Back to the complete issue
Thursday, 5 May 2022

Fallout from war in Ukraine officially hit the auto industry in March — as expected

Passenger car sales fell 3% y-o-y in March, according to figures from the Automotive Information Council (AMIC), an industry association to which most distributors report sales. AMIC data shows that around 18.9k cars were sold in March, down from 19.5k in the same period last year. That ends a run of growth that began last year. You can thank shortages of components, rising inflation, disruption to local production, a slowdown in imports, and the upward pressure on prices following the float of the EGP toward the end of March. Last year saw the sector shrug off the global chip shortage as strong demand pushed sales to their highest levels since the EGP float in 2016.

The breakdown:

  • Total vehicle sales fell sharply: Overall, the auto industry sold 23.8k vehicles during the month, down 9.4% from last year.
  • A massacre in truck sales: Truck sales saw the most significant drop out of any other segment, falling 32.9% y-o-y to nearly 3.2k.
  • Bus sales extended their drop: Some 1.7k buses (historically, the worst performing segment) were sold in March, down nearly 16.6% y-o-y thanks to cutbacks in the tourism industry, which is reeling from the drop in Russian and Ukrainian tourists.

This was expected: The impact of the war in Ukraine on the industry — including soaring commodity prices, further supply disruptions and the EGP devaluation — was expected to be felt properly in March, industry insiders told us last month.

Car prices were rising — until the gov’t imposed caps: As of last month, car dealers were not able to hike prices above the price set by the official distributor. Dealers that sell at higher rates will face fines of up to EGP 2 mn. Many dealers have been hiking car prices, or refusing to sell at all, since the EGP devaluation. It’s not clear how long the price freeze will last.

AMIC data is self-reported by member distributors, who include the majority of (but not all) industry participants.

IN OTHER AUTOMOTIVE NEWS-

Is Mercedes-Benz interested in investing more in Egypt? Trade and Industry Minister Nevine Gamea met with Mercedes-Benz Egypt CEO Gerd Bitterlich on Tuesday to discuss the company’s current and future investments in Egypt, according to a ministry statement. Key points in the talks included discussion of the government’s automotive strategy (the updated version of the now-defunct automotive directive), which aims to increase local vehicle manufacturing and assembly and increase the sector’s competitiveness to become a regional manufacturing hub and bolster export volumes. Gamea stressed that this would be a government priority.

Want to read more on what the automotive industry wants to get out of the strategy? Read our inaugural Inside Industry story here.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.