Boston, MA -- (SBWIRE) -- 05/28/2013 -- Car sales in Egypt rose 43%, to 17,463 units, in January, according to the latest data from the Automotive Marketing Information Council (AMIC). Sales of passenger car grew 39% to more than 12,000 vehicles during the month. However, the council said that many car producers and distributors are concerned over the coming period, as well as the whole year, as January sales were affected by the Egyptian currency devaluation. This came as the dollar increased by more than 10% since December, which resulted in around EGP5,000-60,000 (US$750-9,000) price rise for some luxury cars.

As the Egyptian pound reaches new lows, forcing up the price of imported vehicles, BMI believes this creates opportunities for small car and budget brands through demand from those consumers still keen to go ahead with purchases. As China's Geely Automobile just completed construction of its plant in late 2012, this could be one brand set to take advantage of the current conditions.

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Following a 30% decline in sales in 2011, largely owing to the political unrest in the country, the new vehicle market bounced back in 2012, with a 13% increase reported by AMIC. The report added that the market performed particularly well in H212. However, the depreciation of the Egyptian pound against the US dollar, which had reached EGP6.691/US$ on February 4, has made it difficult for imported brands to capitalise on the market's recovery. According to anecdotal evidence, the price of some models is rising weekly.

Industry surveys suggest that the majority of consumers are still keen go ahead with new car purchases, however, and the choice of model may change rather than the decision to buy. This is where we believe low-cost brands will have an edge and companies such as Geely, which has recently finished construction of a local plant, will have an even greater advantage as domestically produced products are more competitively priced.

Geely started production of the Emgrand EC7 in October 2012, in conjunction with the country's largest automotive firm Ghabbour Auto (GB Auto). The plant, near Cairo, assembles vehicles from completely knocked down (CKD) kits, so there will still be some currency impact on the import of kits, although lower than the 40% levied on cars with an engine of 1.6 litres or smaller, and the 125% tariffs on larger cars. The plant will also be exporting some of its 30,000 units a year to other North African markets, meaning it will be earning export revenues.

The new plant is also good news for GB Auto, which will replace production of the outgoing Hyundai Verna with the Geely models and will see its annual production capacity rise to 70,000 units a year. Although still the country's largest assembly and distribution form, Geely has lost market share on the back of supply shortages from Hyundai so the diversification of brands will help.

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