On the Road to Recovery: Egypt’s Auto Market Accelerates in 2024
In a remarkable turnaround, the Egyptian automotive market is experiencing a significant resurgence in 2024 after a tumultuous period of decline in 2023. The recent drop in automotive prices has sparked renewed optimism among consumers and industry experts alike, signaling a positive trajectory for the sector.
This revival came after a series of economic measures implemented by the Central Bank of Egypt (CBE), which have led to a notable depreciation of the US dollar (USD) against the Egyptian pound (EGP).
Market Recovery in 2024
According to recent reports from the Automotive Marketing Information Council (AMIC), the automotive industry in Egypt has witnessed a remarkable recovery in 2024.
Total vehicle sales have surged, with a notable 21.7% increase recorded in late February compared to the same period in 2023. This surge in sales can be attributed to increased consumer confidence, stemming from positive indicators suggesting progress in addressing the dollar shortage crisis.
Montaser Zaytoun, a member of the Automotive Division at the General Federation of Egyptian Chambers of Commerce, emphasized that the unification of US dollar prices between official and parallel currency markets has played a crucial role in lowering official car prices.
Over 90% of car models are no longer overpriced, leading to a significant rebound in the auto market, which had previously experienced stagnation.
Direct Impact of USD Depreciation
The recent depreciation of the USD against the EGP, facilitated by the CBE’s decision to raise key interest rates and allow the USD rate to be determined by market forces, has directly influenced the positive trend in car prices.
The EGP depreciated by approximately 53% against the USD in official banks, leading to a substantial drop in auto prices. Raafat Masrouga, honorary head of the AMIC, explained that this adjustment has resulted in enhanced purchasing power for both new and second-hand autos, with prices of used autos decreasing by at least 25%.
Looking Ahead: Stability Amidst Exchange Rate Fluctuations
As the USD to EGP exchange rate stabilizes and Egypt’s foreign exchange reserves surpass pre-March 2022 levels, experts anticipate continued stability in automotive prices.
Masrouga predicts further decreases in auto prices, supported by the possibility of the EGP strengthening against the USD to levels below EGP 40 soon. Zaytoun concurs, suggesting that prices will remain stable as long as the USD remains above EGP 40, provided there is an adequate supply of autos in the local market to meet growing demand.
Opportunities for Local Industry
The revival of the Egyptian automotive market presents significant opportunities for locally assembled cars to gain market share. Priority should be given to deepening local manufacturing and rational management of hard currency for production necessities.
Khaled Saad, secretary-general of the Egyptian Association of Automobile Manufacturers, highlighted the importance of leveraging localization efforts to increase local content in automotive production. The portion of local content has already increased to 15-20% in 2024 compared to 2023, signaling progress in reducing dependence on imported components.
As the market continues to stabilize and local production efforts intensify, the outlook for the Egyptian automotive industry appears increasingly promising, offering opportunities for growth and development in the years to come.
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