Used car and spare parts dealers have welcomed the state initiative to scrapping old vehicles as a good and legitimate step that is also long overdue.
The dealers have noted that it will eliminate traffic congestion as a result of old and worn out car breaking down, and will lead to improved sales of new and used cars of more up-to-date models. They add that, at the same time, it will lead to a decline in the sale of spare parts.
Egypt’s Minister of Industry and Trade Nevine Gamea said, during her speech at the “Egypt Can by Industry” conference, that there are vehicles on Egypt’s roads that have been in use for the past 30-35 years.
The minister noted, however, that cars of more than 20 years of age should be scrapped, but the government has been forced to allow their continued use, because of the lack of financing capacity for replacement and renewal.
She said that the state will give financial incentives to vehicle owners to replace their old cars, while providing loans at zero interest.
Gamea also said that the government is currently coordinating with the Central Bank of Egypt (CBE) to provide long-term financing programmes of up to 10 years.
During 2021, the initiative aims to replace 70,000 old vehicles, including 55,000 taxis and passenger cars and 15,000 larger vehicles, with a further 180,000 expected to be replaced during 2022 and 2023.
The Ministry of Industry and Trade has sent an official letter to various auto companies working in the local market indicating the date of the exhibition to replace and convert cars to work on natural gas. This is set to take place from 4 to 6 January 2021.
Ibrahim Ismail, Executive Director of the Cairo Used Car Market, said that the used car market has witnessed a complete halt in trade since the beginning of the novel coronavirus (COVID-19) pandemic.
Ismail pointed out that the government’s decisions did not include passenger cars that are 20 years old. It would have been better for the decisions to include all old, dilapidated cars so that the state can create movement and phase out all such vehicles available in the market.
Alaa El-Sabaa, a member of the General Automobile Division of the Federation of Egyptian Chambers of Commerce (FEDCOC), praised Egypt’s increasing reliance on natural gas.
He noted that this is particularly noteworthy since natural gas ensures significant financial savings compared to petrol.
El-Sabaa added that it is better to apply the initiative to taxis and microbuses only, as adding CNG tanks to private cars may affect the engine performance. Moreover, CNG tanks are usually located in the vehicle’s trunk, reducing the space available for other cargo, he noted.
He suggested that private cars should run on electricity instead. He also called on the state to build more natural gas stations nationwide.
Osama Aboul Magd, Chairperson of the Egyptian Automotive Dealers Association, said that the government’s plan to scrap old cars will lead to a revival of sales movement, whether for new or used vehicles.
He also said that converting aging cars into scrap has several benefits, the most prominent of which is reducing carbon emissions. This will, in turn, encourage a commensurate reduction in pollution, especially in the more populous areas of Egypt.
In addition to this, Aboul Magd said that older vehicles frequently break down on the roads leading to traffic congestion.
Aboul Magd called for initiatives to be put in place to encourage and motivate consumers into replacing their old vehicles with new ones that run on natural gas.
Mahmoud Hamada, head of Hammad Motors and head of the used and hybrid sector at the Automotive Dealers Association, said that the decision to scrap used cars will revive sales movement. He noted that the scrapping of old vehicles will have a positive impact on the market, whether used or new cars.
However, the decision has caused confusion in the used car market, due to the expected increase in demand for new cars that will be paid for in instalments. He projects that customers will not prefer used cars that were manufactured before 2010, which will lower the prices of older models that fall in the 2000-2010 period.