Noticeable confusion has prevailed in Egypt ‘s automobile market since last week, and is likely to continue in the near future, reports Al-Sharq Al-Awsat newspaper. The sale of new cars was almost entirely suspended as a result of a decision by the Egyptian Minister of Transportation, Midhat Hassanain, to impose an additional five percent tax on new cars.
The imposition of the tax on new cars is expected to stimulate the domestic used cars market, which has suffered from a recession in the past two years. The additional five percent tax is applicable to all new cars, regardless of whether or not they are imported or manufactured locally.
However, the association of local automobile manufacturers has announced that the new tax would have a negative impact on the local car industry, which has been an experiencing difficulties lately.
Presently, the Egyptian automobile industry is utilizing only 30-35 percent of its potential manufacturing capacity. The imposition of the new tax will noticeably decrease sales of new cars in Egypt. Consequently, the local car industry will operate at less than 25 percent of its overall potential capacity. — (Albawaba-MEBG)
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