Egypt automotive market faces accusations

A number of automotive sector experts warn of the state of pessimism experienced by the market due to the continuation of the dollar crisis, high prices, and increased waiting lists to receive cars. The Central Bank of Egypt (CBE) however revealed a 113% increase in the sales of cars and their components during 2015, compared to last year.

Figures announced by the CBE show the provision of dollar for the automotive sector to be larger than that in 2014, which did not see such increases in car prices of as currently.

Car prices will rise by 2.5% from the current price after the dollar price jumped on Thursday and Sunday and will officially register at EGP 8.03, while its price in the parallel market reached EGP 8.45, board member of Automotive Division of the Chamber of Commerce in Cairo and chairman of El-Sabaa Automotive Group Alaa El-Sabaa said.

Agents and distributors are buying dollars from the black market at high prices as a result of the sector being at the bottom of the list for opening letters of credit. This reflects the vision of government officials and how they consider cars to be provocative goods.

The primary objective of reducing the value of the currency against the dollar is to invite foreign investors to pump their investments in the Egyptian market, he said. However, not creating a real investment environment before making such decisions will stop investment in the automotive sector.

Car sales fell by 11% in 2015 compared to last year's sales as a result of the CBE's decisions to set a minimum cash deposit. El-Sabaa said the sector has been expecting to achieve sales growth exceeding 30% during 2015. After imposing severe restrictions on opening letters of credit, sales declined below the target since the beginning of the year.