Egypt auto sales to increase 97 pct by 2013, says report

Kate Dannies
4 Min Read

A newly released report predicts a rapid recovery and a bright future for Egypt’s auto industry, bolstered by a forecasted explosion of the local retail market.

The Egypt Retail Report Q3 2009 released recently by Business Monitor International forecasts a 97 percent rise in car sales by 2013 to $19.61 billion from $9.96 billion in 2008.

This astronomic increase in automotive sales will be bolstered by a large-scale revival in Egypt’s retail sales as a whole from $63.27 billion in 2008 to $118.5 billion by 2013, says the report.

The Automotive Marketing Information Council (AMIC) reported that car sales in Egypt declined 36.3 percent year-on-year for June.

However, though only 90,357 cars were sold during January-June 2009 compared to 141,796 units during the same period in 2008, AMIC figures indicated that growth was picking up, with June sales up by 23 percent from May to 19,536 units.

“We have started seeing recovery in local auto market primarily based on the taxi replacement project. We would say that the fundamentals otherwise are still weak and we haven’t seen any indicators for robust recovery yet, General Motors Egypt Managing Director Rajeev Chaba told Daily News Egypt.

Despite this mixed bag of indicators, the report proposes that the sector has nowhere to go but up, and up quickly.

The report cites Egypt’s large youth population, emerging affluent middle class, healthy tourism industry and the growing presence of modern retail concepts as the major factors pushing large-scale growth in the country’s retail sector.

Changing demographic and economic factors will also push the expansion of the market for retail products, including passenger cars, the report says.

Egypt’s population is expected to reach 83 million by 2013, while GDP per capita is forecast to rise by nearly 79 percent to $3,773.

According to the IMF, Egypt’s forecasted GDP per capita in 2013 is $1,425, less than half of the report’s predicted GDP per capita for the same year.

“The report’s forecasts for Egypt’s economic growth seem overly optimistic given the financial crisis, inflation, and other problems we are facing in the economic realm, said Magdy Sobhy of Al-Ahram Center for Political and Strategic Studies.

“It’s hard to imagine per capita income increasing that quickly, and, therefore to see retail sales expanding as rapidly as the report predicts, he continued.

Meanwhile, the country’s urban population is expected to reach 43.2 percent by 2010, bringing more people in close range of Egypt’s major car dealerships and other retail outlets.

The report states that by 2010 65.1 percent of Egypt’s population is expected to be classified as economically active, with 37.4 percent of the active population falling in the 20-44 age bracket, the retail sector’s most active segment.

A planned program to reduce Egypt’s high automotive tariffs in line with its obligations as a signatory of the General Agreement on Tariffs and Trade (GATT) beginning in 2010 should also boost car sales as prices come down.

For local automotive companies, however, the path to recovery doesn’t seem so clear cut.

“Egypt is a growth-emerging market and has a substantial scope of increase…the predicted increase seems to be on the higher side, explained Chaba.

“We expect a growth of 15-20 percent annually. This can be higher if the government facilitates replacement of old cars for more fuel efficient cars, he added.

To read the other stories in our monthly special focus on Egypt s auto sector, click here:

http://thedailynewsegypt.com/admin/article.aspx?ArticleID=23948

http://thedailynewsegypt.com/admin/article.aspx?ArticleID=23944

http://thedailynewsegypt.com/admin/article.aspx?ArticleID=23946

http://thedailynewsegypt.com/admin/article.aspx?ArticleID=23947

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