Clients are passing and checking the prices of the new and used cars lining up outside Pyramid Auto shop in the Faisal street in Giza province, southern Egypt’s capital Cairo, but they are hesitant to conclude a purchase deal amid the ongoing inflation pressure and local currency devaluation.
“New vehicle sales have been stagnant during the past three months as more consumers, negatively affected by the increasing inflation, have become deeply concerned with high prices of both the new and used cars,” said Ibrahim Al-Masry, a 45-year-old manager of Pyramid Auto.
Prices of some new models increased by around 30 percent after the Central Bank of Egypt allowed the Egyptian pound to weaken by 14 percent against the U.S. dollar on March 21 after having kept the currency steady for the previous 18 months, Al-Masry told Xinhua.
Also, the disruption of the supply chain and hiking costs of shipping driven by the ongoing Russian-Ukrainian conflict are significant factors for a recession in car sales in Egypt, he added.
Osama Aboul-Maged, chairman of the Egyptian Automotive Dealers Association, agreed that the auto market fears mounted over the U.S. Federal Reserve’s further tightening measures, which “overshadowed the post-pandemic recovery amid rising recession concerns in Egypt.”
Since early 2022, the prices of cars increased by up to 15 percent, said Aboul-Maged, anticipating that the new rise in car prices will reach 20 percent by the end of this year.
Egypt’s Consumer Protection Agency ordered on April 13 a fine of up to two million pounds (over 107,000 U.S. dollars) as a punishment for overpricing cars.
The halt of production of electronic chips in the world’s largest companies in the European Union due to a shortage in Russian gas supplies has limited the production of thousands of goods, including cars, said Aboul-Maged, noting it also contributed to the auto recession in Egypt.
Sales of new cars in April and May declined by 80 percent compared to the same period in 2021, while demand for used cars grow, according to Al-Masry.
“Rise in new car prices in the local market has promoted a large number of buyers to turn to used vehicles that also have experienced a relatively hike,” Al-Masry said, adding his shop provides several types of installment programs up to 7 years to attract more buyers.
Less-aged cars and popular brands with good resale value are in high demand among clients.
Mohamed Abdel-Raziq, a 40-year-old insurance consultant who bought a used Fiat Tipo 2019 at 280,000 pounds with a 4-year-installment, said that buying a used car was a bit of no-brainer.
Egypt is an emerging used car market in the Middle East at a rebounding stage from the economic crisis after the COVID-19 pandemic, Aboul-Maged said, adding that collaboration among different partners and streams, and tech-enabled services are expected to drive the industry in the future. ■