Egypt Car Sales Up Despite Political, Economic Woes

Automobile sales in Egypt have picked up this year, despite political turmoil and a weak economy, as consumers opted for cheaper and more fuel efficient vehicles, according to a new report.

The country recorded a 12% year-on-year increase in passenger car sales to nearly 60,000 units in the first five months of the year, analysts at Cairo-based investment firm Naeem Holding said, citing data from the Automotive Marketing Information Council, an industry body in Egypt.

Car sales had dropped sharply since the uprising that toppled former president Hosni Mubarak in early 2011 as wary consumers put off purchases amid an uncertain political environment and a struggling economy. A weaker local currency also made imports more expensive.

But the country’s auto industry is “swimming against the current” this year as sales continue to improve, though consumers are increasingly looking at options from car makers in China, Japan and South Korea, the report said.

“Chinese car models have been doing well because they’re more fuel efficient and target the lower segments of consumers because cars are more of a necessity,” said Hady Medhat, a research analyst at Naeem.

Geely, a small Chinese car, has been particularly popular among Egyptians with sales of some 2700 units in the January-May period, accounting for about a fifth of total sales in the 1,300 to 1,500 cc category.

Sales of Japanese cars, which have been long trusted in Egypt, have also doubled in the past five months because they’ve become price competitive in the local Egyptian market, the analyst noted.

“The Japanese Yen and the Egyptian Pound have both been depreciating, so the prices of Japanese cars have become more affordable for consumers,” Mr. Medhat said. Korean car sales also grew this year, though Hyundai–a popular brand in Egypt–was affected by supply shortages.

Even bus and truck sales have been increasing, the report said, attributing the bus sales, which are up 37% on year, to a slight recovery in tourism. Truck sales were up 15% on year.

The improvement in car sales this year reflects the potential that Egypt, with a population of over 80 million, has as a market. The growth trend is expected to continue in the summer months when car sales usually increase, but renewed anti-government protests in the Arab country could hurt consumer confidence again, the analyst said.

Source: The Wall Street Journal