2009-11-04 08:13:02 -
Egypt Autos Report Q4 2009 - a new market research report on companiesandmarkets.com www.companiesandmarkets.com/Summary-Market-Report/egypt-autos-re ..
As elsewhere in the region, the Egyptian auto market was heavily hit by the impact of the global
economic recession in the first half of 2009. Sales of vehicles dramatically dropped by just over a third in
H109 compared to the same period in 2008. Car and truck sales were particularly hit hard dropping by
about a third and bus sales
declined by approximately a quarter. It was only the SUV market that
seemed to survive the impact of the world economic meltdown, as sales actually increased by just over
10%. However, after a tough first half, there is confidence in the Egyptian auto sector that conditions will
improve and that the worst has already been experienced. For example, AMIC reports that sales in June
were 25% higher than June 2008. Indeed, it is BMIs view that sales will increase by 4% next year and
that growth for the following three years will average around 25%. While conditions may be turning
around, growth in car sales may still be restrained by restrictions on access to financing for auto
purchases from banks and from high inflation. After a dip in the value of car sales in Egypt in 2009, the
value of sales is expected by BMI to recover strongly by 2011 to US$12.35bn, reaching US$19.61bn in
2013.
With a slowing economy, it is unsurprising that commercial vehicles have been particularly badly
affected. While sales of passenger cars are linked to disposable income, the commercial vehicle market is
related to the strength of businesses. In H109, 16,380 trucks were sold, representing a 32% year-on-year
(y-o-y) drop and indicating that the Egyptian economy was struggling. Sales of pick-ups, mini pick-ups
and medium trucks dropped by 34%, 33% and 37% respectively. The biggest fall was for medium trucks
(9-16 tonnes) which dropped by 56%, while heavy trucks fell by 17%. The market for buses also declined
severely in H109, with a drop of 24% to 6,900 vehicles. The biggest fall was for buses used to transport
tourists as the economic downturn has resulted in a sharp drop in tourism numbers. Large tourism buses
witnessed a drop in sales of 82% y-o-y, with just 44 being sold in the first six months of 2009. Although
the economy looks to be recovering somewhat, the month of Ramadan is not typically a time of heavy
vehicles sales, while a succession of holidays following the religious festival will also not be conducive to
new car sales. As a result, the market will likely remain stagnant in H209 before recovering in 2010.
Although momentum has slowed, the Egyptian government still appears very pro-business, and if it
remains in power, the prospects for further private sector growth over the coming years are positive.
However, this pro-business stance is yet to feed through to reducing poverty levels, and perceptions of
corruption will continue to make some of its policies unpopular. However, if Gamal Mubarak the son of
President Hosni Mubarak and seen as his fathers successor and the technocrat government he helped
introduce remain in place, then the private sector and banking system should continue to flourish. Still,
Egypt only comes in second place in our business environment rankings for the Middle East and North
African region.
