2013-02-22 13:52:13 - Recently published research from Business Monitor International, "Egypt Autos Report Q1 2013", is now available at Fast Market Research

Despite the downgrades to our sales and production forecasts in Q412, we still believe there is growth potential in Egypt.

Egypt is the Arab world's most populous state, with approximately 80mn people. It is the region's traditional cultural hub and potentially the leader of the Arab world. Car ownership in Egypt is low even compared with the standards of developing countries, at 32 cars per 1,000 people. This compares with 109 in neighbouring Algeria and 128 in China. Egypt also boasts a large youth population and is experiencing a 'youth bulge', according to US-based Population Reference Bureau, which claims one in five Egyptians is aged between 15 and 24, with one half of the population under 25. A new government may

still also trigger a broader rise in consumer confidence.

Our optimism is backed by a few encouraging developments in the country announcements from carmakers in the country.

Passenger car sales in Egypt rose 11% year-on-year (y-o-y) to 13,376 units, in October 2012, according to Egypt's Automotive and Marketing and Information Council (AMIC), which has forecast a 3% annual increase in overall passenger car sales for 2012. This came after the council estimated that total auto sales fell by 33% y-o-y over the January-August 2011 period, to just 111,108 vehicles. We estimate sales dropped over 31% the full year, to 117,395 units. We estimate output was down nearly 30%, with around 81,000 vehicles produced.


Full Report Details at
- www.fastmr.com/prod/536433_egypt_autos_report_q1_2013.aspx


Ghabbour Auto (GB Auto), Egypt's only listed automaker, registered a 25% increase in net income to EGP92.5mn (US$15mn) in H112, according to figures released by the stock exchange in August. The automaker represents one-third of the passenger car market, which has increased rapidly owing to easier availability of credit, a variety of cheaper Asian vehicles and a growing population. However, it did report a 26.5% y-o-y drop in net income to EGP65.4mn (US$10.7mn) for Q312 and its market share during the month of October 2012 drop below its normal rate of 22%, according to the AMIC. The drop came as a result of supply constraints following labour strikes at Hyundai Motor, said CEO Raouf Ghabbour.

Hyundai management declared that supply returned to normal levels in mid-October, which means GB Auto will likely recover its normal market share in November and December. Its overall market share during the year stands at 30%. Additionally, 400 taxis were sold under the government's taxi replacement programme in October 2012, all of which were Hyundai Verna models.

We believe the introduction of new, affordably priced cars to the market could also boost sales. At the end of October 2012, GB Auto and China-based automotive company Zhejiang Geely Group (Geely International) completed construction of their new facility in Cairo. Geely said the factory has begun operations with its annual production capacity expected to reach 30,000 units. The company's first vehicle to be produced is the Emgrand EC7, which will replace the medium-sized Hyundai Verna, which has achieved significant success in the Egyptian market. GB Auto will stop manufacturing the Verna by the end of 2013.

US automaker General Motors Company (GM)'s subsidiary GM Egypt has started manufacturing the Chevrolet Move car at its facility in 6th of October City. Production of the Move car will use kits supplied by GM's Chinese joint venture (JV) SAIC-GM-Wuling. GM has invested US$10mn in developing and installing new tools at the facility to support plans to make almost 5,000 vehicles a year for the Egyptian market.

In April 2012, it was revealed that Japanese automaker Toyota Motor Corporation (TMC) launched the first production line for its Fortuner sports utility vehicle at Egyptian carmaker Arab American Vehicles Company (AAV)'s Cairo plant. The Fortuner is the first Japanese car to be manufactured in Egypt, and TMC's move reinforces foreign automakers' confidence in Cairo, according to Egypt's industry and foreign trade minister, Mahmoud Eisa. Toyota is planning to produce around 3,000 units of the Fortuner a year. Vehicle quality control, logistics management and supply and demand management will be managed by Toyota Motor Engineering Egypt.

Political risk in the country still threatens our forecasts, however. Egypt's presidential election on June 16-17 2012 was overshadowed by what could only be described as a military coup that threatened to plunge the country into its worst crisis since the initial days of January 2011's revolution.

We slightly downgraded our vehicle sales and production forecasts in both the third and fourth quarters of 2012. However, we kept 2012's estimate the same owing to pent-up demand from 2011 when the market was hit by the effects of political and economic strife.

Much still hinges on the country's political future and the extent of the country's Islamist shift. For example, in March 2012, a spiritual leader in Egypt issued a fatwah (law, regulations) which banned Muslims from driving Chevrolet vehicles, according to Pravda, because the logo of the company is a Christian cross. The report said many Egyptians thought the fatwah was 'strange'. However, there is certainly a risk that the recent wave of anti-American protests triggered by a US-made film deemed insulting to Islam could hurt the US brands in Egypt, and possibly spread to all Western ones. Furthermore, the Egyptian stock market (EGX30 index) plunged 9.6% on November 25 on the news that President Mohamed Mursi had granted himself unlimited power.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at www.fastmr.com/catalog/publishers.aspx?pubid=1010

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

For more information about these or related research reports, please visit our website at www.fastmr.com or call us at 1.800.844.8156.