Egyptian unrest reaches into auto industry
Automakers ride a rollercoaster of positive sales numbers and political instability.
The recent uprising in Egypt that led to the military ouster of President Mohammed Morsi has affected every aspect of Egyptian life and business, and the auto industry is no exception. From sales numbers to production lines, Egypt’s auto business has been riding waves of turmoil and recovery since the 2011 Arab Spring demonstrations toppled the regime of Hosni Mubarak.
Morsi’s removal from office came just days after industry analysis revealed a 12 percent year-to-year increase in car sales for the first five months of 2013. The sales figures depict a stunning resurgence of consumer confidence; the Egyptian market entered a period of intense unease following Mubarak’s departure over concerns for the future of Egypt’s government and economy.
As the Arab world’s most populous country and the third-largest car-producing nation in Africa, Egypt is an immensely important market on the world stage. Small Chinese and Japanese cars have benefitted the most from the sales increase, thanks to their relatively low costs and fuel efficiency -- important to bear in mind when the government keeping gas prices low is toppled. Asian builders weren’t the only ones to make the most of the buying surge: General Motors has the best-selling brand for 2013 in Chevrolet, as well as the Opel brand, which it sells in Egypt; truck sales also experienced a fifteen percent increase over 2013’s first five months. We’ve yet to see how current events in Egypt will affect auto sales. Considering that the overall year-to-year sales increase fell from 14 to 12 percent from April to May, the auto industry may be facing another sales dip like the one experienced in 2011.
Some manufacturers have already felt the impact of the massive demonstrations and Morsi’s removal firsthand. BMW and General Motors both shut down dealer and production units the day after Egypt’s military ended the Morsi presidency. Toyota’s Egyptian production facility ran throughout the crisis, but it did close all of its dealerships for three days as a safety precaution while hundreds of thousands protested. The interruption appears to be short-lived for manufacturers, however: the BMW and General Motors facilities that were shut down were all scheduled to be back up and running on July 7th, and Renault’s 38 dealerships across Egypt never closed during the crisis.
On a list of concerns over the current situation in Egypt, how cars and trucks are selling isn’t near the top of it, nor should it be. As elections are held and Egyptians attempt to get back to something resembling a normal life, the performance of the auto industry will be an important harbinger of where the country might be headed. Egypt has population of more than 80 million, and with total car and truck production of fewer than 40,000 units in 2012 during a period of intense sales growth, the potential is there for builders to make a big push in a re-emerging market. What happens next is in the hands of the citizens of Egypt.
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