Fuel subsidy cut does not affect car sales: experts

Ahmed Amer
3 Min Read
Government to begin 2nd and 3rd phase petrol distribution system implementation. (AFP Photo)

Rafaat Masrouga, the honorary chairperson of the Automotive Marketing Information Council (AMIC), said that the increase of petroleum prices will not impact the sales of cars; however, the market will witness a state of anticipation this month. Companies have no intention to move the prices, according to Masrouga.

He revealed to Daily News Egypt that 95 gasoline has become better economically for the new cars that normally use 92 gasoline, explaining that the car models higher than 2012 will save up to 15% of operation costs for the distance of 100,000 km. This will also help the car maintain its performance.

Hussein Moustafa, the chairperson of the Association of Automobile Manufacturers, said that the impact of increasing fuel prices on car sales will be limited, especially for the popular cars. Luxurious cars have not been and will not be affected at all, according to him.

Moustafa explained that a small percentage of car drivers who use 92 gasoline will now use 95 for its better impact on the car’s performance, while the remaining percentage will find it difficult to use 95 gasoline due to its increased cost.

Sources explained that the increase in 95 gasoline prices is considered small compared to the increase in the prices of the 92 and 80 gasoline types. This is due to the fact that 95 gasoline is currently not subsidised, while 92 gasoline was subsidised by 50% and is still subsidised by more than 25% after the recent increase in fuel.

The sources went on to explain that the growing gap in the prices of 92 and 95 gasoline has made consumers resort to the subsidised 92 gasoline, and the result is increased subsidy expenditure and burdens on the state’s general budget.  However, with the recent increase in prices and the declining gap between 92 and 95 gasoline prices, consumers are expected to change from 92 to 95.

The sources stressed that the car market was not impacted by the increase in fuel prices, as car sales are impacted by the import process of the entire vehicle or the local components.

On 29 June, the cabinet approved an increase in the prices of fuel products and natural gas. The list of fuels includes gasoline, diesel, and gas.

According to the new price list, a litre of 80 gasoline is EGP 3.65, up from EGP 2.35; a litre of 92 gasoline became EGP 5 instead of EGP 3.50; and the diesel fuel price was raised to EGP 3.65 from EGP 2.35.

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