Egyptian market anticipates custom cuts on EU cars

The local automotive market is expecting a 10 percent cut in custom duties on cars imported from Europe starting in January.

This is the second consecutive year the market is anticipating the cut.

Some market players, however, dismissed the possibility of a sharp drop in the prices of best-selling brands.

Such a drop may prompt rival Korean and Japanese rivals to lower their rates at the onset of the new year, analysts say.

Omar Balbaa, deputy head of the automobile sector at the Federation of Egypt Chambers of Commerce (FECC), said the market is currently in anticipation for phase two of custom cuts on European cars. The reduction is part of a European partnership agreement signed with Egypt that stipulates a gradual decrease of 10 percent in customs until 2019, when duties will be abolished entirely.  

Balbaa told Al-Masry Al-Youm the cuts will reach 20 percent by January 2011, up from 10 percent in January 2009. He stressed the measure will have a definite impact on Korean and Japanese brands, as well as locally-made 1600CC brands, whose prices are predicted to drop by 2.6 percent.

But Alaa al-Sabaa, member of the Egyptian Businessmen Association (EBA), argued the cuts will not affect prices before 2014, adding that the impact will be more apparent in brands with engines over 2000CC. Al-Sabaa pointed to other factors controlling European automobile prices, such as currency value, whose increase can diminish the prospects of a local price drop.

He stressed that a number of Korean and Japanese manufacturers have shifted to their Europe-based plants for importing to Egypt’s local market, while other firms have also sought a presence in Europe to benefit from the partnership agreement.

Nissan will resort to importing from its factory in the UK starting next year in order to take advantage of the custom cuts, according to al-Sabaa.

Translated from the Arabic Edition. 

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