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Tuesday, 1 November 2022

Egypt car sales hit 4.5-year low in September on supply constraints — when will you be able to actually buy a car?

Auto sales slump to 4.5-year low: Monthly auto sales fell to their lowest level since 2018 in September as import restrictions continued to weigh on the market. Figures released by the Automotive Information Council (AMIC) yesterday showed that only 6.8k passenger cars were sold during the month, 60% fewer than in September 2021. This is the lowest monthly sales volume since January 2018.

Other vehicle types didn’t fare (quite) as badly: Truck sales fell 33% to around 2.8k while sales of buses were down 8% to around 1.8k. Overall vehicle sales were down 50% to 11.4k, the lowest figure since the covid-19 lockdown in April 2020.

ICYMI- The auto sector has been suffering: Car sales have fallen through most of 2022 thanks to import restrictions. Amid tightening financial conditions globally, the Central Bank of Egypt (CBE) imposed sharp restrictions on imports to preserve foreign currency, which have made it almost impossible for distributors to bring fully built up vehicles, assembly kits, and spare parts into the country and forced a number of global car manufacturers to suspend sales to Egypt.

Light at the end of the tunnel: The central bank will by the end of the year phase out the requirement to finance imports via L/Cs — the measure was the primary way the bank had been stifling imports. In the meantime, new governor Hassan Abdalla is allowing shipments worth as much as USD 500k (up from a previous limit of USD 5k) to be cleared through the old documentary collection system.

That last bit suggests that spares, at least, will likely become more available in the weeks to come — and that some smaller shipments of vehicles in port since spring might come through at the same time.

But it will be months before vehicle supply improves. Global producers have been redirecting to other markets production (of both assembly kids and completely built vehicles) that they had previously earmarked for Egypt. It’s going to take months for distributors here to place orders, global suppliers to make and ship — and then longer still if you’re looking for a model that is assembled in Egypt.

And the Madbouly government’s expat car program is unlikely to eat substantially into pent-up demand. The scheme has opened a four-month window for Egyptians working abroad to pay for vehicles up front in hard currency in return for the right to import a new car with the promise they’ll get taxes and customs back in local currency five years down the road. The Finance Ministry thinks the scheme will convince hundreds of thousands of Egyptians abroad to purchase vehicles.

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