CAIRO: Last month, licensing some cars got trickier. On May 5, parliament passed a set of price hikes that upped the cost of registering a variety of vehicles. Then last week, the council approved traffic law amendments that will prohibit the registration of cars made more than 20 years ago.
But while some of these measures have stirred inflation fears, most analysts are in agreement that they will do little to slow car sales, which have steadily swelled in Egypt over the last half-decade.
The May 5 price hikes raised registration fees for most vehicles by between LE 100 and LE 150, depending on the size of the engine. For engines with less than one liter of capacity, fees were upped to LE 116 from LE 16. For 1.0 and 1.3-liter engine cars, fees rose to LE 143 from LE 23. For vehicles with 1.3 to 1.6-liter engines, the fees went to LE 175 from LE 25.
For cars with engine capacities of 1.6 liters and above, the bar was raised a bit higher. For cars with engines of 1.6 to 2.0 liters, the fees went up to LE 1,000 from LE 120, with a minimum of LE 200. For engines capacities of two liters and above, fees became two percent of a vehicle’s value with a minimum of LE 1,000.
In a report issued later that month, HC Brokerage said it did not expect the new regulations to “significantly hamper auto sales, using GB Auto, Egypt’s dominant car firm, as its example.
Eighty-five to 90 percent of GB’s sales are comprised of cars with engine sizes below 1.6 liters, which were not significantly increased, the report noted. A bigger obstacle to car sales, the report said, is inflation. Higher prices in general tend to shift buyers’ preference from luxury goods like cars to basic goods, the report said.
In its own analysis, investment bank Beltone Financial also said the fee hikes are not likely to seriously dampen sales of cars below 1.6 liter capacity. It added that inefficient public transport still pushes many customers, particularly those situated in underserved new housing areas, to buy cars here.
If fees do discourage sales, it has yet to happen: GB Auto’s revenues grew by over 30 percent in the first quarter of this year.
Parliament is expected to release specifics of the new traffic law within the next week. The Beltone report predicted that this law will likely boost passenger car sales, as owners of older cars that are now unable to re-license will be pushed to replace them.
Although there are already over a million vehicles clogging the streets here, with drivers sometimes idling for hours along the overburdened, fume-choked byways of Mohandiseen and Giza, Egyptians tend to buy cars if they can.
Many auto industry officials say the only force holding back demand is affordability, as car sales have risen along with economic growth.
Three million cars are licensed every year, according to statistics published in Al-Ahram Weekly in 2006. Passenger car sales have tripled over the last three years and analysts expect Egyptians to buy over 230,000 this year.
