The used car market has ground to a halt due to the suspension of notary office services, according to Osama Abu Al-Majd, Head of the Egyptian Automotive Dealers Association.
Consumers abstained from used car purchases whilst the suspension of notary office services was in place, fearing the lack of facilities to transfer ownership.
Abu El-Majd added that initial contract sales that had been offered as a temporary alternative to transferral of ownership did not contribute much to moving sales.
He noted that because the contract was temporary, consumers instead decided to defer their purchases until registration and licensing resumed.
Although the Eid is usually accompanied by a rise in new and used car sales, the current situation surrounding the coronavirus (COVID-19) pandemic has hindered consumer activity and further postponed purchases.
Abu Al-Majd said that it is difficult to make projections for the ailing market, especially as the new car market has been more affected than that of the used car market, seeing a fall of 50%. He added that the sector is also unlikely to recover before a vaccine for the coronavirus is discovered.
Mahmoud Hammad, head of the Egyptian Automotive Dealers Association’s used cars sector, said the market is seeing a slight movement in sales following Prime Minister Mostafa Madbouly’s decision for notary offices to resume work. He added that prices in the sector could soon rise, due to increasing demand and lack of supply.
Hammad noted that preliminary contracts have been safely adopted in the used cars market, with the rights of both the seller and the buyer being fulfilled.
He added that the used car market will witness a recovery over Eid, and will see higher demand that will equal sales for the first quarter (Q1) of 2019.
Auto Store for new and used cars General Manager Ali Hassan said that the new car sector runs parallel to the used car sector, with sales in the former dependant on the latter. He attributed this to consumers selling old cars before they purchase a new one, and that the resumption of registration and licensing will contribute to moving sales.
Hassan said that the increase in automotive sector activity has been achieved through an interconnectedness of the system as a whole. He added that the Central Bank of Egypt (CBE) decision to limit deposits and withdrawals at EGP 50,000 has pushed many consumers to postpone buying new cars.
Hassan also anticipates that Ramadan sales will decline due to the current circumstances, with a return to normal unlikely until after the coronavirus pandemic has been contained. This would especially be the case as many dealerships have reduced their imports, which would see supply cut against high demand.
He added the auto sector was one of the sectors most affected by the global pandemic, as it relies on other sectors that have also been impacted, including tourism and transportation.
Moreover, consumers are worried about dipping into the liquidity they have on car purchases or commit to monthly instalments on the back of the uncertainty surrounding the global economy.
Car dealer, Mohamed Bilal, said that the resumption of licensing at Traffic Department units will move sales in conjunction with the Eid, which usually sees high trading volumes.