CAIRO: The Ministry of Trade and Industry and the Ministry of Finance are finalizing plans to implement a passenger car replacement project similar to the taxi replacement program currently underway, Al-Alam Al-Youm reported Monday.
The initiative is intended to facilitate the process of replacing dated passenger cars with new vehicles to reduce pollution and traffic caused by the presence of old cars on Cairo’s crowded streets.
“Some of these vehicles are 40 and 50 years old and are still running in Egypt’s streets, causing a tremendous amount of pollution, requiring the government to act and try to replace them without causing any loss to their owners, said Minister of Trade and Industry Rachid Mohamed Rachid.
Like the taxi replacement program, the passenger car project will provide old vehicle owners with tax breaks, financing and other incentives to ease the burden of purchasing a new car.
Rachid said that incentives will be in the form of a relative tax discount at a yet to be determined rate, and confirmed that the incentives would be in line with previous replacement programs undertaken by the government.
The project will likely be implemented in partnership with several Egyptian banks and automakers, including Ghabbour Auto.
If this project is going to be applied by the government, certainly GB Auto will take part in it just as it did in the taxi replacement project. The company will present new models of cars in the market that suit the buyers and are in line with their capabilities, said Bassem El-Shawy, director of investor relations at GB.
Despite this promised support, the new program is likely to face more opposition than the successful taxi replacement program due to the fact that private car owners have less incentive to get rid of their old vehicles, and fewer means of financing a new one.
Where taxi drivers were offered cash for their old vehicles, subsidized prices for the new cars, the opportunity to place advertisements for extra cash, and the benefit of attracting more customers with a new cab, private owners of an old but functioning vehicle have few reasons to throw it away.
“There are cultural aspects to consider when implementing this program; Egyptians aren’t quick to throw away things and they buy things for life. This cultural resistance will need to be faced through advertising campaigns and incentives and I don’t think it will be easy, Mennatalla Sadek, senior financial analyst at Cairo-based investment bank Beltone Financial told Daily News Egypt.
Although resistance to the idea can be expected should the project be implemented, there is little doubt that such a program would benefit the local auto industry and improve the conditions of Cairo’s streets.
“I believe that it makes sense to extend the program to passenger cars and I think overall it will be positive for the market and for reducing traffic and pollution; it would certainly have a positive effect on the local automotive sales. The extent of the growth in sales would depend on the specifics of the law, Sadek explained.
“This would mean that the local manufacturing companies would have an opportunity to capitalize, but it also means there would be increased competition from imported cars, especially smaller ones, and this would make the local auto market more attractive to new players going forward, she continued.
Sadek said that the implementation of such a program could help local auto dealers regain the high levels of growth they enjoyed before the onset of the financial crisis late last year.
“I think that if such a program were to be implemented it would help the market return to double-digit growth, she said.
On the street, however, drivers of older vehicles are apprehensive about what a program like this could mean for them.
“I shouldn’t be forced to get a new car just because the government decides mine is too old to be on the road. I have three kids in school and paying for a new car, even if it’s subsidized and financed, isn’t in my budget at all, said Amr Magdy, an electrician and owner of a 27-year-old Fiat.
For her part, student Nivine Eskandar worries about how she’ll get to university without her 23-year-old Lada handed down from her parents if the project is put in place.
“It’s not a great car but it gets me where I need to be and its much better for me than taking public transportation where I would be harassed and face crowds and a lot of other problems – I don’t think my parents will buy another car to replace this one because of money concerns, I’ll just have to stop driving, she said.
Whether the new project will bring negative or positive changes to Cairo’s streets and the lives of private vehicle owners will only become clear upon implementation of the project, the timeline for which is still unclear.
In his statement, Minister Rachid refused to disclose the exact timing of the project’s implementation, though he said he hoped that the replacement program would help encourage the revitalization of the local auto market, contributing to the goal of reaching production levels of one million cars by 2020.
