Automotive

The automotive market in Egypt is relatively small in comparison with other developing markets of similar size. Half of the country’s vehicle production is derived from the local assembling plants where it is difficult to attain the economies of scale necessary to reduce production costs. In addition, depreciation of the Egyptian pound by 44.0 percent during 2004 raised the cost of imported vehicles and locally assembled vehicles, which use imported components.

However, the prospects for vehicle sales is looking bright due to the emerging transparency in policy and sharp import tariff reductions that promise to boost consumer confidence in the Egyptian automotive industry. Other factors expected to drive growth in this market include development of consumer credit facility, liberalization of trade and commerce policies, growing economy and infrastructure, and active participation in promotional campaigns.

Due to the tourism boom in Egypt, there is a niche market for two-wheelers (motorcycles and scooters), which are imported from India, China, and Japan. There is also high demand for small cars in the passenger vehicle segment that comprised 66 percent of the total automotive market in Egypt. Growth in the tourism industry also has a positive impact on the sales of buses and coaches.

Another factor working in favor of the Egyptian automotive market is the widespread availability of natural resources and a growing economy that is attracting investments from a large number of foreign automotive manufacturers. Trade liberalization policies in particular have encouraged foreign automotive manufacturers to appoint authorized dealers in Egypt, establish service stations, and hold promotional exhibitions. Currently, the domestic production of automotive vehicles in Egypt is limited to the assembling of vehicles through joint ventures between Egyptian firms and international automotive companies. Therefore, lowering of import tariffs is expected to affect the domestic assemblers that would have to compete with cheaper and better quality imports.

The current aim of Egyptian automotive market is to expand its reach into the international markets. Egyptian auto parts sale to European original equipment manufacturers (OEMs) and aftermarket sales can increase considerably, if high quality parts are delivered at a reasonable price through reliable suppliers.

Due to the tourism boom in Egypt, there is a niche market for two-wheelers (motorcycles and scooters), which are imported from India, China, and Japan. There is also high demand for small cars in the passenger vehicle segment that comprised 66 percent of the total automotive market in Egypt. Growth in the tourism industry also has a positive impact on the sales of buses and coaches.

Another factor working in favor of the Egyptian automotive market is the widespread availability of natural resources and a growing economy that is attracting investments from a large number of foreign automotive manufacturers. Trade liberalization policies in particular have encouraged foreign automotive manufacturers to appoint authorized dealers in Egypt, establish service stations, and hold promotional exhibitions. Currently, the domestic production of automotive vehicles in Egypt is limited to the assembling of vehicles through joint ventures between Egyptian firms and international automotive companies. Therefore, lowering of import tariffs is expected to affect the domestic assemblers that would have to compete with cheaper and better quality imports.

The current aim of Egyptian automotive market is to expand its reach into the international markets. Egyptian auto parts sale to European original equipment manufacturers (OEMs) and aftermarket sales can increase considerably, if high quality parts are delivered at a reasonable price through reliable suppliers.