The used car market is witnessing a recession following an announcement by the Egyptian Customs Authority of its commitment to implementing a new bracket for customs exemptions for European cars.
The decision led to the postponement of many purchasing decisions until the new prices are implemented.
Mahmoud Abdel Fattah, Director of the Islamic Auto Trade Showroom, said that the used car market is witnessing a complete recession as a result of the customs reductions on European-made cars, despite the fact that the reductions represent only 3% of the price of the car, and an increase in the price of the dollar has reached more than 4% of the price of the car.
He added that the media has conveyed an inaccurate picture regarding the reductions to people, pushing customers to delay purchase decisions until the reductions are applied. This has led to decreased used car sales, and a state of complete paralysis.
Regarding the demands of the used car sector in Nasr City, Abdel Fattah requested that the banking sector provide facilities and letters of credit to auto merchants and help combat the recession that has swept the auto market in general.
He pointed out that cars with 1600cc engines witness the largest sales on the used car market, leading to a price increase for the vehicles in recent times, in addition to lower supply. He added that sales for 2000cc engines and upward have completely stopped.
Amro Al-Sawy, director of a used car showroom, said that the market is witnessing a sharp sales decline due to those who are waiting to buy under the customs reductions. This has led to a standstill for demand for European vehicles, he said, explaining that cars with engines greater than 1600cc have not witnessed any purchase demand or sales offers. The market is now entirely dependent on sales for cars with 1600cc engines and lower.
He explained that Korean and Japanese cars do witness demand from time to time, and these demands are met with sale offers. This is due to the fact that the cars that are sold are priced higher than the condition of the car merits, which leads to lower sales for merchants.
He explained that the used car market trades are always thinking about gaining no less than 1% of the price of the car when making a sale.
Ahmed Hussein, a car dealer, said that talk of reduced prices for European cars is a lie, indicating that customers believe car prices will drop by 10%. He stressed that this misconception has dramatically halted sales movement.
He emphasised that Korean and Japanese models are witnessing increased demand at present, but that low supply levels threatened the market. He went on to say that both this lack of supply and the customs reductions were effectively threatening the throne of the used car market.
Source: Daily News Egypt