Pictures of new vehicles lined up in port in Alexandria have repeatedly appeared on social networks in Egypt of late, most of them released by members of the “Let it Rust” campaign, an initiative that kicked off on Facebook towards the end of 2018 to protest against the high prices of cars in Egypt. The campaign has picked up momentum, with its Facebook page attracting more than a million followers, as consumers have continued to wait for a decrease in automobile prices following the full elimination of custom tariffs on European cars that went into effect at the beginning of the year within the framework of the free-trade agreement with the EU. The pictures are indicative of the success of the campaign, according to its members, which calls for a boycott on buying new cars to put pressure on dealers to lower their prices, even if cars in storage are left to rust. The Ministry of Finance announced this month that the Alexandria Port Authority had released 11,000 private vehicles worth more than LE3.28 billion in January when the full elimination of custom tariffs on European cars was first applied. The campaign organisers wrote on Facebook that car-sellers have been the most affected by the boycott campaign, followed by distributors and dealerships, though they said the latter had not yet felt the full repercussions. “The dealerships will not go bankrupt because they have already cashed the price of cars docked in ports from the vendors and distributors in advance. Some of the owners of these dealerships also have other businesses to lean on,” the campaign organisers said. Some two months after the launch of the initiative, the campaign statement said that “the dealerships, which should have started lowering their prices after the EU agreement came into force, haven't been directly affected by the campaign, but they will lose billions in a few more months.” “We will also not limit our demands to reductions in car prices. We want to see higher safety standards and more options, just like in other countries,” they said. The dealerships are trying to come out of the crisis with the least possible financial losses, but they are unlikely to lower their prices in order not to appear as if they have given in to campaign demands, the campaign statement said. Car dealerships may sell their stocks of vehicles to neighbouring countries, or even at a loss, or they may deliberately withhold stocks of new cars, the statement said, anticipating that rumours could start to circulate that customers should buy cars now because their prices could go up. Mohamed Radi, founder of the “Let it Rust” Facebook page, said the campaign's success had been felt through the dealerships' responses, social media pages, and the engagement of the public with the campaign. Even car vendors, distributors and dealerships had admitted that sales had come to a halt in the vehicles market, he added. A number of dealerships have announced considerable reductions in car prices, but these have not been enough for customers who expected a bigger drop, Radi said. Continuing the boycott campaign would pressure dealerships to further reduce their prices in order to meet sales quota in contracts with the manufacturing companies, he added. For car prices to drop the dollar needs to maintain its current rate against the Egyptian pound. A rise in dollar prices would inevitably lead to an increase in car prices, Radi said. A recent report from HC Securities and Investment, an investment bank, predicts a gradual decrease of 9.5 per cent in the price of the pound against the dollar to reach LE19.6 per dollar soon. Raafat Masrouga, honorary president of Egypt's Automotive Information Council (AMIC), said the “Let it Rust” campaign had contributed to a slowdown in car sales by 35 to 40 per cent in January and February. “We targeted selling 20,000 vehicles after the full elimination of the custom tariffs, but fewer than 12,000 cars were sold in January,” he said. The dealerships' ability to survive in the market depends on their ability to store unsold vehicles, Masrouga said, pointing out that failing to achieve sales target would put the dealerships in a tight spot with the manufacturing companies. There is no other way to increase car sales “except by lowering prices. But the price drops will not be by LE50,000 or LE60,000 as people expect,” Masrouga added. Some dealerships also do not want to reduce their prices, fearing people will respond by raising their demands. The agreement to eliminate custom tariffs on cars imported from Europe went into effect in 2010 and has been gradually implemented until reaching the full exemption from customs in January 2019.
