Is it the renaissance of Egypt’s automotive aftermarket?


This whitepaper explores the resurgence of the Egyptian Automotive aftermarket, which is heavily influenced by the dominance of multi-branded workshops. The reasons for the consumer’s preference for unorganized multi-brand garages over the OEM’s (Original equipment Manufacturer’s) service providers were analysed. The impact of the imports of spare parts within the automotive industry were taken into context to comprehensively understand the industry’s ecosystem and its future outlook. Read on to discover what influences a positive market outlook of the Egyptian automotive aftermarket.

1. A boom in Egypt’s Automotive aftermarket Industry is being fueled by expanding population, growth of E-commerce channels and favorable government initiatives

Dip in Automobile Sales
  • The automotive sales in the country are dipping a bit as of now, due to floating of Egyptian Pound and increase in the price of US Dollar.
  • With this, there is an expectation that people will hold on to their used cars and instead pay for maintaining the same. The roadside assistance market should thrive as a result.
Rise of E-Commerce Channel for Aftermarket
  • A growing trend has been observed in the Egyptian aftermarket in the e-commerce channel, with platforms such as Odiggo, Tawfiqia and Egyparts gaining visibility among the public.
  • The Egyptian aftermarket is ripe for growth and to offer up great opportunities for parts producers, distributors, and service providers, local producers, suppliers, etc.
Change in Installment Rates by Central Bank of Egypt
  • The Central Bank of Egypt, during the year 2020, decided to raise the maximum installment allowed from a customer's total fixed income to 50% from the existing 40%. This made it easier to acquire loans and hence, led to more car purchases.
  • Banks have taken initiatives to ease procedures for car loans, various offers are made by car dealers, and the government has launched older-vehicle replacement and conversion initiative.
Government Support to promote Green Energy
  • The government of Egypt announced an initiative to encourage consumers to replace old vehicles for new ones operating on CNG engines with extended credit facilities among its green program incentives.
  • The share of CNG-powered vehicles is increasing further, which will open up new industry segments and growth opportunities for the aftermarket in Egypt.
Interested to know the entire competitive ecosystem of the Egyptian Automotive Aftermarket? Click here to read a free sample report

2. However, increasing car prices, halting of imports and changing brand make-up of country’s four-wheeler fleet are the major barriers for the industry’s growth

Changing Brand Make-Up of Country's Four-Wheeler Fleet

  • The brand make-up of the country’s vehicle fleet is changing.
  • Most of the market for four wheelers in Egypt is held by Chevrolet/Isuzu, Hyundai, Toyota and Nissan.
  • The significant market shares held by these brands could be eroded by the entry of European and Chinese brands, whose sales numbers can be fueled up by import duties in place.

Increased Car Prices due to Depreciation in Egyptian Pound and Rise in Interest Rates

  • Depreciation of pound by ~15% and increase in interest rates by ~1% impacted Egypt’s car market.
  • As per key decisions taken by the Egyptian government on 21st of March, 2022, passenger car prices have experienced a ~15-20% increase leading to some dealers even refusing deliveries to customers who had previously booked their vehicles at a lower price.

Halting of Imports over Debts by Car Manufacturers in Egypt

  • Agents/Dealers of agents of European vehicle manufacturers, including Citroen, Volkswagen, Skoda, Audi, Peugeot, Fiat and DS Automobiles had notified their Egyptian distributors to reduce the number of vehicles sent to Egypt.
  • The halt in production was due to the failure of local distributors to pay their invoices on time which created a gap between demand and supply.

3. But, the government of Egypt had announced an initiative to encourage consumers to replace old vehicles with new vehicles operating on CNG engines which indirectly helps to revive the Auto-aftermarket

Role of Egyptian Government in the Automotive Aftermarket Industry

    Replacing internal combustion engines with more environmentally friendly alternatives
  • The government of Egypt has developed a comprehensive strategy for the automobile and electric cars industry, with plans being formulated for covering multiple dimensions such as conversion of cars to work with gas or electricity, and replacing cars greater than 20 years of age with a new electric model.
  • The private sector is also being actively engaged as part of the strategy formulation process.
    Government activates localization law of auto industries
  • The government is also designing incentive programs to encourage the localization of the automotive industry, with additional incentives to be made available for companies that manufacture cars running on clean energy sources.
  • A new custom tariff was issued, and a draft law was formulated to activate incentives for localization and deepening of the automobile industry in Egypt.
    Signing of Memorandum of Understanding
  • An MoU (Memorandum of Understanding) was recently signed between the Suez Canal Economic Zone, the Sovereign Fund of Egypt, the East Port Said Development Company and the Egyptian International Motors Company.
  • This MoU aims to localize automotive and associated industries in the Suez Canal Industrial Zone through the establishment of a joint complex for manufacturing of vehicles and their associated supplies.
Interested in knowing more about the strengths and weakness of the market? Click here to download free a sample report

4. As a result, the Egypt Automotive Aftermarket Service Industry is estimated to expand at a double-digit CAGR between 2021 and 2027E on the basis of revenue generated

The Egyptian automotive aftermarket is ripe for growth in the near future years

  • The Egyptian aftermarket is ripe for growth and offers up great opportunities for parts producers, distributors, and service providers.
  • But the increasing competition from local producers may mean overseas suppliers will need to invest in their own on-the-ground structures or seek out ways to add value locally to increase market shares.
  • The number of vehicles serviced in Egypt is expected to expand at a CAGR of ~4% between 2021 and 2027.
  • The share of CNG-powered vehicles increasing further, which will open up new industry segments and growth opportunities.
  • E-commerce is fast emerging as a significant aftermarket force through highly visible platforms such as Odiggo, Egyparts and Amazon Egypt.

Four Wheeler Aftermarket Service Industry in Egypt is estimated to expand at a CAGR of ~19.0% in between 2021 and 2027E on the basis of revenue generated

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