Re­mov­ing Euro­pean car im­port cus­toms tar­iffs causes in­er­tia in Egypt’s used ve­hi­cle mar­ket

First week of 2019: traders main­tain prices, cus­tomers wait for re­duc­tions

The Daily News Egypt - - Business - By Nour Ahmed and Yara Ali

It is un­usu­ally quiet in the Egyp­tian used car mar­ket as hun­dreds of ve­hi­cles ac­cu­mu­lated in the al­lo­cated ar­eas with their own­ers and traders sit­ting be­side them. Some are des­per­ate to get rid of their old ve­hi­cles and oth­ers are frus­trated as the num­ber of buy­ers se­verely de­cline.

This was the case of the Fri­day mar­ket for used cars in the Nasr City, which is the first mar­ket day af­ter the Egyp­tianEuro­pean As­so­ci­a­tion Agree­ment came into ef­fect, ac­cord­ing to which Egypt re­moves all cus­tom tar­iffs on cars im­ported from EU coun­tries.

On 1 Jan­uary, sev­eral Euro­pean car deal­ers in Egypt an­nounced a de­cline in prices of dif­fer­ent car brands, such as Skoda, Opel, Peu­geot, Ford, and oth­ers. This seems to have re­flected neg­a­tively on the used-car mar­ket, which has been emp­tied of buy­ers who are now wait­ing to see if the new prices of Euro­pean cars will hope­fully re­sult in a de­cline of used car prices.

Used cars of­fered for sale de­cline to 25%

Ibrahim Is­mail, ex­ec­u­tive di­rec­tor of the Used Car Mar­ket in theTenth Neigh­bour­hood of the Nasr City,said that link­ing the used car prices to new ones is not rea­son­able.

He stressed that a pe­riod of stag­na­tion has been ex­pe­ri­enced in the used car mar­ket since Novem­ber 2018, es­pe­cially af­ter the an­nounce­ment of the new Egyp­tian-Euro­pean agree­ment stat­ing the elim­i­na­tion of cus­tom tar­iffs on Euro­pean cars. He was puz­zled with the im­pact on the used car mar­ket, which in­cludes a few Euro­pean brands yet was ac­tu­ally dom­i­nated by Korean mod­els.

Is­mail said the mar­ket usu­ally re­ceives over 3,000 used cars ev­ery Fri­day, but that num­ber grad­u­ally de­creased since last Novem­ber reach­ing its low­est level last Fri­day of only 700 cars,less than 25% of the usual vol­ume.

He added that the ac­tual im­pact of lift­ing cus­toms on Euro­pean cars will not ap­pear be­fore 20 days in Jan­uary, hop­ing that new car prices be sta­bilised so that the used car mar­ket can be re­vived again this month.

Hos­sam Maghrabi, a car dealer, said that if new car prices de­clined, the used car prices will fol­low,as traders will tend to buy new cars.

“I hope the prices go down, so sales will im­prove, and we all walk out win­ners,” he said.

Euro­pean cars are not that com­mon among Egyp­tians

SayedAbu Salah,a used car trader,said that the abo­li­tion of cus­tom tar­iffs on Euro­pean cars will not af­fect the used car mar­ket, point­ing out that these new Euro­pean cars will re­main pricey even af­ter the new de­ci­sions,and that its cus­tomers are from a very spe­cific so­cial seg­ment, while most peo­ple pre­fer the Korean mod­els for their mod­er­ate prices.

He added that the re­ces­sion that hit the mar­ket be­gan af­ter the an­nounce­ment of the fi­nal im­ple­men­ta­tion of the Egyp­tian-Euro­pean agree­ment, which prompted many cus­tomers to wait for the new prices, caus­ing a stag­na­tion in car trad­ing.

Abu Salah noted that the used car mar­ket will need at least two months to re­cover.

Used cars are ex­pen­sive and Euro­pean cars are more avail­able

Hany Ahmed, a used car owner, said that he reg­u­larly comes to the mar­ket to fol­low up on the prices of used cars, not­ing that he has post­poned sell­ing his car un­til the prices sta­bilise.

He added that if the prices of Euro­pean cars de­clined, he will pre­fer buy­ing a Euro­pean car to a Korean one, even though he be­lieves the drop in prices gives a chance for Egyp­tians to own Euro­pean cars.

Ez­zat Mo­hamed, a cus­tomer in the used car mar­ket, said that he prefers Korean cars for their spare parts’ low prices.

He said that the mar­ket is cur­rently in a state of re­ces­sion, adding that the prices of used cars are un­rea­son­ably high and deal­ers have no in­ten­tion to re­duce them.

Hyundai Verna is most de­manded

Ahmed Eissa, a used car dealer, said that elim­i­nat­ing cus­toms on Euro­pean cars had the most sig­nif­i­cant im­pact on the prices of cars, not­ing that the de­ci­sion only af­fects only those in­ter­ested in Euro­pean cars, which are a mi­nor­ity.

As for the most de­manded cars,these are Hyundai,Kia,and Korean cars in gen­eral.As for the most sold car in the mar­ket,it is HyundaiVerna.

He added that cars within the price range of EGP 100,000 - 120,000 have the high­est de­mand.

Chi­nese cars be­com­ing pop­u­lar for their low prices

One of the car deal­ers said that Chi­nese cars are be­com­ing pop­u­lar in the mar­ket due to their suit­able prices. He be­lieves they out­per­form Korean and Ja­panese cars be­cause of their low-price ac­ces­sories and spare parts.“I have been work­ing in the mar­ket of Chi­nese cars since 2006 and it has been all good,” he said.

“Egyp­tians pre­fer fa­mous brands.We now only trade 10 car brands.” he added.

He stressed that most Egyp­tians do not buy Euro­pean cars given their high prices, un­like the mar­ket of used cars where the most ex­pen­sive car would cost EGP 300,000, which suits mid­dle class Egyp­tians.

A pe­riod of stag­na­tion has been ex­pe­ri­enced in the used car mar­ket since Novem­ber 2018

Newspapers in English

Newspapers from Egypt

© PressReader. All rights reserved.