Many economic factors and crises have left their mark on the automotive sector during the current year, most notably the liberalization of the currency exchange rate, the shortage of the dollar availability, the high price of the “customs dollar”, the difficulty of imports and the Mercosur agreement.
According to the latest data from the automotive industry and the Automotive Market Information Council’s (AMIC) report, sales fell, since the beginning of this year until the end of August, by 39% to 83,887 units, compared to 13,594 units during the corresponding period of 2016.
Passenger car sales fell 38% to 59,928 cars, compared with 97,401 units. The Daily News Egypt surveyed more than 40 industry experts including dealers, distributors and traders to discuss their vision for the future of the automotive industry.
The results of the survey show that 90.4% of respondents believe that 2018 will be the year of breakthrough in the automotive sector, while only 9.6% believe that next year will not be a major development for the sector.
Meanwhile, 52.4% of market figures forecast a slight improvement in sales in the fourth quarter (Q4) of this year, compared to 47.6% who believe performance will not be different from previous months.
About 60% of the workers in the automotive sector said that the market was negatively affected by the lack of the Automotive Industry Strategy Directives, while 40% did not count on the delay of the strategy and their views on the fluctuation of monetary policies and the exit of large segments of purchasing power from the market.
Moreover, 52.4% of the participants considered that the Mercosur agreement is a threat to the automotive industry at the mean time, while the remaining percentage saw the trade agreements as a strong point to encourage exports.
In the opinion of 57.2% of sector figures, the economic climate is able to attract new investments, after the devaluation of the local currency against foreign currencies.
2018 a year of breakthrough for the automotive sector: Ahmed Mehrez
Ahmed Mehrez, general manager of ARTOC Auto, said next year would be the year of a breakthrough, expecting the dollar exchange rate to fall in 2018, which would allow for a gradual return of sales to those interested in buying.
According to Mehrez, the market was not affected by the absence of the auto industry strategy last year. The sector did not witness purchasing power due to the economic factors surrounding the increase in prices of most products, not cars alone.
Before the approval of the strategy, Mehrez called on the parliament to amend its terms to serve all workers in the sector without discrimination and taking into consideration the market as a whole.
He also believes that European agreements, including Mercosur, will not affect the local product, but rather benefit the common market.
The currency stability restores sales: Osama Abu El Magd
President of the Association of Car Dealers, Osama Abu El Magd, said that the continued stability of the currency exchange rate and the implementation of the strategy for the sector, which is expected to be approved by the parliament soon, will be the main factors for the return of the sector to its previous era.
Abu El Magd said that sales during the past months have declined significantly, and therefore the prosperous period of summer and holidays buying has passed, expecting the recession to continue during the last quarter of this year.
He denied that the market has been adversely affected by the absence of the strategy of the automotive industry, adding that the application without modification according to his vision is what could affect the sector negatively.
He pointed to the importance of the continued stability of the currency rate with the provision of benefits to the auto sector, which is one of the most important sectors that can contribute to the advancement of the economy, and predicted that 2018 year a breakthrough for the sector.
10% growth expected during Q4: Raafat Masroga
Raafat Masrouga, the strategic expert, expects the sector to witness a 10% growth during the q4 of this year as the local consumer is beginning to accept new pricing after market increases.
Masrouga said that the delay of the auto industry strategy caused the delay in the stability of the market in a final way, because it is supposed to address the obstacles to the return of the auto industry again.
He explained that the Mercosur agreement will lead to an increase in the sales of the Egyptian product more than the value of the importer, which will affect the local product, while he believes that the new investment law will attract investors.
The absence of “strategy” is innocent: Alaa El Saba
“It is difficult to improve sales during the last quarter of this year,” said Alaa El Saba, a member of the Board of Directors of the Cairo Chamber of Commerce, chairman of El-Saba Automotive, referring to the continued high prices and low per capita income, which negatively affects purchasing power.
He ruled out the seven, the impact of the absence of the automotive industry strategy, negatively on the performance of the market, considering that the strategy is innocent.
On the impact of trade agreements on the performance of the automotive industry, he said that it will affect negatively except one case that the parent companies decide to export from the Egyptian market.
He said the market breakthrough depends on the state of the state economy in the next year, considering that the current economic climate is unable to attract new investors for the auto industry, and the biggest challenge is the cost of borrowing and high interest rates.
The current climate is unable to attract new investors: Ali Tawfik
Ali Tawfik, head of the Egyptian Auto Feeders (EAFA), said the indicators of market improvement were close to verification in the q4 of this year. He added that the decline in sales during the past period had its reasons, causing a reservation of companies and keeping purchasing power.
“The rate of decline is declining, and this will be reflected in the improvement of indicators during the fourth quarter of this year,” Tawfik added.
Tawfik confirmed that the delayed issuance of the strategy for the sector led to a shortage of production, as companies resorted to storage of production, in preparation for the launch after the issuance of the strategy to take advantage of the quantitative incentive.
He said that trade agreements, including Mercosur and the Egyptian-European partnership, did not pose a threat to the auto industry and its feeder industries after the devaluation of the pound against foreign currencies and the low cost of labour.
Auto manufacturers and feeder industries should develop plans for export.
Tawfik predicted that 2018 will perform better than 2016 and 2017 in terms of sales of the car market, considering that the current economic climate is unable to attract new investments without specifying the vision of the state in the automotive industry.
A big breakthrough with the decline of the dollar: Yaser El Kasrawy
Yasser El Kasrawi, executive vice president of Auto Group, predicted that Q4 of this year will witness a relative decline in the dollar against the pound, which will affect car prices and attract new segments of purchasing power.
El Kasrawy said that the delay in the issuance of the strategy created a new crisis. A number of car dealers resorted to storing the cars to benefit from the quantum production incentive.
He explained that the new economic zones can benefit production and raise the export capacity provided that coordination between government agencies to achieve this, and trade agreements, including “European Partnership”, and “Mercosur” a powerful factor opens new markets for local product.
El Kasrawy added that with the beginning of the q2 of next year there will be a breakthrough for the car market, especially with the depreciation of the pound against the dollar, which greatly benefits the foreign investor and makes the economic climate able to attract new investors.
He also pointed out the importance of overcoming the bureaucratic procedures that any foreign or local investor can face when entering the market or expanding.
A Source in one of the companies: Absence of standard specifications wastes trade agreements
A source in one of the major companies said that the delay in issuing a law to develop the automotive industry in Egypt has made many companies delay development.
The source, who asked not to be named, expected q4 of this year to improve slightly with the introduction of new models, in addition to the activities of marketing companies.
The source pointed out that the market adapted to trade agreements, and it is difficult to say that the agreement “European partnership” or Mercosur negatively affect the industry.
The reason why the auto industry is benefiting from these agreements is that a number of manufacturers have not aspired to export, due to the absence of the lowest safety factors and standards for cars assembled locally, unlike the suspension of production of a number of cars worldwide for years and are still put on the local market.
The source predicted that the market sales will rise in 2018 compared to this year, stressing that the current economic climate of the country is able to attract new investments, making the low currency rate against foreign currencies an attractive investment.
AUTOMECH FORMULA 2017 succeeded in moving sales: Hussein Mustafa
Hussain Mustafa, executive director of the Association of Automotive Manufacturers, said that the Automech Formula 2017 has supported the car sales, with the introduction of discounts, which is reflected in the total results of the Q4.
He added that the absence of incentives for the car industry has had a negative effect on its development, as well as an impact on attracting foreign investments, hoping to issue the strategy soon.
He ruled out the impact of trade agreements negatively on the performance of the domestic market, expecting the sector to see a major breakthrough in sales during the next year, due to the improvement of the economic situation of the country.
He stressed that the economic climate of the current state is able to attract new investments, with the issuance of the new investment law, and new economic zones.
Monetary policy volatility expels investors: Karim Nagar
Karim Nagar, chairman of Kayan Egypt, the Seat and Skoda car dealer, ruled out an improvement in car sales during the fourth quarter of this year. He said that in July and August there was a relative drop in sales. Surpassing the 100,000 mark in 2017.
Nagar said that the absence of the strategy had a negative effect on the car industry in Egypt, as the customs protection given by the state to the local product negatively affected the development and advancement of the industry.
On the negative side of the trade agreements, Nagar said the opposite is true. The local market has an opportunity to promote and export an industry such as feed industries, with the devaluation of the currency and the cost of labour.
He predicted that 2018 will witness a breakthrough in the performance of the car market with expectations of a relative decline in the dollar against the pound and the growth of market sales, compared to this year.
He added that the economic climate at the moment is unable to attract foreign investors, in light of the fluctuation of monetary policy followed, the intervention of the human factor in dealing with investors, and the inability of the employee to make a decision.
Purchasing power in the way of return: Amr Nassar
Amr Nassar, executive advisor to MCV Group, Secretary General of the Export Council of Engineering Industries, expected the fourth quarter of this year to see a slight improvement in sales.
Nassar said that the vision of the state is absent from the car industry, which has negatively impacted the performance of the car market, as the workers in the sector are waiting to set the lines of incentives to stimulate investors and on the basis of the future plans for companies.
He considered that trade agreements are obstacles to the advancement of the vehicle industry In Egypt at present, and do not serve the public good.
Nassar predicted that next year will witness a breakthrough in sales, because the most difficult period in the car market is 2017, and 2018 will be considered the way to reap the fruits, in addition to the previously fearful category of buying began to return after stabilizing the situation and agreed to the current prices.
Nassar believes that the current economic climate is not able to attract new investments except with a clear government vision to convince the investor.
A great opportunity for the ingredients industry: Tarek Mustafa
“q4 of this year will be slightly improved,” said Tarek Mustafa, marketing director of Auto Jameel, Ford’s agent in Egypt. “Most of the customers who delayed their decision to buy because of higher prices are starting to return to buy again.
He ruled out that the delay in the issuance of the strategy of the auto industry, a relationship with the decline in sales of the market. The strategy can affect the market after issuance, stressing that the reason is the fluctuation of the currency during the past months.
He added that the trade agreements are not an obstacle to the advancement of the automotive industry, because it aims to attract investment from parent companies, and the assembly and manufacture of components, which is the main industrial base for the implementation of local industries.
Morocco, for example, has been able to promote its economy through the automotive industry and sign agreements similar to “Mariexo”.
He pointed out that the Egyptian market has experienced many difficulties during the years 2016 and 2017, and the next period will be better, as the economic situation is able to attract new investments, and all the indicators indicate that.
Investors’ privileges are the solution: Abd El Moneim El-Kadi
Abd El Moneim El-Kadi, vice president of the Chamber of Engineering Industries (CEI), said that the market conditions have started to improve relatively with the stability of the policies during the last quarter of this year, which will have a positive impact on the market sales.
El Kadi added that the main factor for the decline in the market performance is the rise in the exchange rate, not the delay in issuing the government strategy for the automotive industry.
The commercial agreements, such as the Mercosur and the Egyptian-European partnership, give concessions to the other parties and harm the local product, because the local industry needs a lot, and it has much to conquer world markets.
He said the current situation was stabilizing, suggesting 2018 to be the year of breakthrough, but the procurement figures will need a period to return to its previous status.
No complete breakthrough in 2018: Khaled Saad
Khaled Saad, general manager of Bavarian Brilliance, said the last months of this year would see a slight improvement in sales.
He said that the negative impact of the strategy of the car industry may come after the issuance and not before it, adding that the trade agreements are an obstacle to the advancement of the vehicle industry now, as it serves the other side more than
the Egyptian side.
Saad explained that the year 2018, will not see a complete breakthrough, but improved performance compared to this year.
According to Saad, the current economic situation is suffering from the absence of attracting factors of new investments, and there are many obstacles that he hopes to be removed from the investors
