Egypt's foreign currency crisis drives second-hand car prices up 50 percent
Korean cars topped sales in the second-hand market, acquiring 50% of sales, followed by Japanese cars with 30% of sales. (Shutterstock)
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Egypt's second-hand market is seeing a price increase of 50% due to the rise of new car prices with rates that some described as “crazy” in April. This led to a decline in the demand on new cars and owners of used cars delayed their decision to sell them.
In a tour of the second-hand cars market in Nasr City, it was clear that the market has been affected by the decrease in new car sales and the significant increase in their prices during April and May. Moreover, the car market is suffering a shortage in supply due to the foreign currency crisis. Conversely, the low supply in the second-hand market was met by an increase in demand, raising the prices by more than 50% compared to last year.
The manager of Mido Car shop for second-hand cars, Mina Nabil, said that since the beginning of last month the second-hand market saw a rise in prices with rates 50% higher than prices last year.
The market is seeing recession in sales, the manager said. Sales retreated by nearly 80% compared to the past three years. A large number of traders withdrew from the second-hand cars market as a result of the recession hitting the market.
He revealed that cars in the price range of EGP 60,000 to EGP 90,000 are in the highest demand. This category is acquired by Korean and Japanese brands.
Many buyers have moved to websites to buy their cars, which has negatively impacted the business of the second-hand cars markets, he added.
Nabil expected an increase in sales of second-hand cars in the run up to Ramadan, as the holy month is a season for the second-hand cars market and usually sees an increase in the number of buyers.
Both Hyundai Elantra and Kia Cerato are the best-selling models in the second-hand market, followed by Chevrolet Aveo, Nissan Sunny, and Toyota Corolla.
Manager of a second-hand cars shop in Nasr City, Amr El-Sawy, said that the foreign currency crisis has heavily impacted market sales. The scarcity of supply of new cars has pushed car owners to delay selling them.
The prices of second-hand cars have increased by 50%, under pressure from the suspension of new car reservations. El-Sawy said the price of new cars is the factor that controls the second-hand cars market. The prices of the cars on offer often exceed EGP 90,000.
El-Sawy said that Korean second-hand cars are in higher demand, especially the Hyundai Elantra and Kia Cerato, while sales of Verna, Accent, and Kia Rio have stalled due to their high prices.
Korean cars topped sales in the second-hand market, acquiring 50% of sales, followed by Japanese cars with 30% of sales.
Chinese cars came in third place in the second-hand market, with 12% of total sales, followed by European brands with 9.5% and American brands with 8.5% backed by the demand on Chevrolet Aveo.
El-Sawy explained that the sales of Chinese cars are not focused on any particular model, since price controls sales rather than the condition of the car or its brand.
Some second-hand cars are experiencing a 50% increase in their prices, most prominently is the ŠKODA Octavia.
Car trader El-Sayyed Ahmed said the rise in the US dollar exchange rate significantly impacted the sales of second-hand and new cars. Sales decreased by 50% to the lowest level of the past four years.
He demanded that the government conduct quick economic reforms to restore prosperity in the automotive market.
Car trader Ahmed Hussein, revealed that the best-selling brands are Hyundai, Kia, and Toyota. Korean brands are the most demanded by clients, while other brands are witnessing a sort of recession, he added.
Owner of Al-Eslameyya for Auto Trade, Mahmoud Abdel-Fattah, demanded that the Central Bank of Egypt provide facilities and make it easier for traders to open letters of credit. This will help them open new markets and face the recession that overran the automotive market.
He added that the second-hand cars market is suffering a shortage in supply under pressure from the US dollar crisis, which increased prices by 50%.
The significant price increases in the new cars market have been highly publicised since the beginning of April. The increase overran nearly 137 models of all the well-known brands in the market, including the two German brands Opel and BMW, the two Korean brands Hyundai and Kia, the American Chevrolet, the two French brands Renault and Peugeot, and the two Japanese brands Nissan and Mazda. The new increases announced by agents exceeded about EGP 10,000 per car.
Car prices continued their upwards trend earlier this month, registering record levels driven by the foreign currency crisis, as foreign currency is needed for import, and the high price of the dollar in the informal market.
The car market has seen a change in the price policy of 95 models; prices of 91 models have increased, while only four models have retreated.
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