AUTOMOTIVE INDUSTRY IN EGYPT 13 pages
1. 2. 3. 4. 5. 6. 7. 8. 9. 1. 11. 12. 13.
Abstract Summary Egyptian Market for Automobies and Auto spare parts !imports" E#porting Market $rofie %oca $roduction %oca Content Current Status and &uture $rospects End 'sers Anaysis Market Access Customs and (T) Issues $ubic tender procedures Import $rocedures * +eguations
T!AI TRADE "ENTER# "AIRO S!ERI$ YE!YA O"OT%ER# 213
Automotive Industry in Egypt
1
Thai Trade Center, Cairo Sherif Yehya
1. As)-a')
The Egyptian market is an important one due to its popuation !some 53 miion", its eading position in Midde Eastern affairs, and its centra ocation bridging three continents Europe, Asia, and Africa/ Egypt4s automotive market is gro6ing due to an increase in car oans, ho6ever the oca industry is unabe to keep up 6ith demand and additiona investment is needed in this vita sector/
%as&' (a)a - .o/ of producers0assembers 26 - Annua capacity 325# vehices - .o/ of feeder industries factories 338 - Annua production 'S2 655 miion - .o/ of brands 62 - Saes !311" 9# vehices !annuay" - .o/ of registered cars 5.6 miion !311" 2* buses 3* trucks 5* passenger - E#pected .o/ in 31 7.1 miion S+,-'es Egyptian Automobie Manufacturers4 Association !EAMA"/
The eariest beginnings of the Egyptian automotive industry date back to the year 1573/ 8uring the sociaist era, the government pedged to transform the country from an agricutura economy to an industria one, and the first competey Egyptian car 6as produced/ The car soon 6ent out of production, as it 6as unabe to compete 6ith foreign brands, especiay foo6ing the end of sociaism and the move to6ard a more ibera market/ It 6as not unti 159: that automotive giant, ;enera Motors !;M", set up its first assemby pant in Egypt, revoutioni
33 factories that produce most automotive components/ ?esides ;M, giants such as ?M(, .issan, @yundai, and 8ae6oo produce a ma=ority of their product ine in their factories in Egypt/ In fact, the ?M( assemby ine in Egypt is the ony factory outside ;ermany 6here the ?M( Series is produced/ ?ut it 6as not unti 33B that the Egyptian automotive market began to e#pand e#ponentiay, aong 6ith the oca production of both assembed cars and components/ The tota production market in Egypt consisted of ony B5,>>: vehices in 33B/ This figure rose to 117,79> vehices in 313 a 1>7D increase/ @o6ever, due to the p+/&)&'a/ '0ages s)a-)&g & 211 , production 6as do6n over >1D in 31/ In 31>, Egypt 6as the third argest carproducing market in Africa, after South Africa and Morocco/ I(,s)- Oe-&e Egypt boasts 7 automotive assemby pants of ma=or car brands and is considered the fastest gro6ing automobie market in the Midde East and Africa/ Some :/7 miion vehices are registered in Egypt, >D of 6hich are more than 1 years od/ The market is e#periencing a steady increase of an average 153,333 units per year/ Tota production in 311 6as 1>>,333 units, 6hie imported vehices reached 5,333/ At present, the market for automotive parts and accessories sod to origina euipment manufacturers !)EMs" in Egypt is estimated at F95B miion, 6hie parts and accessories demand for the after-market is estimated at F33 miion/ Many internationay kno6n auto manufacturers, incuding ;enera Motors, 8aimer0Chryser !eep "0e-+ee", Me-'e(es, Pe,ge+), !,(a&, S,,&, %M, and "&)-+e have estabished assemby pants in Egypt/ Most have aso estabished service centers 6here mechanica servicing is provided, as 6e as body repair and painting/ Automotive Industry in Egypt
Thai Trade Center, Cairo Sherif Yehya
Opp+-),&)&es & A,)++)&e I(,s)- Investments in the automotive sector are estimated at F1/ biion/ %oca vehices production increased in 313 by >BD over 335/ This increase has prompted the need for service centers 6ith modern euipment/ Gno6edgeabe sources in the industry report that the e#port-oriented feeder industries 6i attract the ma=ority of investments/ Many mutinationas are using their base in Egypt as a springboard to penetrate to other Arab and neighboring African countries through e#ports/ An automotive industria 73 miion per year, 6hie their duty rates range bet6een 13D and B3D/ "a- :+as In 311, about B3D of car saes 6ere financed by oans, according to a market eader in car oans in Egypt, 6ith an increase of 73D over 313/ The gro6th in car oans in party reated to the reform of the banking sector, and consoidation of non-performing oan portfoios/ 2. SUMMARY
The Egyptian automotive industry and its feeder industries !parts, service, repair, financia services, etc/" has progressed rapidy in the ast ten years as the number of ocay assembed cars has increased, incuding severa that have begun e#porting/ 'nti 313, the auto industry !saes of ne6 autos and parts, both for factory assemby and the auto market" 6ere reativey bright spots in the overa Egyptian economy/ @eading into 311 ho6ever, a combination of interna and e#terna factors has resuted in a much o6er estimate of activity in this sector/ The fact is, 311 6as a bad year for amost a sectors of the Egyptian economy, and the automotive industry 6as no e#ception/ Saes of ne6 vehices dropped by appro#imatey 3D, and athough many had hoped that financia iuidity probems and a recession-ike environment 6oud improve by the end of the year/ 'nfortunatey, government fisca poicy, protectionism, ta#, customs, and vauation procedures have not yet done much to increase the attractiveness of Egypt as an investment site/ ;oba economic do6nturn and the events of Hanuary :, 311 and the resuting near coapse of tourism 6ord6ide have hit Egypt particuary hard/ In addition, reduced prices for oi and gas !due to e#port to Israe and Hordan under market vaue" and decreased receipts from the Sue< Cana have reduced Egypt4s abiity to obtain hard currency/ &inay, many factors have put strong pressure on the Egyptian pound, 6hich has aready devaued some : percent from mid-311 to mid-31, and is e#pected to devaue at east another 13 percent in the short term/
3. Egp)&a a-e) ;+- a,)++&/es a( a,)+ pa-)s# Ip+-)s
The ma=or market decine in production and saes of ne6 vehices has ed to unprecedented opportunities in the aftermarket/ As is common in difficut economic times, consumers and businesses are deferring the purchase of ne6 vehices, 6hich means that e#penses associated 6ith maintenance and repair of oder vehices is soaring/ There is a serious ack of very high uaity service in Egypt, even occasionay in deaerships that service ony their o6n modes/
Automotive Industry in Egypt
>
Thai Trade Center, Cairo Sherif Yehya
Egypt Import Statistics
"++(&)< 87# Ve0&'/es# O)0e- T0a Ra&/a O- T-aa R+//&g S)+'# A( Pa-)s A( A''ess+-&es T0e-e+; Pa-)e- "+,)-
U&)e( S)a)es D+//a-s 211
(ord
* S0a-e
212
213 =a>,?
211
212
* "0age 213
212@211
>,39,::7,3/33
>,B9,75,1B>/33
1,17,91,19/33
133/33
133/33
133/33
1/7
Gorea South
9>:,9>:,7>3/33
9>3,55,559/33
>9,B1,:7/33
/3
>/9
15/1>
- 3/77
Hapan
B5>,>B,3>9/33
7>9,71B,5/33
>19,15,7>>/33
1:/59
19/>7
19/:7
5/B:
;ermany
:7,B9,:15/33
:>1,B>,:>1/33
>3B,>7,9>/33
19/
1:/9
1/>
- :/:1
China
>19,15:,991/33
>>3,:1,B>/33
1:,71:,9B>/33
13/>1
5/B5
9/95
>/5
Thaiand
1::,:7,B/33
,95,>55/33
13:,B>,1B>/33
:/3B
7/B1
7/1B
B>/
C
115,>97,B35/33
19,:>B,59/33
13,37>,131/33
>/9
:/>5
:/5:
:/39
India
115,B5,>53/33
171,77:,957/33
9:,1B3,35/33
>/9
B/7:
B/57
>:/>1
'nited States
,75,7B3/33
5:,>B,199/33
9,797,19:/33
/:
/B
B/:9
/9
Morocco
,B>9,933/33
B,1,B33/33
>,5>:,1:3/33
3/95
1/>7
/1
1/5B
Turkey
>9,79,:71/33
B>,5:,397/33
:,B7,311/33
1/:
1/7
1/B9
1>/7
Itay
BB,99,5:1/33
B,>:,3:9/33
>,37,1/33
1/B:
1/
1/>B
- :/7
'nited Gingdom
1,51,1BB/33
B,3>,9::/33
1,:,35/33
3/B3
1/1
1/3
B1/53
&rance
>1,15:,7:/33
>,:>,5>:/33
1:,>B,>91/33
1/31
1/39
3/95
3/B:
?ra
:9,>9,:>/33
5,9:3,B5/33
1B,>17,5B9/33
1/95
3/97
3/9>
- B9/9
,1>:,9:/33
:,7:,53/33
1>,99,9/33
3/3
3/B
3/91
1355/
Spain
,5>1,/33
1,1:,79/33
5,199,>/33
3/B
3/71
3/:B
- /9
Indonesia
1:,1,9B1/33
1,7,>/33
5,1B,>>B/33
3/B5
3/:1
3/:>
17/97
+ussia
,>79,19/33
17,:5,:17/33
7,:B,71/33
3/B
3/B9
3/>5
1:/15
Tai6an
1B,>>,1B/33
1:,>5,/33
7,711,1/33
3/B7
3/B:
3/>5
5/9
?earus
9,B7,153/33
1B,>B3,117/33
:,97,>>/33
3/9
3/B1
3/>B
7>/57
Saudi Arabia
S+,-'e +; Da)a< "e)-a/ Age' ;+- P,/&' M+&/&a)&+ a( S)a)&s)&'s
4. Ep+-)&g According to the European $artnership, Egyptian products are e#pected to be ao6ed into Europe free of custom duties and European products into Egypt but ony after a transition period of 13-1 years/ Automotive industriaists beieve that Egypt shoud make use of those years and of the support offered by Europe to deveop its industry and to e#port as much as possibe/ Manufacturers are said to be ess enthusiastic about e#porting than the Egyptian government is, ho6ever/ Most Egyptian-made products ack the uaity to compete in Europe, and e#cuding Egypt, Common Market for Eastern and Southern Africa !C)MESA" member countries together have a market of ony 73,333 cars a year/ Aso, e#cept for Egypt and Sudan, a other C)MESA member countries are right-hand drive, 6hich 6oud reuire an adaptation of vehices that is not =ustified by the si
Automotive Industry in Egypt
B
Thai Trade Center, Cairo Sherif Yehya
for Egyptian e#ports as the African, Midde East, and Arab markets are not big enough and Asia is too far a6ay and aready has many o6-cost factories estabished there/
Egp) Ep+-) S)a)&s)&'s "++(&)< 87# Ve0&'/es# O)0e- T0a Ra&/a O- T-aa R+//&g S)+'# A( Pa-)s A( A''ess+-&es T0e-e+; Pa-)e- "+,)- U&)e( S)a)es D+//a-s * S0a-e * "0age 213 =a>a? 213 211 212 211 212 212@211 (ord
5>,:>:,:>B/33
1>,>3B,51/33
11,3:B,B19/33
133/33
133/33
133/33
>1/9>
&rance
515,39/33
7,3,:9/33
B9,531,17B/33
3/59
1/:
B>/7B
:1/B:
1,:1,7:/33
1,1,:/33
11,711,1:/33
19/
5/51
13/>7
- >3/1
Ageria
9,551,51>/33
13,55B,>B/33
9,>7>,/33
5/71
9/5
/B7
/
Saudi Arabia
9,:,1:5/33
9,33,795/33
:,79,9B:/33
5/1
7/::
:/3
- :/53
13,91,>3/33
7,,B7B/33
B,55,71/33
11/:
:/:3
B/B7
- >/>
'nited Gingdom
>,113,137/33
7,B1,:1/33
>,B39,3BB/33
>/>>
:/1
>/3B
137/B7
Ga
1,7,BB/33
B,5>,:/33
>,>7,33B/33
1/99
B/3>
>/33
19/1
Cameroon
>,19,>B7/33
B,>B5,9B/33
>,>13,3:/33
>/BB
>/:>
/5:
>:/1B
Yemen
1,BB,:3/33
B,339,B/33
>,>,771/33
1/:B
>/:
/99
1/95
;hana
1,335,:/33
>,5B:,1B/33
>,351,::/33
1/39
>/3
/7
53/
C
>,3:3,:/33
>,>3,53>/33
,9,>B3/33
>/7
>/3>
/:
/>3
1:B,3>1/33
>,797,>:5/33
,B:5,9>7/33
3/17
/55
/3
5>/7
55,55/33
,5:7,5/33
1,7,>9/33
3/11
/B3
1/:9
9:7/:>
$ortuga
,B7,>>/33
,5:>,:>/33
1,BBB,59/33
/5B
/B3
1/5
/::
Sudan
,3,9:9/33
,B57,9>5/33
1,>>,173/33
/>7
/3
1/15
1>/>:
$oand
7:7,515/33
1,99,5B/33
1,37,7B/33
3/3
1/:>
3/5:
197/7>
Turkey
1,B,93/33
1,9:5,1>/33
51:,93/33
1/>>
1/:1
3/9
B5/:5
'nited Arab Emirates
>,>5,5B1/33
1,71,>B/33
915,B33/33
>/B7
1/>1
3/>
- :3/B
Chad
:9,7/33
1,B>>,>99/33
:99,39/33
3/7
1/17
1B/95
'nited States
11,3:/33
1,B15,95/33
B93,99/33
3/1>
1/1:
3/: 3B>
;ermany
Jatar
.e6 Keaand Congo 8em/ +ep/
5. MARBET PRO$I:E The foundation of Egypt4s nationa automotive industry 6as aid in 15:5, 6hen the government signed a contract 6ith a ;erman firm for the oca manufacture of trucks and buses/ That contract stipuated that a ne6 company 6oud be estabished in Egypt to manufacture appro#imatey haf of the components for each vehice and to assembe the E/ Nas- A,)++)&e Ma,;a'),-&g "+pa =NAS"O? 6as vehices/ To this end, estabished in 1571, and its first production ine 6as set up in (adi @of near @e6an, =ust south of Cairo/ .ASC) soon thereafter forged additiona contracts 6ith European companies/ The first 6as 6ith the Yugosav firm IM+ to produce tractors the second 6as 6ith &iat of Itay to produce passenger cars and the third 6as 6ith the ;erman Company ?umhardt to manufacture trucks/ .ASC) began to impement these contracts in 157, but 6ar and economic hardships Egypt e#perienced in the 1573s and 153s hampered the gro6th of feeder industries and reduced .ASC)4s budget for e#pansion/ &inancia pressures forced .ASC) to give priority to its truck and bus production, especiay in terms of increasing oca content/ This 6as done at the e#pense of its passenger car pro=ect, 6hich had not deveoped at the same pace/
Automotive Industry in Egypt
:
Thai Trade Center, Cairo Sherif Yehya
13/5
.ASC) caims that 6ithin ten years of its aunch, it 6as producing appro#imatey >333 trucks and 1733 buses per year 6ith 3D oca content/ In a peak year in the 1573s the company assembed 1,333 passenger cars 6ith >3D oca content/ .ASC) 6as the first and, at that time, the ony component4s production company in Egypt, and the monopoy position it en=oyed enabed it to profit substantiay/ @o6ever, .ASC)4s situation took a do6nturn in 15B 6hen the government embarked upon poicies that ao6ed the importation of foreign cars 6hich had previousy been banned into the oca market/ Mean6hie, government4s price-fi#ing poicies for pubic sector industria products continued despite of rising costs/ The government directed .ASC) to focus its passenger car assemby operations on one mode, the &iat0.asr 19/ In 155B, under the government4s privatiD for buses, 73D for minibuses, :3D for tractors, and around B:D for passenger cars/ The company has assets 6orth more than F933 miion and is a ma=or customer for some >>1 oca suppiers, of 6hich B are from the private sector/ .ASC)4s poicies are no6 based on t6o ob=ectives producing the &iat modes 8ogan and Shahin, and eventuay getting a suitabe bid from a foreign automotive manufacturer to fuy privati>9 factories empoying around 3,333 6orkers 6ith an annua production of FB:: miion, according to the Egyptian Automobie Manufacturing Association !EAMA" statistics/ Mutinationa companies assembing vehices in Egypt have contributed a great dea to the deveopment of the feeder industries by pushing oca suppiers to reach higher standards of uaity/ EAMA foresees that car manufacturers 6i eventuay ocai
;enera Motors began assembing trucks and buses in Egypt in 159> and began assembing passenger cars in 155>/ @o6ever, despite very attractivey o6 abor costs, Egypt4s reativey sma market has discouraged some payers from engaging in oca manufacturing/ Egypt4s e#isting 7 factories have a capacity of some >:,333 vehices per year 6orking ony one Automotive Industry in Egypt
7
Thai Trade Center, Cairo Sherif Yehya
shift/ At present they are estimated to be currenty using ony >3D of their production capacity, and severa oca car manufacturers, incuding GIA Motors and $eugeot, are renting production capacity from e#isting factories such as Arab American Lehices !AALN"/
'nti the eary 15934s, Egyptian consumers had a choice of ony three brands of autos &iat, $eugeot and Mercedes/ A had very different price ranges/ ?uyers often had no choice of coors and had to 6ait 6eeks or months for deiver/ Today, there are more than 7 different passenger cars avaiabe on the market and buyers are hard pressed to decide 6hat to buy/ As more brands entered the market, Egyptian consumers4 e#pectations have risen/ Through a recent survey of car o6ners conducted by @yundai in Egypt, price, credit avaiabiity, after saes service, and reputation of the agent 6ere found to be the most important factors consumers consider 6hen buying an auto/ In 155, as part of its overa iberai, reativey arge private sector manufacturer in Egypt/ It produces competitive uaity fue tanks, interior trim and uphostery/ There are pans to e#pand the production ine to incude such products as air conditioners/
7. :+'a/ '+)e). The importance of the auto industry in Egypt stems from its support of a huge base of aborintensive feeder industries that embrace amost every sector of the economy/ Even though saes of ne6 vehices are ony aroun d 3,333 vehices annuay, incuding passenger and commercia vehices, both ocay assembed and imported, many companies have been ocay estabished to suppy parts needed for oca assemby/ ?y a6 !a Ministry of Industry
8ecree 15", the oca content in assembed vehices must be at east B:D for passenger cars and 3D for trucks and buses/ As a resut of oca content a6s, typicay some 1:D of the car vaue is in painting and manpo6er needed for the assemby process/ Every assember deas 6ith at east >3 oca suppiers 6ho provide components such as gass, tires uphostery and batteries/ To compy 6ith oca content reuirements, the foo6ing automobie components 6ere deveoped in the oca market and are no6 being manufactured in Egypt at or very cose to internationa standards - Tires and inner tubes/ - ;ass and 6indshieds/ - Auminum parts/ - Eectrica 6ires/ - %eaf springs/ - )i fiters/ - Air fiters/ - 'phostery materia/ - $astic parts and bumpers/ The reativey recent oca content a6s have caused ot of probems for many oca manufacturers, especiay those assembing sophisticated cars ike Mercedes and Automotive Industry in Egypt
Thai Trade Center, Cairo Sherif Yehya
?M(/ E#perts in the automotive industry beieve that B:D is the ma#imum that car manufacturers coud reach in terms of oca content, as any additiona increase 6oud mean having to make parts of the engine or the body in Egypt/ (hie it is certainy possibe in technica terms to manufacture those parts ocay, production 6oud not be in arge enough uantities to cover the high investment cost/
8. ",--e) s)a),s a( ;,),-e p-+spe')s.
Today, apart from the pubic sector firm .ASC), there are other car producers in Egypt manufacturing more than si#teen brands and modes 1. A/ $+)+,0 "a- Asse/ "+pa Assember of the ?M( :33 series 2. A-a Ae-&'a Ve0&'/es A =oint-venture bet6een AMC and the Arab )rganiT-a'+ Assember of the $oish and C as a competitor to the Egyptian ;erman Automotive Company Hoint -venture M? The assemby pant of the company is ocated in the 7th )ctober City 12. Spe-aa M+)+-s# :)( Is an Egyptian auto manufacturer based in Maadi, Cairo It is a part of the Dae++ M+)+- Egp) !8ME" 6hich itsef beongs to the A+,/ $+)+,0 G-+,p/ The factory is ocated in the 7th )ctober City 13. T0e Se+,(& G-+,p Is an Egyptian automobie manufacturer 6hich 6as founded in 15: 6ith its current head office in Cairo he company began its 6ork 6ith the Modern Motors S/A/E/ 6hich is speciai
9
Thai Trade Center, Cairo Sherif Yehya
14. T0e Egp)&a Ge-a A,)++)&e "+pa th )r short E;A, is an Egyptian car assember 6hich is ocated in the 7 )ctober City assembe vehices of the Mercedes ?en< 15. E/ Nas- A,)++)&e Ma,;a'),-&g "+pa " Is EgyptOs state o6ned automobie company, founded in 1573 in @e6an, Cairo Since 155 the company has produced icensed versions of the &iat
Statistics from the Ministry of Industry sho6 that in fisca year 333, these private companies produced B1,:33 passenger cars, 1>,133 trucks, >:3 heavy-duty cars, >333 mini and microbuses, B:3 standard buses, and >3 tourist buses/ Industry e#perts note that, compared to .ASC)4s >3-year effort, private carmakers have raised their ratios of ocay manufactured components uicky/ Egypt imports neary :D of its automotive reuirements in the form of finished vehices/ The remaining :D are manufactured domesticay/ The parts and accessories market for the )EM manufacturing sector stands currenty at about F733 miion, but not a of that market is avaiabe for foreign e#port penetration/ There is a B:D minimum oca content reuirement for the production of automobies, as 6e as reuired minimums for other types of vehices, such as buses !3D" and trucks !53D"/ The economic issues at the end of 311 have negativey affected car assembers and importers euay/ 8eaers 6ho have sod vehices on credit are having difficuty coecting and conseuenty are deferring on their bank payments/ .evertheess, demand for motor vehices by the increasingy affuent Egyptian popuation far e#ceeds the countryOs production capabiity/ Egypt4s popuation in 31> 6i ikey be 53 miion and is gro6ing at an annua rate of about percent/ $erhaps 1:D of the popuation has the economic everage to purchase a ne6 automobie/ According to the atest officia statistics avaiabe, in 31 there 6ere :/7 miion registered vehices in Egypt appro#imatey 3 percent 6ere buses, >3 percent 6ere trucks, and :3 percent 6ere passenger cars/ Sources indicate that 6hie private investment in the auto industry has ceary been significant, 6ith investments no6 e#ceeding F1 biion, manufacturing automobies 133D in Egypt is another matter/ &or that to take pace successfuy a number of factors must come together, many of 6hich Egypt sti acks/ This indicates a continuing need for imported automotive parts and accessories for the partia manufacturing and assemby operations no6 under6ay/ The market for the automotive feeder industries is e#pected to increase in parae 6ith the e#pected improvement of the overa economy in 31B/ Consumer demand is durabe and future trends ook positive/ +eiabe after-saes service, as 6e as spare parts and maintenance services, is the key to maintaining a competitive advantage/ Assembers of passenger cars, trucks, and buses have found that keeping appro#imatey B3 percent inventories of parts guarantees the continuity of their production and 6i satisfy the needs and demands of their cients/ They have aso found that using credit faciities as an incentive to boost saes is an approach that 6orks 6e/ Many e#perts see the future of the industry in Egypt as being in commercia vehices, incuding buses and heavy-duty trucks, primariy because these as trucks need not be as technoogicay sophisticated as passenger cars/ The percentage of oca content in buses is aready some 3 percent, and bodies are manufactured ocay/ At the same time, industry e#perts suggest the manufacturing of an Arab carN 6ith the hep of a po6erfu Automotive Industry in Egypt
5
Thai Trade Center, Cairo Sherif Yehya
mutinationa partner if 13,333 vehices can be produced on the same ine, it is generay affordabe to go into manufacturing the po6er train and the sheet metas/
9. END>USER ANA:YSIS End-users of auto and auto parts vary according to their types of activities/ Tourist companies that o6n and operate tourist buses have their o6n maintenance 6orkshops and personne, and they reuire the entire range of euipment and parts needed to maintain their feets/ Merchandise transportation companies aso reuire the entire range of euipment and parts to keep their trucks in top running condition/ A nationa traffic department periodicay checks the mechanica condition of a passenger cars, trucks and buses on the road/ @o6ever, the ma=ority of end-users are private individuas o6ning cars and 6orkshops in the different governorates of Egypt/ Egypt presents a very difficut and often chaenging environment for motor vehice users/ Temperatures in the desert in the summer can easiy e#ceed :3 degrees Centigrade !1 degrees &", 6ith temperatures inside cosed vehices e#ceeding even this by a 6ide margin/ Cimate change in the .ie Laey and .ie 8eta, 6here 55/5D of the popuation resides, is resuting in increasing humidity as 6e/ The metropoitan areas are sub=ect to a continuousy high degree of sand, dust, and other particuate matter in the air/ The uaity of fue is said to be uneven, 6ith in some cases a very high eve of contaminates/ Many roads, both in the cities but especiay in rura areas, are very rough/ Accordingy, auto maintenance is essentiay a constant, daiy process, 6ith especiay heavy tos taken on tires, suspension, air conditioning systems, fue systems, and a eectronic systems, incuding engine systems/ As a genera rue, the more rugged, durabe, and easy to maintain the vehice, the better it 6i survive Egypt4s demanding conditions/ The main trends in terms of end-users profies and segmentation needed for automotive euipment, toos, and parts are as foo6s &or buses, pubic sector companies and governorates !simiar to states" represent the argest users/ $ubic transportation is a state monopoy impemented by nationa pubic sector companies and0or administrations/ These reuire some genuine spare parts in addition to standard or generic parts purchased by using norma government tendering procedures/ ;overnment and pubic sector companies are price oriented/ Internationa companies suppy auto parts through their oca agents/ %arge 6orkshops are generay o6ned and0or controed by oca vehice manufacturers or their agents/ The vast ma=ority of repair 6ork, ho6ever, is done in very sma, oca 6orkshops/ ;eneray speaking, the uaity of body 6ork is outstanding, and costs are very o6, 6hie the uaity of engine, eectrica, and systems maintenance and repair varies greaty and is often e#pensive and unreiabe, meaning that nothing that is fi#ed stays fi#ed for ong/ %oca mechanics are oath to pass up any opportunity for 6ork and often to caim to have e#pertise and access to appropriate parts 6hen in fact they do not/ In many cases, repairs are made using inappropriate parts, resuting in greaty increased future costs for additiona repairs/ Sma 6orkshops generay speciai
13
Thai Trade Center, Cairo Sherif Yehya
Internationa oi companies such as Mobi, Cate# and Es so have estabished 6orkshops in 93 percent of their gas stations and are idea end users of spare parts, 6hether origina parts or from any other source on the condition that parts 6i be of good uaity/
1. MARBET A""ESS
There are no anguage reuirements in Egypt/ Athough Arabic is officia, Engish is acceptabe/ The country uses the metric system of measurement, but bids 6i not be re=ected if another system is offered uness the tender specificay reuires metric measurements/ 11. ",s)+s a( TO &ss,es.
Customs duties on cars are paid according to the engine capacity the arger the engine, the higher the customs/ The customs duty of Automotive is bet6een :-1>:D P 13D saes ta# according to the type of cars, capacity of engine !CC" and the options/ &oreign companies invest in assembing cars ocay primariy to avoid paying the high customs duties imposed on imports, especiay arge and higher-end modes/ %oca assembers pay around 7D customs duties on individua imported components on average/ )pinions vary about ho6 the (T) 6i affect oca assemby/ Some beieve that (T) and former ;enera Agreement on Tariffs and Trade !;ATT" rues coud threaten the continuance of the car industry in Egypt/ According to e#isting agreements, customs on a products eventuay 6i be reduced to a ma#imum o f >3D, 6hich means it coud be cheaper to import a compete manufactured car than to assembe it ocay/ Some go so far as to impy that this might eiminate the Egyptian passenger car manufacturing industry/ Some e#perts point out that no 1333 cc vehices are being produced 6ith customs at about B3D/ In fact, no car ess than 1>33 cc is being ocay assembed, as it is ess e#pensive to simpy import it/ Critics of reducing the customs charges say that this ceary sho6s 6hat 6i happen 6hen the customs on a types of cars is reduced to ony >3D/ Current (T) rues reuire the eventua canceation of the oca content reuirement, and in 33 Egypt 6as granted a transitiona period of five years 6hich ended in Hune 31/ @o6ever, the government of Egypt negotiated to e#tend the period for another five years to hep dea 6ith a much more difficut economic situation than 6hat 6as anticipated even a fe6 years ago/ Some e#perts beieve that the government shoud reduce or cance customs on imported components, 6hich 6oud reduce the price of ocay assembed vehices and in turn, make ocay assembed products more competitive/ @o6ever, present government poicies ca for as much oca production as possibe 6ith the utimate goa of e#porting, starting 6ith feeder industries !incuding components" and so6y moving to6ards e#porting finished cars/ ;ATT0(T) rues in the ong run are e#pected to favor traders more than oca assemby, ho6ever, as assembers renting production capacity 6i a6ays case manufacturing and simpy import if it is ess e#pensive to do so/ Customs tariffs on automotive parts and euipment range bet6een 13-B3D advaorem/ There is aso a 13D saes ta#/
Automotive Industry in Egypt
11
Thai Trade Center, Cairo Sherif Yehya
12. P,/&' )e(e- p-+'e(,-es. The foo6ing is generic information on pubic tender procedures for ma=or government contracts/ Egyptian a6 reuires that for pubic tenders, foreign companies must retain Egyptian commercia agents/ &oreign firms are not reuired to have an agent 6hen deaing 6ith the private sector/ @o6ever, most foreign companies have found it beneficia to engage a oca agent to hande the probems associated 6ith communications, bureaucratic procedures, oca business practices, and marketing/ ?ased on geographica ocation or product basis, a firm can appoint mutipe agents in Egypt to further enhance its success/ Athough agent commissions vary 6ith services provided and the amount of individua contracts, agents generay charge a commission ranging from - BD for initiative, -BD for opening credits, and 1-D for cearing goods through customs/ $arastata companies purchase commodities through cas for internationa tenders/ These are announced in the daiy Egyptian press/ In many cases, an e#porter may not be abe to provide the 6ide variety of products reuired in arge tenders/ (ith the formation of a consortium, ho6ever, it can offer a bid/ The Itaians, ;ermans and Hapanese have successfuy used this techniue in Egypt/ Egyptian buyers prefer a singe bid for an entire tender rather than having to piece together bids for each component/ $ubic sector companies may reuest credit in their procurement tenders/ (hie suppiers offering credit 6i certainy have a better chance of 6inning bids, saes 6ithout credit are sometimes made since other factors such as price, uaity, and a deivery schedue may be of greater importance/ $ubic sector companies generay aso reuire a performance bond eua to 13D of the contract, reeasabe upon competion of the contract/ To avoid deays in obtaining reease of the performance bond, the contract must be formay amended if the buyer reuests any change in deivery terms or specifications/
13. Ip+-) P-+'e(,-es Reg,/a)&+ Egyptian companies often rey on customs brokers, or their o6n staff to check on shipments and to cear products through customs/ The foo6ing (+',e)s ,s) e p-ese)e( )+ )0e ',s)+s office in order for a shipment to be reeased 1/ ?i of %ading or %etter of ;uarantee !%0;" / Commercia Invoice/ >/ $acking %ists B/ Insurance $oicy :/ Certificate of )rigin countersigned by the Chamber of Commerce and notari
Automotive Industry in Egypt
1
Thai Trade Center, Cairo Sherif Yehya
:ae/&g -eF,&-ee)s< .ame and address of manufacturer ?rand or trade mark !if appicabe" Country of origin, type of product .ame and address of importer The production year of the imported cars must be in the same year of the mode $roduct use instructions !optiona" Importers must present one set of a import documents to the ;enera )rgani
Automotive Industry in Egypt
1>
Thai Trade Center, Cairo Sherif Yehya
