Price decline is freshening hopes in the automotive market

Ahmed Dawoud
5 Min Read

The automotive market saw a decline in prices over the past few days despite the fact that most major foreign car brands continued to raise their prices—a circumstance that created a state of wonder about the near future of the automotive market, and whether the time is right to buy or postpone purchases until further reductions.

Daily News Egypt polled senior distributors and dealers.

Head of the Egyptian Automotive Dealers Association Osama Abu El-Magd said that the market is seeing a decline in prices, because of what he called personal initiatives by traders in an attempt to revive sales after the recession witnessed by the sector over the past months, and low sales of last year.

Car sales over the past year have fallen by 28.8% compared to 2015, as the market saw sales of 198,300 units compared to 278,400 units in 2015.

Abu El-Magd said that the decision to float the pound has negatively affected the automotive sector, as the dollar exchange price against the pound affected car imports and therefore sales as well.

He said that the majority of car salespersons are exposing themselves to losses in the current period, in order to revive the staggering market.

Regarding the right timing for car purchases, Abu El-Magd said that the current period serves as an opportunity for those who want to purchase a car, stating that he expects the return of price hikes by April.

Chairperson of El-Saba Automotive, Alaa El-Saba, said that the decline of prices does not affect the traders directly yet, because most of the cars that are currently in store were imported according to the dollar price before the flotation.

Traders can easily waive the big profit margins because they are already winners. He explained that the trader who currently gives up on e.g. EGP 30,000 on a sale is only losing part of the additional profit that he would have gained due to the flotation of the pound price.

Ahmed El-Goukh, showrooms manager at El-Ezz Motors, noted that there are a number of traders not working in the automotive sector who carried out large purchases of cars for the purpose of storage.

h, those traders spread their offers on social media in an effort to promote the cars that they have stored.

He added that there are cars displayed at discounts of between EGP 20,000 and EGP 80,000, which encouraged distributors working in the sector to make discounts that suit the movement of sales in the market and contribute to the return of sales.

Despite the discounts in the automotive sector in the current period, the market is still suffering from recession and a slowdown in sales, according to Paradise showroom’s owner, Mahmoud Al Wakeel, who believes that prices will continue to stay low.

Regarding the future of the automotive sector in the next phase, Al Wakeel stated that the situation of the market is unclear and that it is difficult to predict the future of the automotive sector and whether it will witness further increases or declines.

Al Wakeel emphasised that the price of the currency might reach a new post-flotation low of EGP 14, which might open the door to a decline of car sales prices and lead to a rise in sales.

According to an Automotive Marketing Information Council (AMIC) report, the demand on passenger cars declined by 27%, where sales of passenger cars registered 141,900 in 2016, compared to 195,500 cars by the end of December 2015.

Sales of buses fell by 35% to register 21,200 in 2016, compared to 32,500 buses in 2015, while sales of trucks declined by 30% to register 35,000, compared to 50,000 at the end of the previous year.

The AMIC report further said that the demand on locally assembled cars declined by 20.6% to register 100,800 units in 2016, compared to 127,800 units in 2015, while imported cars increased by 35.6% to register 97,400 cars, compared to 151,400 a year earlier.

Chevrolet topped car sales in the local market during 2016, with total sales of 43,000 units: 21.7% of the market.

AMIC’s annual report said that sales in December 2016 was only 47% of December the year before: 15,500 cars and 23,800 cars respectively.

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