Thin stock, a moving dollar and fewer imports: Khaled Saad on car prices
In short
Khaled Saad, secretary general of the car manufacturers association, named 3 reasons for the latest price rises: short supply, a higher dollar and fewer imported cars. He also said sales are up 25% on last year.
Khaled Saad is secretary general of the car manufacturers association. He named 3 main reasons behind the latest price rises in the Egyptian car market: short supply, a higher dollar, and a drop in imports of fully built cars.
Imports are down
Saad said imports of fully built cars fell sharply compared with last year. The state is backing local manufacturing and a bigger local component share.
Importers and dealers did not hold big stocks to begin with. They held limited quantities. That created waiting lists for customers who want some models. Demand for some models continues even though few cars are available.
Locally assembled cars feel it less
Locally assembled cars were affected too, but less than fully imported ones. The other 55% of production inputs is imported and goes into assembly in Egypt. So the price rise on local cars is not the same as on fully imported ones.
The dollar
Saad stressed that foreign currency is the main driver of car costs. He said the state used to fix the exchange rate for customs, through the so-called customs pound. That let companies set a car's cost and price it for one, two or three months.
That has changed. A company may ship a car when the dollar is at one level, and the rate is different when the car arrives. This makes pricing hard.
Saad also said there is no fixed dollar rate to price cars on. Anyone who says the dollar is fixed at one figure is not telling the truth, in his words.
Sales and used cars
Saad said sales are up 25% compared with last year. Prices fell early in the year, when supply was large and the local component share and locally made supply both grew. That brought Egyptian buyers back, after demand had stalled last year. Then the dollar rose, and prices followed.
Used car prices rose along with new car prices, he said. A buyer who wants a new car and is selling an old one asks for a higher price, to shrink the gap. Interest in used cars has dropped sharply compared with new cars.
Over price
Saad said people in the sector reject over price. He linked its return to limited supply, which he tied to the limits on imports. He also said a seller can only sell a car he actually has.
He said buyers who fear further rises rush to buy even without an urgent need. When cars are available and the market is calm, buying slows.
