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Egypt Independent
4 days ago
- Automotive
- Egypt Independent
Automobile Division expects passenger car prices in Egypt to rise soon
A member of the Board of Directors of the Automotive Division of the Federation of Egyptian Chambers of Commerce, Montaser Zeitoun, announced that the used car market has witnessed increased demand recently, exceeding 50 percent, despite significantly increased prices. Zeitoun attributed this demand to the limited supply, coupled with rising prices of brand new cars in recent years. Used Car Prices The car market, both new and used, has witnessed significant activity in recent months, he said, noting that any change in prices – whether up or down – is directly linked to the dollar exchange rate at banks. Nissan Sunny and Chevrolet Car Prices Zeitoun explained that brands such as Chevrolet, Nissan Sunny, and MG have raised their prices due to delayed deliveries, which has led to a shortage of supply and increased demand. Car Price Forecasts in Egypt Regarding expectations for the coming period, Zeitoun indicated the possibility of price increases during the summer months (June, July, August, and September) due to increased demand before Eid al-Adha, the desire of some parents to purchase cars for their high school students before they enter university, and rising demand before the coastal and summer resort seasons. Edited translation from Al-Masry Al-Youm
Mada
26-02-2025
- Automotive
- Mada
Egypt's auto market: From liberalization to iron-grip monopolies
Government decisions in recent years have set Egypt's automotive market back by years, undoing nearly two decades of progress that had helped break the monopoly of major dealerships and open up the industry. Now, nearly three years into this decline, the market is floundering, the latest sign of which came with a decision to release thousands of vehicles that had been held in customs for months. But the move came with a set of conditions designed to close the last remaining loophole that independent importers had been using to bypass dealership control. Due to the complexity of these conditions, the vehicles have yet to be released, according to multiple sources speaking to Mada Masr, while major dealerships regain their dominance over the market. The government's policies and the erratic execution of its decisions have fueled frustration across the industry. With the exception of large dealerships and the government itself, most stakeholders see these measures as reinforcing monopolistic practices that had long defined Egypt's car trade, until the market was opened up 19 years ago. Over the past few weeks, Mada Masr spoke with 12 sector sources to understand the full scope of this regression and its consequences. Passenger cars make up more than half of all vehicles in Egypt, totaling 5.6 million cars, 94.3 percent of which are privately owned, according to the Central Agency for Public Mobilization and Statistics. These vehicles enter the market through three main channels: imported or locally assembled cars produced by official dealerships — large entities with substantial solvency and market share — or those brought in by small-scale independent dealers, who account for about 15 percent of the market, according to Montasser Zaytoun, a member of the Automotive Division at the Federation of Egyptian Chambers of Commerce, speaking to Mada Masr. Local car manufacturing represents only a small share of Egypt's auto market. For years, the government has championed the idea of 'localizing the automotive industry' and has worked toward a national strategy to achieve it. This has led to the creation of the Supreme Council for Automotive Industry and the High Committee for Automotive Manufacturing. Yet, policies remain inconsistent and vague, according to industry sources — a sentiment echoed in a recent Fitch Solutions report on Egypt's auto sector, which Mada Masr reviewed. The country's existing auto factories function as assembly lines rather than manufacturing plants, sources say. Their production capacity falls short of supporting export ambitions or competing with regional industry leaders like Morocco and Turkey. Moreover, the actual domestic content in Egyptian-assembled vehicles is minimal, limited to low-value components such as plastic parts, glass, wiring and seat upholstery. High-investment components like chassis and dashboards remain absent, according to Ali Tawfiq, head of the Egyptian Auto Feeders Association, speaking to Mada Masr. Senator Mahmoud Sami points to a lack of incentives for auto component manufacturing in the government's strategy, which has so far focused on offering customs breaks to assemblers, he tells Mada Masr. As a result, Egypt produced just 19,000 vehicles in 2019, and 24,000 the following year — before available data from the International Organization of Motor Vehicle Manufacturers (OICA) stopped. This figure pales in comparison to Egypt's annual average import of 200,000 cars, according to Abdel Qader Talaat, a board member of the Automotive Market Information Council (AMIC). Large dealerships dominate around 85 percent of imported car sales. Backed by their strong financial solvency and extensive service networks, they control pricing and specifications, often adding substantial markups on what they classify as 'accessories.' Independent importers, by contrast, bring in the same car models but often with better specifications — including safety systems such as airbags, rear seatbelts and advanced braking systems — along with luxury additions like cameras and sensors, all at competitive prices, sources say. A car showroom sales manager, speaking to Mada Masr, notes that one model in the Egyptian market costs LE100,000 more, simply for including a rearview camera. A dealer of a high-end car brand notes to Mada Masr that multiple players contributed to the crisis. Previously, dealers would sell cars with delivery timelines extending up to six months, often doubling the final price upon receipt compared to the initial deposit. Independent traders saw an opportunity, stepping in to offer cars with better specifications, faster delivery and at the agreed-upon price. As the crisis escalated, marked by soaring prices and a shortage of available cars, small-scale traders and import service companies thrived. Many buyers opted to import vehicles themselves rather than pay exorbitant prices for scarce models — a trend the government noticed and caught on to by launching the expatriates' car import initiative, inviting Egyptians residing abroad to import cars into the country free of taxes and customs, in exchange for placing dollar deposits in a Finance Ministry account that would be refunded in Egyptian pounds after five years. This prompted major dealers to push back by all possible means to curb the growing role of independent traders. In one instance, a dealer imported 1,500 units of a particular model, only to later find that 7,000 of the same model had been registered within the same period, according to Talaat. The industry's response was to lodge complaints with the government. As one source puts it, 'they ran crying to the minister.' Eventually, the government intervened, shutting the door on independent traders and importers. This marked a return to the pre-2006 era, when large dealers held an iron grip on the market. Back then, these dealers were extensions of a handful of families that had emerged during the economic liberalization of the 1970s, leveraging their early connections with the state to establish and maintain monopolies, according to a source from a regulatory authority overseeing markets. During that period, the most widely available cars often lacked basic safety features, such as rear seatbelts, advanced braking systems or airbags — features that dealers classified as 'accessories' reserved for higher-end models. This monopolistic control remained unchallenged until 2006, when then-Trade Minister Rashid Mohamed Rashid introduced a decision that fundamentally reshaped the market. 'Before 2006, no one could import cars outside of dealers, and the specifications of the cars that entered the market were terrible,' says Zaytoun. 'Then, Rashid decided to open imports beyond the country of origin.' The entry of independent traders transformed the market. The new competition forced major dealers to match the standards of independently imported vehicles. Consumer expectations also shifted — whether buying from a major dealer or an independent importer, buyers began to demand advanced safety features and luxury options. Over the past decade, the competition drove the widespread adoption of features such as parking sensors, electric window and mirror controls, cruise control, LED lighting and touchscreen displays — upgrades that industry sources attribute directly to the presence of independent importers. However, the changing market dynamics did not sit well with major dealers, who continued to push for restrictions on independent traders. Their opportunity came in 2022, when Egypt's economic crisis deepened. The country saw a sharp decline in foreign currency reserves following Russia's invasion of Ukraine and the subsequent exodus of hot money from Egyptian markets. With no clear resolution in sight, the government moved to drastically cut import spending to conserve dollars. The Central Bank of Egypt implemented a series of measures restricting dollar usage and curbing imports, including vehicles. This shift aligned with pressure from major dealers, whose lobbying played a key role in the government's pushback on independent traders, according to the sources speaking to Mada Masr. Additionally, authorities did not hold major dealers accountable for withholding their affiliated after-sales services from cars imported outside their networks, further discouraging consumers from purchasing independently imported vehicles. They turned independent imports into 'cars bought off the street,' as one senior official at the Industrial Development Authority says, lauding the government's decision. Ultimately, the Trade and Industry Ministry issued decree 9/2022, imposing three key restrictions on those looking to import cars for resale: service centers for the imported cars must be available nationwide, importers must maintain a stock equivalent to 15 percent of the total spare parts each car requires, and the foreign currency to fund their imports must be secured from export revenues. The decree effectively limited car imports to major dealers. The conditions were tailored to fit large-scale importers and official agents while sidelining smaller traders, according to Zaytoun, the regulatory source, and a marketing executive at a leading car company, speaking to Mada Masr. Automobile Manufacturers Association Secretary-General Khaled Asaad and head of the Industrial Development Authority Mohamed Abdel Karim both defend the decision. Speaking to Mada Masr, they argue that dealers face significant financial obligations, including costs for maintenance services, spare parts and developing after-sales service infrastructure — such as hiring skilled labor and maintaining contractual commitments with parent companies to receive large shipments of vehicles annually. According to Asaad and Abdel Karim, dealers also face foreign currency restrictions imposed by banks, customs clearance delays, bureaucratic hurdles and expenses related to market research and managing distributor contracts. They argue that such costs and operational burdens make comparisons between major dealers and independent traders 'unfair,' justifying the price differences, vehicle availability and the exclusivity of after-sales services for their cars. However, the regulatory source sees the government-backed move to exclude small traders from the market, under the pretext of investments in after-sales services, and binding contracts with parent companies as 'a truth used for wrongful ends.' The source cites two reasons. First, car buyers and after-sales service customers do not receive these services for free; they pay for them — whether through maintenance and warranty contracts with the dealer or separate fees for maintenance and spare parts, meaning dealers recoup their investments. Second, major dealers in Egypt actively seek exclusive contracts with foreign manufacturers, not only for vehicle supply but also for software licenses that control access to maintenance services. As a result, any obligations tied to after-sales services stem from the monopolistic control the dealers themselves have created. Meanwhile, aware of Egypt's uncompetitive market, foreign manufacturers impose higher-than-usual prices on dealers, who, in turn, accept them due to the lack of competition, according to the regulatory source and Zaytoun. The crisis persisted for two years before relenting in March last year, following the Emirati Ras al-Hikma deal that brought in US$35 billion in investments, significantly easing government restrictions on dollar spending. However, conditions set by the Industry Ministry remained in place. Small-scale traders, unwilling to back down, turned to 'personal imports' as an alternative to commercial imports. But as authorities caught on, the government moved to block this loophole indirectly. Since January 2024, the customs code for personal vehicle imports has been suspended. In response, traders reached out to the Egyptian Customs Authority and were permitted to use an alternative category — one designated for 'personal belongings.' Upon arrival, shipments could then be reclassified as vehicles in accordance with customs regulations, sources say. The personal belongings category typically covers luggage, furniture, books and similar items. Using it for vehicle imports did not exempt traders from providing full product details. Importers still had to list all identifying information for the cars, which were later reclassified under the vehicle category upon arrival at Egyptian customs, with an additional fee for the category adjustment. The government, however, continued tightening restrictions. Traders and third-party import companies were caught off guard when the Egyptian Customs Authority issued verbal orders to central administrations to halt the use of the personal belongings category, according to Amir al-Helaly, head of the Importers Committee at the Automotive Division at the Cairo Chamber of Commerce. The suspension of this customs category on Nafeza — Egypt's digital customs portal — effectively blocked the pre-registration of shipments under the Advance Cargo Information Declaration (ACID) system, a mandatory step for completing imports under the customs law. Helaly reached out to then-Finance Minister Mohamed Maait, who told him the issue was 'just a technical glitch that would be resolved within a month.' But the glitch dragged on for months. This latest government maneuver brought customs clearance to a standstill, leaving between 16,000 and 20,000 vehicles stranded at ports since June, according to multiple sources from the automotive and customs sectors. For months, traders and third-party import companies received repeated government assurances that the crisis would be resolved and the stranded cars released, but to no avail, sources say. Then, last month, the Egyptian Customs Authority issued a decision, a copy of which Mada Masr reviewed, allowing the release of vehicles stuck in ports — but only those shipped before December 27 and fully paid for by June 25 last year. The decision also introduced additional requirements, including proof that the vehicle's payment was transferred via the SWIFT banking system and a mandatory LE10,000 fine for incorrect customs declarations (misclassifying cars under the personal belongings category) in line with the customs law. Moreover, payments had to originate from either the importer's own account or that of a first-degree relative, says customs authority head Al-Shahat Ghatury to Mada Masr, adding that vehicles failing to meet these conditions would remain in limbo until a new solution was reached with the government. The issue, however, is that most of these cars belong to small traders, third-party importers and disabled-access vehicle buyers — alongside a small number imported by major dealers, according to sources. Many cars were paid for via external transfers, making it impossible to provide SWIFT payment confirmation, further complicating their release, sources say. Now, nearly two months after the decision, not a single vehicle has been released, according to Zaytoun, Helaly and Automotive Dealers Association head Osama Abul Magd. This has resulted in heavy losses for traders and import companies. According to Helaly, more than $2 billion was paid to shipping agents in 2024 alone due to port storage costs. Abul Magd argues that the government has no legal basis to withhold the vehicles and that traders are preparing to file a lawsuit before the State Council to challenge the decision, seek the release of the cars and claim compensation for their losses. Meanwhile, thousands of vehicles remain stuck in ports, market uncertainty drags on and the government's favoritism toward major dealers continues to fuel frustration among small traders, who see the regression of market liberalization over the past two decades as an alarming trend with no clear end in sight.
