Egypt auto market set for record growth
Cairo, September 22, 2010
New car sales in Egypt are set to jump to a record this year, the head of the country's main carmaker group said on Tuesday, brightening the outlook for local vehicle assembly firms such as GB Auto.
Egyptian automakers, most of which assemble foreign brands using imported parts, were hit by the global financial crisis last year.
Sales are now growing at pre-crisis levels, partly thanks to a government plan to offer affordable cars to taxi drivers, Salah El-Hadary, secretary general of the Egyptian Automobile Manufacturers Association, told Reuters in an interview.
'Sales figures show that the market is steering towards a speedy recovery in 2010 that will continue into the coming years, mainly boosted by the taxi replacement programme,' he said.
He forecast that sales this year would grow by 27 per cent to around 260,000 vehicles. Around 45 per cent of cars sold in Egypt are assembled in the country.
The top foreign brands are Chevrolet, Hyundai and Kia. A recovery in Egypt's vehicle market helped boost GB Auto's revenue in the second quarter by 62 per cent to 1.7 billion Egyptian pounds ($298 million), with net income in the quarter amounting to 77.7 million pounds.
Vehicle sales nationwide rose 31 percent year-on-year in the January-July 2010 period to 144,018 vehicles, Hadary said.
He forecast further growth after the taxi replacement programme, managed by Egypt's ministry of finance, spreads to cities other than the capital Cairo.
The taxi programme has helped Egypt's auto firms emerge from the savage downturn - and made Egypt's streets a little safer and cleaner - by replacing many of the country's grimy, rickety black and white taxis with new, locally assembled models.
The programme aims to scrap around 50,000 taxis by the end of this year. The ministry has earmarked a budget of 560 million pounds for the programme's first two years of operation.
Investment bank HC Securities said it expected GB Auto to capture a 25-30 per cent share of taxi replacements. A similar government plan to replace old microbuses is under study and could be kicked off in 2011, Hadary said.
'If the microbus replacement plan comes into effect, it will bolster sales, increase domestic output and expand the country's auto market,' he said. 'Local automakers are ready to take part in the plan once it begins.'-Reuters