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  • Dr. Nilgün Birgören
    Dr. Nilgün Birgören    Premium Member   Group moderator
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    The Road Less Traveled
    By Tamer Hafez



    If new vehicle sales are a barometer of the overall economy, then the latest figures suggest the country still has a long road to travel before it emerges from the sharpest downturn in recent history.

    Egyptians bought 36% fewer cars, trucks and buses in 1H2009 than they did during the same period in 2008, according to new figures from the Automotive Marketing Information Council (AMIC). Vehicle sales totaled 90,357 overall, but this constituted a precipitous drop following four years of steady growth in the car market.

    There is, however, some reason for optimism: Sales have risen every month since January and analysts are hopeful that the sector will rebound in 2010.

    Dealers sold 67,129 new passenger cars in 1H2009, a 38% year-on-year drop. Big cars — those with engine sizes between 1.6 liters and 2 liters — witnessed the lowest percentage drop in sales with a 20% year-on-year fall. This category includes the BMW 320i (with a retail price of LE 360,000), the Mercedes C200K (LE 370,000), the Audi A4 (LE 400,000), the Speranza A620 (LE 114,000) and the Brilliance Galina (LE 160,000).

    As a group, SUVs with engines larger than 2 liters experienced the second lowest drop in sales, falling 27%. This category includes the BMW X3 (LE 450,000), the Mercedes GLK 300 (LE 460,000), the Nissan Armada (LE 720,000), the Jeep Cherokee (LE 320,000) and the entire Land Rover/Range Rover line up (from LE 550,000 to LE 1.45 million).

    SUVs with engines smaller than 2 liters were the only group to record an increase in sales, 11% during 1H2009. This category includes the Speranza Tiggo 1.6L (LE 80,000) and 2.0L (LE 105,000), the Daihatsu Terios (LE 130,000), the Suzuki Vitara (LE 137,000), the Citroen C4 Picasso (LE 175,000), the Hyundai Matrix (LE 95,000) and the Kia Carens (LE 100,000).

    Meanwhile, sales in the 1.5–1.6 liter and 1.3–1.5 liter categories have dropped by 39% and 40%, respectively — very close to market average. Sales in the 1.0–1.3 group dropped 40%. The group suffered from a lack of new offerings. Its best-known members are the Speranza A113 (LE 50,000) and A213 (LE 55,000), the Toyota Yaris (LE 90,000) and the Brilliance FRV 1.3L (LE 75,000).

    The super sub-compact car market (vehicles with engines less than 1 liter) saw sales plummet 70%. Most manufacturers, including popular Chinese brands, have stopped making cars that fit those specifications.

    The sales figures suggest that the global economic downturn has squeezed budget-conscious car buyers out of the lower end of the market. At the same time, the crisis has not hit Egypt’s wealthiest consumers as hard.

    Sales of locally assembled cars dropped to 24,807 units, down by 41% year-on-year. Meanwhile, imported car sales dropped 36%, dropping to 42,322 units. The preference for foreign models comes despite higher accompanying tax rate. Local assemblers could soon get a boost if a plan to offer motorists financial incentives in return for trading in their outdated cars and minibuses comes to fruition. The plan, which is under discussion, would limit their choices to a number of locally made new vehicles.

    TRUCKS
    Overall, 16,380 trucks were sold during 1H2009, a 32% year-on-year drop.

    Sales of mini pickups, pickups and light medium trucks dropped by 33%, 34% and 37% with sales figures of 730, 11,098, and 2556 respectively. Demand for light trucks, those with a maximum payload of 1.8 tons, fell 23% during 1H2009. Medium truck, payloads of 9–16 tons, and heavy truck sales both boomed, increasing 56% and 17% respectively.

    Pickup trucks still dominate the sector with a 68% market share. Light medium trucks are a solid second with 16% market share.

    While passenger car sales are closely linked with the disposable income of households, truck sales are often a marker of the financial health of businesses. The vehicles are used to transport products to clients and customers, so when new purchases fall like they did during the first half of the year, it suggests companies are still laboring.

    BUSES
    The market for buses also struggled during 1H2009 with sales down by 24%; just under 6,900 vehicles were sold. The hardest hit were buses used to ferry tourists, whose numbers have fallen dramatically in 2009. Tourism maxi bus sales are down by an unbelievable 82%; just 44 were sold during the first six months of the year. Sales of tourism minis are down 53% and tourism microbuses down 27%. Only one bus category saw an increase in sales.

    Transport microbuses are the most popular in the sector with a 34% market share, although their dominance has dropped from 41% in 1H2008. In a close second is the transport double-micro class with a 31% share, increasing from 21% in 1H2008. Tourism microbuses placed third with a 16% market share.

    The numbers suggest that the tourism sector is treading carefully, expecting a mediocre short- and medium-term future. The companies that are buying tend to opt for smaller buses.

    THE FUTURE
    The AMIC revealed that monthly sales figures are on the rise this year. In February, sales increased 22% over January, while March sales increased by 17%, April 1%, May 2% and June 23%. Overall, 19,536 cars were sold in June. So the AMIC is optimistic that the car market and the economy are on the road to recovery.

    Ramadan is not normally a month when cars fly out of the showrooms and the quick succession of holidays that followed did not favor new car sales. The market could remain at a standstill for 2H2009 with sustainable growth expected during 2010.
    • 29 Sep 2009, 7:41 pm