Egypt car market reversed course after prices plunged, supply rebounded: Experts - Markets & Companies

Al-Ahram Weekly

2 days ago

After years of soaring prices, shortages, and market distortions, Egypt's automotive sector is witnessing a dramatic shift, with car prices falling across key segments.
The notorious 'overprice' premiums have nearly vanished, and industry players are betting big on local manufacturing.
Experts say the trend is not a passing phase but the start of a structural realignment that could reshape the market through 2026.
For Egyptian consumers long burdened by inflated vehicle prices and limited options, the tide appears to be turning.
According to leading industry figures, car prices in Egypt have dropped significantly since early 2025, with expectations of continued declines driven by currency stabilization, increased imports, stronger domestic production, and strategic policy interventions.
'Between 15 to 18 brands have lowered their prices, some by as much as 20 percent. This includes major players like Citroën, which slashed prices by over 10 percent, and SsangYong, which cut prices by nearly 23 percent,' Osama Abu El-Magd, head of the Egyptian Automotive Dealers Association, told Ahram Online.
This downward trajectory coincides with a surge in investment from automotive companies. Five major manufacturers have announced plans to invest more than $600 million over the next year, aiming to triple domestic production capacity from 95,000 to around 260,000 vehicles annually.
These expansions are expected to reduce reliance on imports and increase market competitiveness.
Currency stability rebuilds confidence
The easing of foreign currency restrictions and the stabilization of the Egyptian pound were pivotal in restoring market dynamics.
'The resumption of letters of credit and access to hard currency enabled importers to restock adequately,' said Amr Soliman, a member of the Automotive Committee at the Federation of Egyptian Chambers of Commerce.
'That was the turning point. We've since seen five new models launched, and with Nasr Automotive's plant coming online soon, supply is poised to grow further,' he added.
Weakened demand drives price cuts
While supply factors have played a significant role, a drop in consumer demand due to inflationary pressure also helped push prices downward.
'In the second quarter of 2025, demand softened considerably. This forced distributors to offer more competitive pricing to clear inventory, especially as new brands entered the market, intensifying competition,' Soliman said.
Meanwhile, the normalization of maritime logistics through the Red Sea and falling shipping costs have eased price pressures. Previously, high transport costs were a major driver of car price inflation. Now, supply chains have recovered significantly, contributing to cost reductions.
Additionally, domestic production has become a game-changer. Five new vehicle assembly plants were launched in the past seven months, according to Abu El-Magd, particularly impacting vehicles priced under EGP 1.5 million.
'This created a new layer of price competition, leading to price drops of up to 20 percent on some models. We're also seeing a significant increase in the availability of affordable vehicles, which has reshaped market expectations,' he explained.
However, higher-end segments, those priced above EGP 1.5 million, remain less affected due to limited competition.
The slump in new car prices has had a stark effect on used vehicles, which have seen a value decline of over 20 percent.
'When a brand-new 2025 model sells for EGP 720,000, and a 2016 used model is EGP 700,000, the choice is obvious. This dynamic has weakened demand for used cars considerably,' Abu El-Magd told Ahram Online.
Government strategy: From burden to export
At the heart of the transformation is Egypt's national strategy to localize the auto industry. Backed by direct presidential support, the plan aims to reduce the sector's drag on the trade balance and instead turn it into a net exporter of vehicles and components.
The strategy includes production incentives starting from 10,000 vehicles annually, direct subsidies of up to EGP 50,000 per car, depending on price tier, support for feeder industries, and regulatory reforms to remove investment barriers.
Still, structural hurdles persist, including customs duties on essential components, multi-stage value-added tax (VAT) collection, which burdens liquidity, and development fees of up to 8.5 percent on vehicles over 2,000cc.
'To make local manufacturing truly competitive, these burdens must be eased. Tying incentives to export performance would also raise the global profile of Egyptian-made vehicles,' Soliman stated.
Outlook: Sustained price decline through 2026
Both Soliman and Abu El-Magd agree that current trends are not short-lived. With 10 new factories expected to be operational by the end of the year and local production capacity expanding, car prices are expected to continue their decline into 2026.
'We are entering a new era in Egypt's automotive market, defined by local manufacturing and fair competition. This is good news not only for consumers but for the broader economy,' said Abu El-Magd.
'Exchange rate stability, increased supply, stronger competition, and state support have eliminated overpricing and driven down costs. The key to sustaining this progress lies in deepening local industry incentives and removing remaining barriers to expansion,' Soliman concluded.
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