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The automotive sector in Egypt continues to grow from strength to strength with Q410 being very successful for the industry. A number of Asian manufacturers such as Toyota Motor, Mitsubishi Motors, Hyundai Motor and Kia Motors are increasing their presence in the country and the competition within the market is growing. Market research firm Synovate stated that many new car brands arrived in Egypt throughout the year, which further added to competition. Domestic demand for cars is heavily on the rise, which is also driving market prices.

The market grew 18% y-o-y in September to reach a sales total of 144,739 units. Growth of 15%, to 222,973 units, is predicted for 2011. The passenger car market forecast to increase by 22 % by the end of the year, to reach 193,890 units. The Egyptian auto market, which is heavily supported by government legislations, is undoubtedly one of the fastest growing in Africa and the Middle East. As a result of the expected growth, BMI forecasts that total auto sales will increase from US$9.48bn in 2009 to US$23.5bn in 2014; an increase of 148%.

One of the main reasons for such growth in the auto market is the taxi replacement scheme. This aimed to remove 50,000 old taxis by the end of 2010 and replace them with new models. In September, GB Auto claimed 64% of all taxi replacements which increased its sales by 65.3% y-o-y (reaching US$293,000). Due to the success of the scheme, GB Auto intends to increase its passenger car production from 30,000 units to 80,000. However, the threat to local manufacturers such as GB Auto from China was further heightened as Chery Automobile announced that sales of the Chery continued to rise throughout Q410. Egypt is considered a strategic investment by China as it links the Middle East to Africa.

It was announced in December that Toyota will build a manufacturing base in Egypt. Construction is set to begin in 2011 and will begin by producing approximately 3,000 vehicles. This is a big boost for the country and it is expected to lead to more manufacturers expanding into the country.

Other auto companies set to develop interests in the country include Nissan which plans to provide the Egyptian auto market with new models made in England in 2011. European cars enjoy reduced tariffs and will Nissan will take advantage of the bilateral free trade agreement between Egypt and the EU.

Meanwhile, Mitsubishi signed a new distributor deal with Diamond Motors to help with the everincreasing demand for vehicles. The deal is not exclusive and is in conjunction three Egyptian based companies: Al Mulla Group, Al Kharafi Group and Smart Car. The deal is set to open a network of service counters which will deal with sales, maintenance and parts and is expected to see an investment of US$100mn over the next three years. The first year will see an investment of US$65mn and the centres will be built in different cities throughout the country. The JV has been agreed in order to reach and keep Mitsubishi’s estimated 5-8% share of the Egyptian market and sales of 8,000 units in its first year and 20,000 units in the near future have been forecasted.

Elsewhere, GB Autos expects to see a rise of 50% in net profit for 2010. This is due to a substantial recovery in domestic demand for vehicles. The company claims that its profits will double to almost US$100mn in 2010 as it focuses on exports to the Middle East and Africa (MEA) and begins selling vehicles in Iraq."

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