The resumption of car licensing and notary services in Egypt is causing a stir in the automotive industry, as the country's vehicle inventory begins to move again.
However, the sector is still struggling to find a strategy to overcome supply chain difficulties, despite the influx of automotive parts for local assembly and production issues. Despite this, the automotive industry is hopeful for a comeback in the near future, although the ongoing COVID-19 crisis keeps the outlook uncertain.
Amr Soliman, the Chairperson of Al Amal Group, expressed his support for the decision to restart operations at traffic units.
He believes that this move will improve the sales of vehicles in the market and reduce the number of unsold cars, as customers can finally pick up the cars they had purchased before the pandemic hit.
Import of Automotive Components
Soliman also mentioned that the import of automotive components for local assembly is progressing smoothly, as local assembly plants are operating at 70% of their capacity while taking necessary precautions to prevent the spread of the virus.
He mentioned that the Chinese market has resumed production and export of vehicles, but other markets are still facing challenges. He further added that many importers, due to their fears of low consumer demand and the high number of unsold vehicles, have reduced their import quotas. These unsold vehicles need to be sold to secure the needed liquidity for future imports.
Need for Foreign Investment
Soliman highlighted that the sales of imported cars are surpassing those of domestically assembled vehicles due to the slight price difference and the customs exemptions that apply to European, Turkish, and Moroccan cars. This puts locally assembled cars at a disadvantage as they still have to pay customs on imported parts. This highlights the need for a strategy to bring in foreign investment to the local market.
Soliman explained that due to the stagnation in the market, domestically assembled cars cannot gain from the low import volumes by increasing their sales. Furthermore, consumers are being cautious with their spending as there is still a lot of uncertainty about the future.
Ramy Mohareb, Nissan Egypt
Ramy Mohareb, the spokesperson for Nissan Egypt, has stated that there are no issues with importing parts for local car assembly, despite some shipments being delayed. The only hindrance to the recovery of car sales was the temporary suspension of license issuance at traffic departments, but Mohareb expects sales to increase in the future, with a significant boost occurring during Eid al-Fitr.
He does not believe that the slowing of car imports will lead to a higher market share for local cars, but rather sees the main advantage of a local assembly as being the introduction of an automotive strategy that would attract investors and produce cars at a lower cost.
Automotive Industry Expert; Hussein Mostafa
Automotive industry expert Hussein Mostafa agrees that the obstacles facing car imports and parts imports for local assembly are the same. He believes that the availability of stock and its impact on prices is the main factor affecting car sales. The prices of both imported and locally assembled cars may rise if international trade is affected.
Mostafa also emphasizes that reopening traffic departments for licensing cars will likely boost sales by 10% compared to April and March. He acknowledges that Egypt is not self-sufficient in terms of feeding industries and manufacturing parts, and that China remains the dominant market for global feeding industries, accounting for a third of global exports of manufacturing components.