The holy month of Ramadan usually sees a decline in car sales due to the change in households' priorities during that period. But the first quarter (Q1) of 2019 witnessed the abolition of custom tariffs, the launch of "Let it Rust" boycotting campaign, and the circulation of reports about possible gasoline price hikes, which will further increase the recession in Q2 of 2019. "Automotive sales saw unexpected decline due to the market conditions in January and February. We do not expect a significant increase in sales soon, but in Ramadan in previous years, the market sales were improving. This year, Ramadan comes after severe decline in previous months, so sales are not likely to increase this month," Raafat Masrouga, honorary president of the Automotive Marketing Information Council (AMIC), said. Masrouga expected sales to move up in the second half (H2) of 2019, as he believes the decline in H1 resulted from the deferred purchases that can be concluded in H2 of 2019. He also believes that the boycotting campaign's impact has faded away as customers waited for so long to see prices go down, which did not happen. He recommended distributors and showrooms to provide attractive offers to stimulate sales in Ramadan and activate instalment schemes to help purchasers who cannot pay in cash. Moreover, the gasoline price hikes have never affected car sales, he asserted. Alaa Sabaa, a member of the Cars Division at the Cairo Chamber of Commerce, said the sales could decline in Ramadan due to the change in priorities of customers at this period of the year. He agreed with Masrouga that the "Let it Rust" campaign has been no longer the main reason for the decline in car sales, citing the lack of sufficient liquidity. Sabaa explained that there are many marketing plans to stimulate sales in Ramadan, but has not been announced so far, as higher sales rate is predicted in H2 of Ramadan. He noted that the gasoline price hike will not affect current consumers but will impact the future consumers. However, with the grow of technology, consumers may find solutions to buy cars less dependent on fuel, as consumers always seek the best money-saving technology and the turbocharger engines save more fuel which means that law-capacity-engine car sales will increase. Khalid Saad, general manager of Bavarian Brilliance, said the boycotting campaign did not cause any sales decline and that there is a 10% increase over 2018. He sees that Ramadan sales in the previous years were low as customers focus on Ramadan rituals. The rise of gasoline prices does not directly affect car sales but it may affect the use of cars by individuals to save gasoline, but those who want to buy a car do not think about the price of gasoline. Ibrahim Saeed, executive director of used car markets in the 10th district in Nasr City, expects the sales of cars to decrease during Ramadan, which is happening every year, due to the economic situation that does not allow or buying a new car in light of other priorities, especially in this period. Moreover, the impact of the Let it Rust campaign does still impact the buying decision. He said that the decline in sales in the user market is caused by the lack of supply, as the low number of cars for sale impacts the price of cars. He said that the number can increase in Ramadan, which would enable clients to get cars at more affordable prices. Ibrahim added that one of the reasons for the increase in the prices of cars in the user market is the presence of a broker who controls the price of the used car and adds up his fees. “H2 of 2019 will witness a move in the prices of new cars when the second-hand cars prices stabilise,” he said. He said that the relationship between the increase in gasoline prices and the prices of cars is an adverse relationship, the higher the price of gasoline is the lower the car price would go. The car prices are then expected to fall when the gasoline price hikes. Osama Mahmoud, marketing manager at Auto Group, said sales in Ramadan for car retailers are fairly stable and evident by sales in previous years in Ramadan. But the current year, there are many obstacles seen since January and the abolition of custom tariffs and European car models and the lack of liquidity, along with the campaign to boycott car buying have all contributed to slowing down car sales and pushing down prices. Osama pointed out that there was a significant drop in the first quarter of 2019 but since the slight increase in sales at the beginning of this month, he expects the next month to see an acceleration in sales and in Ramadan, when promotions, discounts, and advertisements stimulate sales. He said that Kasrawy Group announced up to 15% discounts for Ramadan, especially on Proton models that saw discounts of EGP 40,000 on Proton Prevé and EGP 15,000 – 20,000 on Exora. As for the increase in gasoline prices, Osama said that the rise in gasoline has not been implemented so far, but the rise in gasoline prices may affect the decision to buy cars and lead to a significant decline in sales movement Customers may like small capacity engine more as they are more fuel efficient and avoid 2,000 CC engines, especially SUVs.
