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Wednesday, 31 August 2022

Auto sales fall again in July + Stellantis could invest in its local auto factories

Auto sales halved in July from a year earlier as the market continued to struggle with import restrictions, inflation and a weaker currency. Passenger car sales dropped 50% y-o-y last month to 8.9k vehicles, according to figures provided by the Automotive Information Council (AMIC).

Bus and truck sales were also down: Some 1.3k buses and 2.6k trucks were sold in July — marking around a 30% y-o-y drop for both segments. Total vehicle sales dropped 46% y-o-y to 12.8k units.

ICYMI- The auto sector is in a jam: Passenger vehicle sales have since March been marking steep y-o-y declines, with car sales dipping by more than a third y-o-y in June. The market has been rocked by new rules requiring importers to get letters of credit (L/Cs) that effectively limited imports to a handful of essential goods, leaving new cars and car parts stranded at ports and pushing a number of global car manufacturers to suspend sales here. The devaluation of the EGP and inflation are also weighing on the sector.

Distributors are slowly releasing existing inventory to the market at higher prices to maximize margins amid supply constraints. And local assembly is struggling: Assembly lines are getting some allocation of FX to bring in kits (called “CKD” units in the industry) while already-build passenger cars remain effectively blocked from entering the country.

A light at the end of the tunnel? The government is rolling out measures to ease the logjam at ports, including a potential route for importers to bypass filing for L/Cs. Catch the full story in our Economy section, above.

REMEMBER- You’re entitled to a refund if your new car hasn’t materialized. The consumer watchdog in May ordered distributors to fully return down payments with 18% interest to anyone who had ordered vehicles before 12 April and wants a refund. Those who still want their vehicles have full price protection (that is, companies are forbidden from retrospectively hiking prices on cars ordered before 12 April due to inflation).


Stellantis is considering upping investments and expanding capacity at Arab American Vehicle Company (AAV) factories, cabinet said in a statement yesterday. This comes under an MoU signed between the auto giant — a merger between Fiat Chrysler and Peugeot — and the General Authority for Investment and Freezones (GAFI) yesterday. AAV is a JV between Stellantis and the military-affiliated Arab Organization for Industrialization.

Stellantis likes the auto localization strategy: The automaker reiterated its interest in taking advantage of the government’s incentives for the auto sector, having already expressed its interest in assembling electric vehicles in Egypt.

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