The automotive sector is feeling the impact of the lack of foreign currency and the dollar’s price increase in the informal market, along with restrictions on imports.
This has led many experts to anticipate an increase in the prices of car parts by as much as 25% within one month.
“Increasing customs on imports during the last period, in addition to increasing dollar exchange rates in the parallel market, will push prices of spare parts up by 10% within one month,” said head of the spare parts division at the Chamber of Commerce in Cairo, Sayed Dessouky.
Prices have not yet been affected as the quantities currently in the market were imported before the customs increase. The increase will be applied to spare parts within a month, in line with importing new quantities, he said.
Every merchant has a cost and a profit margin. Thus, according to the price used in purchase, a price will be set to achieve the profit margin the merchant is aiming for. Therefore, any increase in dollar prices and costs will be handed to the consumer, Dessouky explained.
Dessouky also predicted a decline in Egypt’s importing of spare parts this year to 25% of what it was a year ago. He attributed this to the large number of restrictions set by the government on imports, pushing importers to reduce imported quantities along with the recession that controls the movement of the market.
According to Dessouky, the real boom in sales and decline in prices will not happen for two or three years, in conjunction with the implementation of projects announced by the presidency. These projects include factories for the production of parts and feeder industries, and will subsequently increase supply and lead to the dispensing of imports. Thus, prices would go down, automatically reviving the market.
Division member Mohamed Al-Battah said the increase in customs, as well as the rise in the dollar exchange rate, has not influenced spare parts’ prices so far because no new supplies have been imported following the increase. He explained that new quantities will be imported at the end of March, on which the increase will be applied. He expected a price increase of approximately 20%.
Al-Battah explained that spare parts were imported at more than EGP 6bn last year, noting that the first quarter of this year is witnessing a decline in imports compared to the corresponding period in 2015. He added that Egypt’s import rate decreased by 20% during the past three years due to restrictions and market recession.