Ahram Online-


Easing the financing of imports is not a panacea for the car sector’s woes, experts say.

The Central Bank of Egypt (CBE) has issued instructions to the banks to provide the importers of 13 non-essential goods, including cars, with the finance needed to open letters of credit to pay for their purchases without prior approval.

The move aims to ease the backlog of imports and increase the supply of goods in the local market. It also reflects an improvement in foreign-exchange availability.

The CBE imposed strict regulations on financing the import of non-essential goods, such as cars, mobile phones, electronics, food plants and seeds, fresh fruit, cocoa, and jewellery and pearls, in March 2022 in order to manage the country’s limited foreign-currency reserves amid growing economic pressures.

Automotive experts believe that the recent CBE directive allowing the import of non-essential goods will not significantly impact the car market, which is struggling with a slowdown.

“The problem with car imports in Egypt is not solely about securing foreign currency, though that is one of the challenges,” Amir Helali, head of the Importers Committee at the Automobile Division of the Chamber of Commerce, told Al-Ahram Weekly.

He explained that there is no clear mechanism outlining how to obtain the Advance Cargo Information Declaration (ACID) number that importers need to obtain through the Egyptian customs platform NAFEZA at least 48 hours before their imports are shipped from the exporting markets and is a crucial part of the customs-release process for new vehicles entering Egyptian ports.

“This remains the real challenge for car imports in Egypt,” Helali told the Weekly.

MontasSer Zeytoun, a member of the Automotive Division of the Chamber of Commerce, said that the registration process on the ACID number platform has been suspended.

Imports of passenger cars into Egypt have decreased recently, according to data from the Central Agency for Public Mobilisation and Statistics (CAPMAS). The value of car imports stood at $156.08 million in August this year, down from $217.64 million in August 2023, representing a decline of $61.55 million.

Talking to local media outlets, Zeytoun predicted that the recent CBE directive may soon be followed by a Ministry of Finance decision to reopen registration on the ACID number platform, but until then importers remain unable to take action.

The reduced supply and rising prices, Helali added, coincide with weak demand due to inflationary pressures.

Egypt’s automotive sales in September dropped five per cent month-on-month to 9,500 vehicles, down from 10,000 in August, according to figures from the Automotive Marketing Information Council (AMIC). This marks the second consecutive monthly decline in vehicle sales after recording 11,400 in July.

July’s high figure is attributed by automotives expert Ahmed Al-Mazahi to the fact that July is the peak season for sales as it coincides with the summer vacation for Egyptian expatriates.

“Two months ago, people were trying to manage their expenses to pay for schools and universities, and now they don’t have the necessary liquidity. This should be added to the departure of Egyptians from Egypt after the holidays. As a result, it is not expected that there will be demand in the coming months,” Al-Mazahi told the Weekly.

According to the AMIC report, the Chinese brand Chery topped the Egyptian car market in September with a 25 per cent market share, marking significant growth from 17 per cent in the same month last year. It was followed by the Korean brand Hyundai, which increased its market share from 14 to 20 per cent.

Al-Mazahi noted that both brands are locally assembled and thus attract a lot of demand due to their affordable prices.

“Unfortunately, most car investors in Egypt are traders, not businessmen, which is why they prefer to import fully manufactured products for quicker profits. However, the sustainable solution for the market lies in investing in localising the industry by establishing strategic partnerships with global agents,” he concluded.