An astonished state struck car dealers in Egypt, especially the members of the ‘Let it Rust’ campaign, after the Automotive Marketing Information Council (AMIC) issued its February report, showing decreased sales by 9% in passenger cars, reaching 6,980 units – as they all expected sales to drop.
However, bus sales increased by 4% y-o-y to 1,304 units. While Truck sales were up just under 3%to 2,573, the report showed.
February’s top-selling brands were Nissan (1,938 cars for a 28% share of sales), Hyundai (1,102, or 16%) and Toyota (691, or 10% market share).
A number of consumers and members of the campaign objected to the figures presented by the AMIC, questioning their accuracy and validity, especially after a sudden surge in total sales in 2018, which was explained by the AMIC as a result of the entry of new Chinese cars into the market.
In response, the Honorary Head of the AMIC, Raafat Masrouga, said that monthly reports are not accurate enough, unlike annual reports, adding that extending the period of study produces more accurate results.
“The accuracy of the reports in Egypt is different from the rest of the world, this is because the data is sent to the AMIC on the number of sales to distributors and traders, and not on the sales to the end customers and for the cars registered to be used, which is different from the system in the United States and Europe, where reports reflect real sales. Annual reports are more accurate as they are cumulative,” Masrouga clarified.
As for the accuracy and reliability of the data sent by automotive companies to the AMIC, he said that car companies cannot manipulate their own sales, as the AMIC is devoted to sending its monthly and annual reports to parent companies, who, in turn, survey the sales of their agents in Egypt.
Furthermore, he added that there could be a margin of error in some Chinese companies’ sales which are unsupervised by parent companies, whereas Japanese and European automotive companies keep a close eye on their agents.
Masrouga pointed out that what was raised about the unreliability of the latest AMIC report for December 2018 was due to few Chinese companies not submitting their reports in previous months as usual, but instead sent them in December; therefore, they were added to the report, which inflated sales by 15%.
The Marketing Director of Al-Futtaim Egypt ‘Honda,’ Hassan Iskandarani, said that the AMIC’s report accuracy exceeds 90%, adding that parent companies review the accuracy of the figures every month, and noted that January’s report is also accurate.
Iskandarani pointed out that the figures in the report include the cars sold to the distributors and the dealers, emphasising that this does not affect the final results of the sold cars because these cars are located at the distributors’ outlets and have already been reserved and customers will purchase them in a matter of time.
The Honda marketing manager said that the increase in car sales in 2018-which customers in Egypt objected to- is due to new companies entering the market such as Zotye Auto, BYD, and Lada, which increased sales year-over-year.
As for the 2019 AMIC January report, Iskandarani highlighted that the sales figures are very logical, explaining that the ‘Let it Rust’ campaign does not justify the decline in sales compared to January 2018, as some believe. He added that the situation was worse last year as the stagnation started in 2017 and agents were forced to reduce their shares, therefore the market in January 2018 was cautious and only sold a small number of cars, unlike January 2019, where customs on European models are removed, hence traders resorted to offering discounts and promotions.
Sales were not affected by the campaign as some would believe, as many participants are not customers or current potential buyers, he said. Real customers, he explained, purchased cars and benefitted from the discount.
The Marketing Manager for Kia in Egypt, Sherif Fahim, confirmed that the AMIC reports are correct and cannot be manipulated, but those who read it must be aware that not all cars have been sold, as some were merely transferred from agents to distributors en route to customers.
Fahim said car companies, in agreement with the AMIC, are currently working on a mechanism to modify the AMIC’s reports in the future, and categorise sales based on actual purchases.
He denounced the charges against the AMIC of inaccuracy and the expectations of a decline in sales, adding that the increased sales were forecasted for in the beginning of 2019, especially with the application of zero-customs on European models. January’s car sales reached 8,000 cars, which is not high but rather less than the expectations of experts, compared to 2018, when sales were much worse.
Furthermore, he predicted that the car market will recover in the coming period after customers realise that prices will not drop again, pointing out that this is different from one customer to another. Each customer sets his/her own suitable timeframe to purchase on their own terms, and if prices do not decrease, they are more likely to purchase the car which meets their budget and requirements.
As for the prices of Kia cars in Egypt, Fahim confirmed that they will not decline, On the other hand, the prices of the 2020 models are expected to rise, and it is highly unlikely that there will be any fall in the prices of their models during the coming period.
The Chairperson of IFG for Trading, Mohammed Farag, the exclusive dealer of Zotye Auto in Egypt, said that the figures provided to the AMIC by his company are for cars sold and licensed to customers. Additionally, Farag said that few other companies provide the numbers of cars that were sold to traders, but instead they should provide the final sales figures.
The mother company does not review the sales figures sent to the AMIC, “We send our data to companies every month, but the companies do not review these figures. Each company’s policy is different from the other,” he added.
Farag stressed his keenness to include Zotye Auto sales in the AMIC in order to introduce its sales portion in Egypt, as the AMIC helps investors and customers learn of the importance of the automotive sector in the market.
His company joined the AMIC report in August 2018, and the full year’s sales were added to the AMIC’s annual report, resulting in a significant increase in total sales for 2018, said Farag.
Moreover, Farag predicts a market recovery in the coming months and that 2019’s car sales will exceed 25% from the previous year. He also anticipates a significant surge in European car sales this year along with strong Chinese car competition. Meanwhile, Korean and Japanese cars will opt out of the competition this year.