Despite ordinarily being a high season for car sales, this summer has seen low demand for passenger cars, according to market experts and distributors who blamed the continuing political unrest in the country that could have led consumers to postpone their purchasing decisions. According to Hatem Yousri, a sales manager at one of the largest local distributors of passenger cars, the second half of the month of Ramadan is normally marked by high sales, but political instability had led to a 40 per cent drop compared to the same period last year. Yousri added that the mass demonstrations that had led the army to oust former president Mohamed Morsi on 3 July had revived car sales for a while, but that sales had again declined when demonstrations and sit-ins by pro-Morsi protesters had been organised in the capital, followed by violent clashes with the army and security forces. However, the Automotive Market Information Council (AMIC) said in a recent report that the first half of 2013 had seen a 15 per cent increase in total car sales, with 102,452 vehicles sold from January until June against 88,775 during the same period last year. The report stated that 11,315 passenger cars had been sold in June alone this year, compared to 9,558 last year, a 19 per cent increase. During the first six months of this year, sales of locally assembled passenger cars had increased by 14.7 per cent, compared to the first half of last year, going up from 22,859 vehicles to 26,230. Sales of imported passenger cars went up from 39,730 units last year to 44,690 cars this year, a 12.5 per cent increase. However, Effat Abdel-Ati, head of the cars division at the Cairo Chamber of Commerce, told Al-Ahram Weekly that the AMIC's reports were not based on sales to end consumers, but instead measured car imports and local manufacturing, or car sales from manufacturers to distributors and not sales to end consumers. “Only cars with license plates should be counted if we want to measure exact sales,” Abdel-Ati said, adding that the Central Traffic Authority, which has information about the number of cars being licensed across Egypt, is located where the pro-Morsi protesters were demonstrating at the Rabaa Al-Adaweya Mosque in Cairo, making it difficult to acquire the needed information. Abdel-Ati said that car sales had been generally low during recent months, even with the introduction of the country's taxi-replacement project. Under this government project, 41,000 old taxis have already been replaced with newer ones in two phases that started in April 2009. Another 15,000 taxis will be replaced under the third phase of the project, which kicked off last April. The project continues to be a helping hand to car manufacturers, who have been suffering from lower sales and profits during the last two-and-a-half years. According to Yousri, car sales fluctuate according to events on the streets. During mass demonstrations and marches, sales are at their lowest. “Many potential buyers postpone their purchasing decision out of fears that their vehicles might get caught up in the middle of a clash, leading to damage,” he said. The higher possibility of car damage or theft has also led insurance companies to decrease the amount they are paying in compensating to car owners. Abdel-Ati said that the companies had previously given clients 100 per cent of damage repair costs, but that they were now only reimbursing 25 per cent because of the higher risks. “This has escalated the reluctance to purchase a new vehicle at the moment,” he said. The Egyptian pound has gained ground recently against other currencies including the US dollar and the euro, and this has been reflected in a reduction in the prices of some imported passenger cars, encouraging distributors to offer discounts on some models. “This, along with the needed stability and security on the streets, should help the auto market over the coming weeks,” Abdel-Ati said.
