduce the credit limit for consumer loans to 35% of the total monthly income of the individual resulted in a decline in the demand for cars. Also, the trend of the Central Bank of Egypt (CBE) towards rationalisation in imports results in a decline in supply to the automotive market. Thus, the market continues to shrink.
Executive Director and spokesperson for the Egyptian Automobile Manufacturers Association (EAMA) Hussein Mustafa told Daily News Egypt that high prices and low market sales are serious indications that the market size this year is shrinking.
Mustafa added that the decision to limit loans to personal income will lead specific segments to stop buying because of the difficulty in proving their income. Among these segments are entrepreneurs, bearing in mind that the automotive market in Egypt is dependent on instalments for 60% of its sales.
Mustafa said automotive companies, agents and all employees in the automotive sector were unable to develop future strategies due to the rapid change of all cost and production components in a short period of time.